DESK REVIEW: GROUNDNUTS VALUE CHAIN ANALYSIS FOR ZAMBIA

By the Agricultural Consultative ForumP/Bag 16, Woodlands

LUSAKA

Outline of Presentation1.Introduction2.Groundnuts production and marketing3. Value chain players4. Challenges and opportunities5. Current research 6. Key findings7. Recommendations

Introduction• Desk review undertaken to understand the main

challenges facing the groundnut value chain• Existing data from the Ministry of Agriculture and

Livestock and past value chain reports on groundnuts as well as a draft Groundnuts and Common Beans Intervention Plan by the Smallholder Agribusiness Promotion Programme (SAPP).

• Limitations: Investigations were only centred in Lusaka and to a few organisations due to limited resources and time.

• No visitations were made to the productive regions for groundnuts in the country.

1. Groundnut Production and Marketing

1.1 Producing Areas1.2 Number of Small and Medium Scale Farmers Producing1.3 Trends in Area Planted, Production and Yields1.4 Groundnuts Marketing1.5 Gender Roles in Groundnut Production and Marketing.

Producing AreasArea Planted Production Mt Yield Mt

Zambia 184,397 113,026 0.6

Central Province 19,234 12,106 0.6

Copperbelt Province 8,735 5,427 0.6

Eastern Province 56,946 30,930 0.5

Luapula Province 17,599 14,133 0.8

Lusaka Province 2,487 1,152 0.5

Muchinga Province 14,163 10,817 0.8

Northern Province 29,025 16,211 0.6

N/Western Province 7,814 10,337 1.3

Southern Province 23,089 9,616 0.4

Western Province 5,305 2,298 0.4

Production by Province during 2012 Season

Area Planted to Groundnuts 2012 Production in Metric Tonnes by Province 2012

Number of Small and Medium Scale Farmers Producing

• Second mostly grown crop in Zambia after Maize

• 37% of the small and medium scale farming households grew groundnuts in 2011/12,

• 44% in 2010/11, 49% in the 2009/10 and 44% households in 2008/09.

• The majority of these smallholder farmers are found in Eastern, Northern, Luapula and Muchinga Provinces

Trends in Area Planted, Production and Yields• Zambia is experiencing increasing groundnuts

production since 2007. • Available statistics indicate a three-fold increase in

groundnut production from 2007 to 2010 from 55,215 to 163,733 MT and a massive 70% increase from 2010 to 2011.

• This can be attributed to a combination of increased hectares planted (from 147,320 ha in 2007, to 267,567 ha in 2010 and 448,243 ha in 2011) and

• Increased production per hectare (from 375 kg/ha in 2007, to 612 kg/ha in 2010 and 622 kg/ha in 2011).

• However, in 2012 production fell by 60% from 278,775MT to 113,026MT.

Groundnuts Yields

• Zambia’s groundnut yields have varied from between 0.3 and 0.6 MT/ha.

• These variations in groundnut yields are typically related to:- changes in soil fertility, - farming systems/practices,- seed varieties planted and - pest attacks.

- Hectarage planted appears to be largely influenced by the availability of markets, by prices in the previous season, and by markets and prices of competing crops.

Groundnuts Marketing a) National Markets- Majority of groundnuts sold in the country

pass through informal market channels - Major players in this group include the

smallholder farmers, the brief case traders; the village based micro processors and the informal cross-border traders.

- Eastern and Northern Provinces have over the past years been the most important provinces of Zambia in terms of quantities of groundnuts sold

Groundnuts Marketing cont.b) Export Markets• Zambia was once an exporter of groundnuts to Europe. • Between 1960 and 1970 the Eastern Province

Cooperative Marketing Union (EPCMU) exported over 8,000 Mt of groundnuts to the UK.

• However, concerns over aflatoxins and low quality standards (size and shape of nut) led to the collapse of this market.

• Since 2000 Zambia has oscillated between being a net importer and net exporter of groundnuts.

• However, trade volumes for groundnuts have remained low, not exceeding 2,000 MT for imports or exports in a given year.

Groundnuts Sales in Zambia, Metric Tonnes 1987 – 2012

Gender Roles in Groundnut Production and Marketing.

• It is a general belief in Zambia that groundnut is a woman’s crop.

• Female headed households are actively involved in groundnut production, with 24% of all female headed households growing groundnuts.

• In male headed households groundnuts are often gendered as a female crop.

• Women are primarily responsible for the planting, weeding, and harvesting of groundnuts. In terms of marketing, women tend to dominate the small-scale informal groundnut trade in rural and urban markets.

