Flower Power - Short

8/3/2019 Flower Power - Short

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COPYRIGHT 2004 - ALTAI CONSULTING, KABUL - AFGHANISTAN1

MAY


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Flower Power Project Summary

Develop the oil roses clusterin Afghanistan to produce roseessence for the fragrance industry worldwide

Objectives

Production

Local

Development

/

Beneficiaries

240 ha. of cultivation

Excellent conditions for organic cultivation of Damascena rose

Value adding processing and distillation done locally

Oil roses yield US$ 3,000 per ha. (US$ 1,650 farm-gate price), agood economic alternative to poppy

500 to 1,000 farmers involved

Harvest: temporary employment for 3,000/5,000 workersincluding many women

10 to 30 local processing units will employ 50 to 150 workers opportunity for women entrepreneurship

25 qualified workers in the central distillation unit


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Phase 1

Market research

Identification of opportunities for Flavorand Fragrance crops in Afghanistan

Phase 3 Implementation and Business plans

Phase 2

Field feasibility study

Selection of crops

Technical scheme for project implementation

Phase 4 Sourcing of stakeholders

IMPLEMENTATION

Approach & Methodology

Work plan


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GENEVAGENEVA

GENEVAGENEVA

GIVAUDAN-Rmi Pulvrail, International Buyers Naturals-Francis Chabagno, New molecules development Director

FIRMENICH

Jean-Pierre Rozat, Director Global Purchasing PerfumeryNatural Raw Material

Gordon Sanders, Buyer Perfumery Natural Raw Material

GIVAUDAN-Rmi Pulvrail, International Buyers Naturals-Francis Chabagno, New molecules development Director

FIRMENICH

Jean-Pierre Rozat, Director Global Purchasing PerfumeryNatural Raw Material

Gordon Sanders, Buyer Perfumery Natural Raw Material


People interviewed

PARISPARIS

PARISPARIS

OTHEROTHER

OTHEROTHER

MT ROMANCE /AUSTRALIAN SANDAL

WOOD Co.Stephane Picquart

DESMARET SAM. Desmaret, GeneralManager

BIOLANDES SADominique Roques, GeneralManager

MT ROMANCE /AUSTRALIAN SANDAL

WOOD Co.Stephane Picquart

DESMARET SAM. Desmaret, GeneralManager

BIOLANDES SADominique Roques, GeneralManager

GRASSEGRASSE

GRASSEGRASSE

ROBERTET

Jean Daniel Dor, Development Director

Robert Sinigaglia, Production Director

Anne Sophie Boulet, Account Manager

IFF

Bernard Toulemonde, GeneralManager Laboratoire Monique Rmy

ROBERTET

Jean Daniel Dor, Development Director

Robert Sinigaglia, Production Director

Anne Sophie Boulet, Account Manager

IFF

Bernard Toulemonde, GeneralManager Laboratoire Monique Rmy

Key industry leaders across all levels have been consulted through one to one interviews.

GIVAUDANNatalie Garcia-Cetto, Perfumer fine Fragrance

Anna Estevane, European Marketing DirectorFIRMENICHOdile Pelissier, Account ManagerTAKASAGOJean Gatignol, Senior Vice PresidentDUCROS

Alain CarronnierLOREAL

Mathias Houpillart, Naturals RM buyer

Marie Claude Fonade, Perfumer

KABUL / JALALABADKABUL / JALALABAD

KABUL / JALALABADKABUL / JALALABAD

MADERA

Alain de Bures, Founder

Anne Lancelot, Country DirectorGERMAN AGRO ACTIONDr. Julius Obermaier, Expert in rose cultivationAlexandra Rueth, Field ManagerURDFrancois Grunewald, FounderOTHER

Zalmai Chawali, Teacher and Farmer


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The Flavor & Fragrance Market

Market Mapping

0

5

10

15

20

2000 2002 2003 (est.)

