Value addition and diversification in agriculture

Vanuatu Coconut Summit 30-31 October 2019Luganville, Vanuatu

Stefan CsordasCommodities Branch, UNCTAD

Agriculture remains the backbone of many low and middle-income economies…

24,522,6

28,8

16,8

00

05

10

15

20

25

30

35

Vanuatu LDCs LICs LMICs

Share of agriculture in GDP (2010-17 average, %)

Data source: World Development Indicators

Agriculture remains the backbone of many low and middle-income economies and is crucial to achieve the SDGs

24,522,6

28,8

16,8

00

05

10

15

20

25

30

35

Vanuatu LDCs LICs LMICs

Share of agriculture in GDP (2010-17 average, %)

6259

64

42

0

10

20

30

40

50

60

70

Vanuatu LDCs LICs LMICs

Employment in agriculture (2010-18 average, % of total employment)

Data source: World Development Indicators Data source: World Development Indicators

There are large differences in agriculutral productivity - value addition is essential

Vanuatu (2014): USD 2,598

Data source: World Development Indicators

Coconut products

Coconut

Kernel

Copra

Crude coconut oil (CNO)

Refined coconut oil (RBD)

Biofuel

Virgin coconut oil

Desiccated coconut

Coconut water

Coconut milk

Coconut vinegar

Coconut flour

…

Shell

Charcoal

Activated carbon

…

Husk

Coconut fibre

Coir yarn

Coir twine

Textiles

Mattresses

Molded coir products

Brushes

Brooms

…

Vanuatu's coconut product exports

72,1

24,2

3,8

67,8

30,2

2,0

50,3

44,9

4,7

0

10

20

30

40

50

60

70

80

Copra Coconut oil Coconut meal

Vanuatu share of coconut products (2016-18, % of total coconut exports)

2016 2017 2018

Data source: Vanuatu National Statistics Office

Diversification can help mitigate weather and climate-related risks

• Vanuatu is one of the most vulnerable countries to climate change

– 21st out of 181 countries according to the 2017 ND-GAIN climate vulnerability score

• Agriculture is major receiver of climate-related impacts

– crop losses and damages to agricultural infrastructure due to floods, storms, and droughts

– Rising sea levels

– Changing precipitation patterns

– Increase in weeds, insect pests and plant diseases

Diversification can help mitigate price risks

Data source: UNCTADStat

1845

1244

931

796

669719

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Coconut oil, crude, in bulk, Philippines/Indonesia, CIF Rotterdam ($/t)

Diversification can help mitigate price risks

Data source: UNCTADStat, International Coconut Community

1845

1244

931

796

669719

238

330 333320

303287

303

0

50

100

150

200

250

300

350

400

0

200

400

600

800

1000

1200

1400

1600

1800

2000

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec

-17

Jan

-18

Feb

-18

Mar

-18

Ap

r-1

8

May

-18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

Oct

-18

No

v-1

8

Dec

-18

Jan

-19

Feb

-19

Mar

-19

Ap

r-1

9

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Coconut oil, crude, in bulk, Philippines/Indonesia, CIF Rotterdam ($/t)

Coir fibre, FOB Indonesia, ($/t), right axis

Coconut products - example of a diversified coconut export structure

Data source: Sri Lanka Coconut Development Authority

UNCTAD project on cotton-by products in Eastern and Southern Africa

• Cotton sector in many African countries characterized by low value addition

• Project aims at strengthening the capacity of beneficiary countries to– assess the potential value, market situation and prospects for

cotton by-products– formulate evidence-based policies that improve the value added

of cotton by-products– devise investment profiles to attract potential investors

• Project implemented in United Republic of Tanzania, Uganda, Zambia and Zimbabwe from 2016 - 2019

Cotton-by products

COTTON PLANT

SEED COTTON

COTTON STALKSSEEDLINT

Meat

Hulls

Linters

Planting seed

Cake / meal- Flour- Feed- Fertilizer

Oil- Salad / cooking oil- Cosmetics- Pharmaceuticals- Waterproofing

- Feed- Fertilizer- Synthetic rubber

- Food packaging- Plastics- Film- Paper

Pulp- Particle board- Fuel briquettes- Substrate for

mushroom cultivation

Spinning (yarns)

Sewing thread

Non-woven- Medical uses- Ragtearing

Weaving yarn

Knitting yarn

Other

Textiles- Towels- Bed linens

Industrial- Canvas- Footwear- Belts

Textiles- Sheets- Curtains- Sleepwear

Industrial- Gloves- Bags

Industrial- Rope- Twine

Source: Adapted from Cotton Development Organisation, Uganda

(waste)

Focus area of UNCTAD project:"Promoting cotton by-products in Eastern and Southern Africa"

13

• Income opportunities for farmers

• Small-scale, rural business opportunities, including for women

• New business opportunities for entrepreneurs

• Improved nutrition

• Substitution of fossil fuels

• Substitution of wood charcoal (deforestation)

• Reduced pollution

Cotton-by products can contribute to development objectives

14

Sources: Estimates by UNCTAD, CIRCOT and Uganda Industrial Research Institute

ItemBriquetting

plantPelleting

plantMushroom

farm

Capacity 20 MT/day 4 MT/day 3,600 kg/yr

Total capital investment (US$) 69,000 25,000 14,850

Total revenues / year (US$) 350,000 59,000 5,832

Net profits / year (US$) 35,000 8,000 3,644

Net profit margin 10% 14% 25%

Return on investment, annual 53% 32% 25%

Investment payback period (months) 23 38 49

Financial projections for selected cotton stalk-based businesses

Summary

• Agricultural development is a crucial aspect of the sustainable development agenda

• Value addition and diversification can help to mitigate risks and contribute to achievement of SDGs

• Large potential for value addition and diversification exists in coconut sector

Thank you.

More information:https://unctad.org/en/Pages/SUC/Commodities-Special-Unit.aspx

Contact: Stefan.Csordas@unctad.org