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Identifying Income Generating Opportunities in Root Crops

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Identifying Income Generating Opportunities in Root Crops Identifying Income Generating Opportunities in Root Crops Preliminary Cost Benefit Analysis of Options for Improving the Availability of Locally Produced Root Crops in South Tarawa JULY 2019 Acknowledgements This analysis represents an output from a cost-benefit analysis training conducted in South Tarawa in September 2018. I am exceptionally grateful to the Ministry of Environment, Lands and Agriculture Development’s (MELAD) staff, in particular Beraina, Susana, Kiritian and Iuta for their commitment to completing the analysis and hope that they will find the techniques learnt valuable in their future work. Kam rabwa to the traders and retailers that participated in the value chain analysis – both at the workshop conducted by MELAD and those that were interviewed subsequently. I am indebted to Richard Beyer and SPC for sharing his insights and feasibility assessments for an agro-processing facility on Buitaritari which fed into the analysis. This analysis would not have been completed without the fantastic support of Norma Rivera from the Global Green Growth Institute in Kiribati for her unwavering commitment to facilitate all the logistical arrangements, her patience and her technical input to the study. Author Marita Manley, Talanoa Consulting. Consultant for the Global Green Growth Institute Copyright © December 2018 The Global Green Growth Institute 19F Jeongdong Building, 21-15, Jeongdong-gil Jung-gu, Seoul, Korea 100-784 The Global Green Growth Institute does not make any warranty, either express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or any third party’s use or the results of such use of any information, apparatus, product, or process disclosed of the information contained herein or represents that its use would not infringe privately owned rights. The views and opinions of the authors expressed herein do not necessarily state or reflect those of the Global Green Growth Institute. Cover Photo: Babai Pit, Abaiang. Photo Credit: © Norma M. Rivera Acronyms AusAID Australian Aid Program A$ Australian Dollar BCR Benefit-cost ratio CBA Cost benefit analysis FAO Food and Agriculture Organization of the United Nations GGGI Global Green Growth Institute GoK Government of Kiribati KSSL Kiribati Shipping Services Limited KV20 Kiribati 20 Year Vision MCIC Ministry of Commerce, Industry and Cooperatives MELAD Ministry of Environment, Land and Agricultural Development MHMS Ministry of Health and Medical Services MFED Ministry of Finance and Economic Development OB Office of the President NPV Net Present Value SPC Secretariat of the Pacific Community Contents Executive Summary 1 1. Introduction 3 2. Background 5 3. Methodology and Options Considered 10 4. Limitations 16 5. Preliminary Results and Sensitivity Analysis 20 6. Discussion 22 7. Recommendations 24 References 26 Annexes 27 Annex 1: Value Chain Mapping Analysis: Pumpkins from Buitaritari - Tarawa 27 Annex 2: Stakeholder Consultation List 34 Executive Summary Cost benefit analysis (CBA) can be used as a To realise the livelihood benefits of the decision-support tool to assess the benefits various options, any further development of investing public funds in different options of this options should be done with the full designed to stimulate economic activity and participation of all existing actors in the livelihood creation. value chain (farmers, traders, agricultural The Government of Kiribati (GoK) extension officers, transport providers) to requested support from GGGI to conduct a ensure that investments are suited to their Cost Benefit Analysis (CBA) training for local needs. government officials as a tool for assessing The following recommendations resulted green and climate resilient development from the analysis: projects to support livelihood development. Following the training one of the CBAs Invest Small and Learn by Doing planned during the workshop was completed to demonstrate the use of the tool. Staff Investing in small-scale agro-processing from the Ministry of Environment, Land with appropriate training and business and Agricultural Development (MELAD) support services provided to producers and designed the analysis and participated fully traders should proceed and represents a in the collection of data, development of low risk option for government investment. assumptions and completion of the analysis. Larger investments are possible once the viability of small-scale investments has been This preliminary analysis documents demonstrated1. the results of a CBA that assessed the following options: investing in a central While a new market facility has benefits, market in South Tarawa, investing in solar- further examination of lower cost options freezers on outer islands to promote trade for improving and expanding existing in frozen products, and investing in small roadside market facilities – as distinct from agro-processing facilities to promote the constructing a new market facility – should development of value-added products. also be explored. The existing market for pumpkins has developed without significant The preliminary analysis concluded that all investment in infrastructure and could be options considered are potentially viable replicated for sweet potato. under certain assumptions (see Section 5). Further data is needed – relating to maintenance and running costs of the various investments, the feasibility of transporting frozen goods and additional interviews to inform the estimates of the size of the market - to improve the robustness of the results. 1 In this case, a micro investment is below A$ 5,000; small investments equal A$5-100k; medium investments equal A$100,000-A$500,000 and large investments are above 500k+ 1 Support Existing Value Chains Demonstrate Viability of the and Private Sector Actors Market for New Products It is important that MELAD and MCIC work MELAD and MCIC have an important role jointly to support existing value chains and in helping to stimulate as yet untested private sector actors and ensure that work products and market opportunities and to to stimulate additional production does not give traders and other private sector actors undermine existing value chains. confidence to enter the market. Part of this It is also clear that existing value chains have role can simply be to connect existing actors constraints that could be addressed. For to each other. example, wastage in the existing pumpkin The MELAD trials for root crops should value chain is high (approximately 20%) continue to determine the viability of the and working with producers and traders to market in terms of taste, quality and price identify options to improve post-harvest preferences. handling could result in additional supply. Working with existing traders to do this Producers also reported pest and disease would help to stimulate their interest in the issues that could be addressed by MELAD market. For example, MELAD ideally should extension services. not be selling any produce itself but simply To ensure local and affordable food is facilitating others to do so as part of the available for consumers in South Tarawa it trials. is critical that existing value chain actors are supported to strengthen the current fragile Improve Availability of Data value chains. to Support Analysis Value chain analysis can be a useful tool in helping to identify specific constraints This study was constrained by the limited and needs. Training in value chain analysis information available for domestic should be conducted so that MELAD and production and trade of agricultural goods. MCIC staff are able to conduct this for all Investing in improving data availability to commodities they are working on. support informed decision making is critical for value chain and/or cost benefit analysis to be conducted regularly. 2 1. Introduction This report outlines the results of a The GoK requested support from GGGI preliminary cost benefit analysis (CBA) to conduct a Cost Benefit Analysis (CBA) in partnership with the Government of training for local government officials as a Kiribati as part Global Green Growth tool for assessing green and climate resilient Institute’s (GGGI) work in Kiribati. The development projects to support livelihood analysis was completed to demonstrate the development. Following the training one of application of the CBA framework and to the CBAs planned during the workshop was support decision making relating to various completed to demonstrate the use of the agricultural initiatives to support agriculture tool applied to a specific project. and green job development currently under CBA training was conducted in September consideration. 2018 for officers of the Ministry of GGGI is an international, inter-governmental Environment, Land and Agricultural organisation working to promote a resilient Development (MELAD), the Ministry world of strong, inclusive, and sustainable of Finance and Economic Development growth (GGGI, 2018) targeting key aspects (MFED), and the Office of the President of economic performance such a poverty (OB). reduction, job creation, social inclusion, and The training was aligned to GGGI’s focus environmental sustainability. In delivering area in Kiribati to strengthen integrated country programmes, it works across the planning approaches, the evaluation of thematic priorities of sustainable energy, green and climate-resilient projects and green cities, sustainable landscapes, and the identification and assessment of water & sanitation. sustainable micro-scale income
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