Market Size, in Bn US $, estimates

CAGR* = 10.1%

Note: *Figures come from the aggregated revenues from the companies dealing in the market. Actual growth should be lower according to our estimatesSource: Freedonia Inc; Givaudan; Firmenich; Robertet; Altai Consulting analysis

60%

40%

0%

50%

100%

87%

13%

1 2

3 4

Market Size

47.4 MM

0.9 Bn $

16.6 Bn $

6.3 Bn $

13.8 16.6 18.4

Flavors

Fragrance

Natural Raw

Material- Uniqueness

- Bio / Well being

- High Quality

Synthetic RawMaterial

- Non speculative

- Affordable

- Allergy free

Flavor/Fragrance Split 2002

2002Flavor and FragranceMarket Size

Of which we consideronly the RM

Of which we consideronly the Natural RM

The Flavor and Fragrance Market is a growing marketestimated at 18.4 billion US $

Fragrances account for 40% of the market

Natural Raw Materials (RM) represent 13% of the totalRM used

The market size for Natural Raw Material for the Flavorand Fragrance Market is 900 M $


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Pre-selection Criteria

for F&F crops in Afghanistan

Size and growth of the market

Differentiators in the market: Is it a value (quality) or volume (low cost) driven market?

Structure of the market: presence of oligopolies, speculation?

Non-sustainability of the current supply chain: non-socially responsible suppliers, cartels,

Willingness of the buyers to find new variants

Attractiveness of Afghanistan in this market: primary suitability (climate, soil)

A

B

C

D

E

F


7/27COPYRIGHT 2004 - ALTAI CONSULTING, KABUL - AFGHANISTAN7

Pre-selection

Fragrance Crops

Suitability to Afghanistan HighLow

BusinessAttractiveness

Low

HighSandal (15-21 M $; 500-700 $/kg)

Fragrance Crops (Market Size in M $; Essence Price per kg), 2002, est.

Vetiver (6-14 M $; 50-120 $/kg)

Clove (4.5 M $; 3 $/kg)

Citronella (3-6 M $;3-6 $/kg)

Rose (18 M $(*); 4,400 $/kg)

Geranium (9-12 M $; 45-60 $/kg)

Sage (7.5 M $; 25 $/kg)

Patchouli (25 M $; 25 $/kg)

Jasmine (5.5 M $;550 $/kg)

Lavendin (12-13 M $; 12-13 $/kg)

(*) including rose essence and concrete



The Damascena Rose is recognized as the best oil rose

Market price forrose essence, has been US$ 4,000 to 5,000 per Kg

It takes 3,500 Kg of rose flowers to make one Kg of essence

Rose concrete is sold for US$ 700 to 800 per Kg

It takes 450 Kg of rose flowers to extract one Kg of concrete

Value Chain:

Focus on the Damascena rose

4,400

400

800

700

400

700

1,400

0

1000

2000

3000

4000

5000

Raw Material Producer

Margin

Processing

Costs

Processing

Margin

Intermediate

Margin

Wholesaler

Margin

Final Price

Wholesale

Production: 2,100 $

Production + Processing: 3,200 $

Value Chain of 1 kg of Rose Essence (~1.3 hectare), est., in US $



Damascena Rose: Market Research and Feasibility Study

Market size: the rose extract forfragrance market segmentrepresents US$ 18 million (*) yearlyworldwide (10,000 tons of flowers)

Main producers are Bulgaria andTurkey (~90% of the market), othersinclude Morocco, Lebanon, Iran

Market Opportunities:

buyers want to change suppliers

production costs in Bulgaria likelyto increase with entry in EU

Afghan Rose quality andconcept

(*) including essential oil and concrete

Oil roses will grow well above 1,000meters elevation in the central andeastern regions:

water quality is good

salt content is low Other fragrance crops can be

cultivated there:

geranium under 1,000 meters

lavender at all altitudes

other local specialties to beexplored

Farmers can intercrop withvegetables and clover for additionalrevenue

Market ResearchMain findings

Feasibility StudyMain findings



Phase 1 Market research

Phase 3Implementation and Business plans

Financial scheme for project implementation

Phase 2 Field feasibility study

Sourcing of stakeholders

IMPLEMENTATION


Work plan

Phase 4



Production Plan

Farmers

Rose FlowersProcessing

Unit

Rose

Flowers

Distillation

/ Extraction

Unit

Farmers

Rose

Flowers

Farmers

Rose

Flowers

Rose

Water

Rose

Essence

/ Concrete

Rose FlowersProcessing

Unit

Distillation

/ Extraction

Unit



Site selection

Spring frost free areas south of the

Hindu Kush

1,000 meters elevation

Irrigation water security

Low salt content

The Central region (around Kabul)

