business producing high-value foods business producing Setting up and running Setting up and running a small-scale business producing a small-scale high-value foods Opportunities in food processing Opportunities in food processing a series Opportunities in Food Processing A handbook for setting up and running a small-scale business producing high-value foods Contributing authors: Yeshiwas Ademe, Barrie Axtell, Peter Fellows, Linus Gedi, David Harcourt, Cécile La Grenade, Michael Lubowa and Joseph Hounhouigan Edited by: Peter Fellows and Barrie Axtell Midway Associates Published by CTA (2014) About CTA The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). Its mission is to advance food and nutritional security, increase prosperity and encourage sound natural resource management in ACP countries. It provides access to information and knowledge, facilitates policy dialogue and strengthens the capacity of agricultural and rural development institutions and communities. CTA operates under the framework of the Cotonou Agreement and is funded by the EU. For more information on CTA, visit www.cta.int or contact: CTA PO Box 380 6700 AJ Wageningen The Netherlands E-mail: [email protected] Citation: Fellows, P.J. and Axtell, B. (Eds), 2014. Opportunities in Food Processing: A handbook for setting up and running a small- scale business producing high-value foods. Wageningen: ACP-EU Technical Centre for Agricultural and Rural Cooperation (CTA). ISBN 978-92-9081-556-3 Copyright © 2014 CTA, Wageningen, The Netherlands. All rights reserved. No part of this publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior permission of CTA. CTA encourages the non-commercial use of the material in this publication. Proper citation is requested. ISBN 978-92-9081-556-3 Cover photo: © Peter Fellows Disclaimer Although the content has been compiled with the greatest care, CTA is not able to guarantee that the information provided is accurate and/or exhaustive, and cannot be held liable for claims pertaining to use of the information. The authors of the publication are not to be held responsible for any consequences that may arise from the use of the information. Furthermore, the information shall not be construed as legal advice. The information does not release the reader from the responsibility of complying with any relevant legislation, regulations, jurisdiction or changes/updates of same. Design and production: FAB s.a., www.fab.be A handbook for setting up and running a small-scale business producing high-value foods - 4 - Preface This book is the result of a collaborative effort by small business owners and advisers of small-scale food processors in ACP countries. The effort was supported by the Technical Centre for Agricultural and Rural Cooperation ACP- EU (CTA). The information contained in the handbook was gathered by the researchers below, who interviewed local enterprises that produce high-value foods and prepared reports that were then compiled by Midway Associates. We hope this book will meet the needs of small-scale enterprises and the agencies that support them by providing technical and business information on the production of high-value foods that was previously difficult to find. It is also intended to help small-scale entrepreneurs to update and improve their businesses to gain market share, benefit their consumers and, of course, improve their own profitability. If you find this book useful, please take a few minutes to complete the feedback form at the end of the book. Preface - 5 - The Opportunities in Food Processing series This is the seventh and final volume of the Opportunities in Food Processing series. The first volume in 2001 was an overview of small-scale processing, including aspects of the science and technology of food processing and business management. The next five volumes applied the principles outlined in the first volume in more detail to the commodity groups: meat and fish products, milling and bakery products, cooking oils, fruits and vegetable products, and dairy products. The aim in each handbook was to provide information that would allow micro- or small-scale food processors in ACP countries to upgrade their businesses. The focus in each book was to improve the supply of processed foods to local markets using technologies that were likely to be available and affordable to ACP processors. Each book assumed a basic level of knowledge and provided detailed information on marketing, financial management, processing and quality assurance, written for people who have English as their second language. Each of the titles is available from CTA at http://publications.cta.int/en/publications/series/opportunities-in-food- processing. A handbook for setting up and running a small-scale business producing high-value foods - 6 - About this book This volume differs from the previous books in a number of respects. It is not commodity-focused and it groups together a variety of processed foods, or ingredients for cosmetic or medicinal products, that share a common factor of having (or with the potential to have) a high value. It assumes that the intended beneficiaries in ACP countries will already be moderately successful in their food processing businesses, and as a consequence it is written using ‘higher level’ language than previous books. Additionally, because the value added to processed foods is often higher in industrialised markets, the book includes exporting as well as supplying local markets, with a focus on how ACP processors are able to enter and benefit from value chains1 for these products. Because the quality requirements for high-value foods, and sometimes their volumes, are both higher than other commodity groups, some of the technologies and staff training requirements described in this book require considerably greater investment than in previous volumes. The book is therefore intended to illustrate potential opportunities for producing high- value foods in ACP countries, rather than a handbook on how to do this. 1 Value chains comprise a set of actors who conduct a linked sequence of value-adding activities involved in bringing a product from its raw material stage to the final consumer. About this book - 7 - About the authors Yeshiwas Ademe currently works as Country Representative and Ethiopian Branch Manager for Valid Nutrition (VN), based in the Republic of Ireland. He is engaged in supporting local production of ready-to-use therapeutic food, supplementary food and complimentary food for malnourished children and HIV/AIDS patients. His background is accounting and he was awarded a BA in Accounting from Addis Ababa University. He has worked in large companies to improve administration, auditing, finance and accounting, set up systems and software and implement computerized accounting systems and business models. Before working for VN, he was Export Manager for a company engaged in exporting oil seeds, pulses and spices to Europe, Middle East, Far East and USA where he set up systematic flows of information to improve reliability, consistency and timeliness of exports and boosted exports from 6,500 MT to 17,450 MT. He also saved the company 30% on the price of imported raw materials and agricultural chemicals. Previously, he was General Manager for a large company engaged in import, export, transport, agro-industry and dairy processing; with more than 600 workers and capital turnover of more than $US 62.5 million. His aim was to import agricultural inputs that improved production by farmers and buy their produce to help improve their livelihoods. Barrie Axtell is a food technologist with over 30 years’ experience working in Africa, Caribbean, Asia and Latin America. His particular interest centres on small-enterprise-based drying of fruits and vegetables and processing high-value crops, such as medicinal plants, spices and essential oils, and small enterprise development. He has co-authored more than 15 books and numerous articles on the role of appropriate technology in food processing. Dr Peter Fellows is a consultant food technologist and a director of Midway Associates. He has practical experience of assistance to food processors in 20+ developing countries and specialises in support to institutions that assist them. He has taught food technology at Oxford Brookes University, was Head of Agroprocessing at Intermediate Technology and has held the United Nations Educational, Scientific and Cultural Organization (UNESCO) Chair in A handbook for setting up and running a small-scale business producing high-value foods - 8 - Post-Harvest Technology at Makerere University, Uganda. Since 2010 he has been Editor of Food Chain Journal for Practical Action Publishing. He is an experienced author and has published 34 books and more than 40 articles on small-scale food processing. Linus Gedi is an experienced agro-industry expert, who started his career as tutor and Principal at Ilonga Agriculture Training Institute in Tanzania in 1976, before becoming a consultant in 1982. For the past 31 years he has worked on various consultancy assignments, ranging from planning primary crop production, handling, storage and marketing of food products, project appraisal and evaluations. His commodity expertise includes cotton, cashew, sisal, oilseeds, grains, fruits and vegetables, beverages, fishery and meat products. From 1996 to 2003 he worked as the United Nations Industrial Development Organization (UNIDO) National Expert in food technology, training entrepreneurs and trainers and helping them set up small enterprises that achieve high quality production and a cleaner environment. From 2004 to 2012 he worked as a consulting food technologist with the Small Industries Development Organisation; involved in training, promoting/supporting SMEs to invest in agro-food processing and ensuring they produce quality and safe food products. He sits on various national and private advisory bodies on food and agro-industry including the Tanzania Honey Council Ltd. and as Trustee of the Private Agriculture Sector Trust.