and Eastern regions (aroundJalalabad) have been identified as

suitable

See details on map

%

##

#

#

#

Azra

Surobi

Jaji

Nuristan

Rodat

Puli Alam

Alingar

Qarghayi

arkh

Pech

Nijrab

Hisarak

Achin

Lal Pur

TagabKohi Safi

Dih Sabz

Alishing

Dawlat Shah

Khushi

Asa

Sayid Karam

Sherzad

Dih Bala

Goshta

Khogyani

Mihtarlam

Muhammad Agha

Nurgal

Bagram

Khaki Jabbar

Dur Baba

Paghman

Shinwari

Kama

Chapa DaraAlasay

Lija Mangal

Bagrami

Kabul

Surkh Rod

Kuz Kunar

Hisa-I-Duwum Panjsher

Jai Ma dan

Narang

Chawkay

Chamkani

Khas Kunar

Shakar Dara

i Barak

Sir

Dara-I-Nur

Chaharikar

Istalif

Shinwar

Bati Kot

Pachir Wa Agam

MusayiChahar Asyab

Chaparhar

Jalalabad

Koh Band

hr

Guldara

Jabalussaraj

Muhmand Dar

Nazyan

Dand Wa Patan

Mahmud Raqi

Mir Bacha Kot

Kalakan

0 50 Miles

N

EW

S

Central region:

Easier logistics, less transportationcosts and time

Rehabilitation (Chamali plain)

Bigger landholdings potential formore efficiency and quality

Eastern region:

Smaller landholdings

Remote locations

Natural flower garden

Alternative livelihood for farmers



Site Selection: Suitable areas for Rose Damascena

cultivation in Eastern Afghanistan

%

##

#

#

#

Azra

Surobi

Jaji

Nuristan

Rodat

Puli Alam

Alingar

Qarghayi

arkh

Pech

Nijrab

Hisarak

Achin

Lal Pur

TagabKohi Safi

Dih Sabz

Alishing

Dawlat Shah

Khushi

Asa

Sayid Karam

Sherzad

Dih Bala

Goshta

Khogyani

Mihtarlam

Muhammad Agha

Nurgal

Bagram

Khaki Jabbar

Dur Baba

Paghman

Shinwari

Kama

Chapa DaraAlasay

Lija Mangal

BagramiKabul

Surkh Rod

Kuz Kunar

Hisa-I-Duwum Panjsher

Narang

Chawkay

Chamkani

Khas Kunar

Shakar Dara

i Barak

Si

Dara-I-Nur

Chaharikar

Istalif

Shinwar

Bati Kot

Pachir Wa Agam

MusayiChahar Asyab

Chaparhar

Jalalabad

Koh Band

r

Guldara

Jabalussaraj

Muhmand Dar

Nazyan

Dand Wa Patan

Mahmud Raqi

Mir Bacha Kot

Kalakan

0 50 Miles

N

EW

S



Flower Power Presentation of

Actors and Roles

FARMERS

Cultivation HarvestDONORS

Funding

PROJECT MANAGEMENT

Research Steering Coordination Marketing

- Local Processing Units (10 to 30)Post-Harvest Processing Rose Water Distilling

- Afghan Rose Co.

Production Distribution Logistics Marketing

NGOs

Training Production Control

PRIVATE BUSINESSES



Infrastructure

Cultivation

Actors and Roles

Rose Water

Production Units

Afghan Rose Co.Transformation

and Sales

Training

ProductionControl

Funds

Rose

Flowers

Rose

Water

International

Market

Rose

Essence

Farmers

Donors NGOs

Processing

Sales



Action Plan

Post HarvestProcessing

Post HarvestProcessing

InvestmentMarketResearchMarket

Research

DONORS

TrainingTraining ProductionMonitoringProductionMonitoring

DistillationDistillation Sales andPromotionSales andPromotion

FUNDING

IMPLEMENTATION

DONORS (Grants for R&D and Infrastructure)

MarketResearch

FeasibilityStudy

Businessplans andpartnerrecruitment

Train thetrainers

Practicaltraining forfarmers

Demons-tration plots

PROJECT

MANAGEMENT

TEAM

Capacitybuilding

DevelopQuality Controlprocedures

10 to 30decentralizedpost-harvestprocessingunits

Potential forwomenentrepreneur-ship programs

Developrelationshipwithinternationalbuyers

Certificationof theproductionprocess

Maindistillation units

DistillationTechniquesR&D

NGOsPRIVATE

INVESTORS

PRIVATE INVESTOR

AFGHAN ROSE CO

PRIVATE INVESTORS

PROJECT MANAGEMENT TEAM

Project Management Marketing CoordinationProject Management Marketing Coordination



Focus on Farmers

Expected average landholding: 2 jeribs (0.4 hectare)

Investment is US$ 1,050 per hectare

Revenue of rose flowers is US$ 1,650 per hectare after year 3, and reachesover US$ 2,000 per hectare including intercrops

Profit is around US$ 400 per year after year 5

The return rate for this investment is 17% a year on 10 years cash flow

Advantages for farmers: income security, training, access to international

markets



Focus on Farmers Financing Scheme

Early farmers (50 of them) will need to import cuttings for an expensive US$1 a piece. They will nevertheless make more profit from selling manycuttings for reproduction.

These early farmers will produce cuttings and sell them to new farmers forUS$ 0.35

All farmers will need a credit scheme in order to make up for the investmentand lack of production in year 1

These figures do not include any grants from donors. Interest free creditschemes or grants could be built in to help farmers invest in cuttings



Value to farmers and their communities

US$ 280

US$ 5,200

US$ 1,500

NPV(*) of

10-year cash flow

Very high labor costs (harvest) are detrimental to the farmers bottom line, but they

are a plus for the extended family / community:

(*) NPV= net present value of projected cash flow

Value to the

community

Value to theextended family

Value to thefarmer



Business Plan Local Processing Unit

Investment is $4,000

Good return on investment

US$ 500 profit per yearWith donor grants of $3,000 per unit, each unit can bring a 35% returnon a 10-year period

Advantages for entrepreneurs: proven technology, natural investment for the

surrounding community



Business Plan Afghan Rose Co.

Investment is US$ 400,000

The company shows 19% Internal Return Rate on a 10-year period,when taking into account:

US$ 150,000 grants to purchase equipment

Donors participation in R&D, Marketing

Other flowers, roots and herbs can be distilled for the fragranceindustry, adding to the profitability of the distillation and marketingcompany

Advantages for private investors: market segment where Afghanistan can be

very successful (and become a brand)



Donors Involvement

Funding for agricultural infrastructure

Project Management

Import and reproduction of roses

Selection and contracting of farmers

Grants and credit scheme for farmers

Training of extension agents and farmers

Extension / field work

Funding for distillation infrastructure

Research and Development, Marketing, Project Management

Grants for test distillation units

Training of distillation staff

Early test of roses for distillation

Sourcing or cultivation of test crops for distillation



How to get started

Cultivation of potential crops(flowers and herbs)

Training of personnel

Distillation tests/ Research andDevelopment

Market research, involvement ofkey stakeholders in the market

Support of other Essential Oilprojects (local roses, otherflowers, dried spices and wildherbs)

Phase 1 Pilot farm anddistillation unit

Phase 2 Development

Production and marketing ofsuccessful Phase 1 EssentialOils

Expansion of pilot farm byprivate investors

Final selection of crops forAfghanistan

Extension projects in several

regions



Pilot Farm - Objectives

Market research and selection of crops, sourcing ofcuttings and seeds (potential crops are geranium, lavender, iris,sage, mint, basil, citronella)

Hiring and Training of personnel (management,horticulture, distillation)

Cultivation and harvest

Sourcing of additional distillation raw material (such asorange blossoms, vetiver, cardamom, aniseed, cumin, saffron)

Distillation

Test of distillation material

Promotion of results

Phase 1


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Pilot farm - Details

25 to 40 hectares

Cultivation

7 to 10 hectares imported Damascena roses

Remaining lands and intercrops: local roses, other flowersand herbs

Employment: 20 to 30 employees

Potential to populate 20 hectares every year with localcuttings of Damascena roses

Phase 1


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Milestones and Timeline

Phase 1 Pilot FarmPhase 1 Pilot Farm

ExtensionExtension

Jun 04Order

cuttings

Oct 04Plant

cuttings

2005 2006 2007 2008 2009004

Apr 07

First Large ScaleRose Flowers

Harvest

Contracting and training of farmers Production and Quality control

Import and cultivation of roses and other crops

Training of personnel Test distillation

Build more capacity Production of essential oils

Processing and DistillationProcessing and Distillation

Sales and PromotionSales and Promotion

2010


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Afghan Roses Executive Summary

Position Afghanistan on a promising marketsegment: flowers for the fragrance industryworldwide

Provide access to international markets for

500 to 1,000 farmers in mountainousremote areas

Create 100+ jobs and 3,000 to 5,000temporary jobs

Help private companies invest inprocessing and distillation capacity in order

to add value locally

Create a sizeable revenue stream for thecountry

Flower Power - Short

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