Value chain players

a) Seed companies• - Zambia has a number of seed companies (ZAMSEED,

MRI, SEEDCO, MONSANTO, PANNAR Seed, etc who supply seed to smallholder farmers.

• Most of these companies are located along the line of rail making their outreach to the majority of the producers limited.

• These companies prefer to trade in maize seed which has a big market from the government subsidy programme.

• These companies have invested very little in groundnuts seed production because the business is not profitable.

Value chain players

b) Traders• Traders provide a market to farmers and act as

suppliers to food processors and exporters. • They are sometimes referred to as brief case

traders but they play a vital link between producers and processors.

• The interest of this group is to make quick money before the smallholder farmers take their groundnut to big markets.

• However the biggest challenge is that most of these traders operate along the line of rail with easy access and good road infrastructure network leaving out the outlying areas.

Value chain players

c) Smallholder farmers- Smallholder farmers form the biggest and

most important group of stakeholders in the groundnut value chain.

- Smallholder farmers either operate in groups or individuals.

- This group has very limited seed multiplication capacity and is reluctant to invest in basic seed, hence their continued use of recycled seed.

Value chain playersd) Food Processors • This group provides peanut butter, roasted nuts, and oil

intermediaries who interface with the end users who are the consumers.

• A number of big companies and organizations belong to this group of players. The majority of them have the capacity to buy the groundnuts from the traders, add value and export or sale within the country.

• However, Zambia’s groundnuts processing industry is fragmented, has inadequate capacity or access to finance.

• There are no international recognised groundnuts processors in the country.

• This group is mainly concerned with aflatoxin.

Value chain players

e) Supermarkets, Food Service Suppliers, Restaurants, hotels, canteens and bars

• These provide a major market for intermediaries and farmers, as they service the needs of the consumers.

Value chain players

f) Exporters/importers• These are those business entities that export and

import the commodity and its finished products. • Currently Zambia has inadequate capacity to be a

player in the main export markets. • Limited informal trade has been recorded

through Chipata into Malawi and Mozambique. • In addition, limited trade has also been made into

South Africa.

Value chain players

g) Consumers• Consumers are the end users of the following end

market products are: fresh unshelled nuts in bulk, dry unshelled nuts in bulk, shelled nuts in bulk, packaged unshelled nuts, and processed shelled nuts with flavourings, peanut butter, oil and cake.

• Consumers normally are interested in high quality cheap products.

• Currently, most Zambian consumers are not aware of the potential health risks associated with the consumption of aflatoxin infected groundnuts.

Value chain players

h) Service providers• These comprise of a range of institutions such as seed

research institutions, seed multiplication out-growers, seed companies, input suppliers and non-state actors.

• Their interest is mainly in improving both production and productivity through research and extension work.

• Service providers especially from government departments have been failing to fulfil the mandate in promoting groundnuts mainly due to human and financial challenges.

Key Challenges

• Low productivity and poor quality product • Control of aflotoxin• Limited availability of certified seed• Volatile exchange rate movements

Opportunities

• Favourable climate and good soils which are ideal for growing groundnuts.

• High demand for groundnuts both internally and on the export market.

Taking advantage of this market can have a substantial impact on the economy of small-scale farmers involved, especially women.

Current ResearchOrganisation Type of Support engaged in Location

Msekera Research Institute Variety research and support to seed certification Eastern Province

Misamfu Research Institute Variety research and support to seed certification Northern Province

Zambia Agriculture Research Institute Agricultural research and aflatoxin issues Nationwide

Seed Control and Certification Institute Seed certification and control Nationwide

Seed companies Possible seed multiplication and distribution Eastern and Northern Provinces

Profit + Farmer training, household food security, market access and Aflatoxin control

Eastern Province

Farmer Input Support Programme (FISP) FISP has been extended to cover groundnuts. This will create a major pull for private sector investments in inputs, processing and marketing

Nationwide

Dunavant Groundnuts input supply and marketing. Possible out-grower development

Eastern Province

Cotton Association of Zambia (CAZ) Farmer mobilisation into growing of groundnuts

MUSIKA Support to out-grower development in groundnuts

Eastern Province

Zambia National Farmers Union Support to the development of oilseed commodity association which includes groundnuts

Nationwide

Indaba Agriculture Policy Research Institute (IAPRI)

Commodity research and policy development and also support to commodity association

Nationwide

World Vision Seed distribution to small scale farmers Eastern Province

Katopola Agriculture Engineering Services Manufacturing of groundnuts shellers and lifters Eastern Province

GIAZ Groundnuts Commodity Association Nationwide

COMACO Groundnut out-grower and processor Eastern Province

Jungle Beat Groundnut out-grower and processor Eastern Province

Kingdom Delicacy Groundnut out-grower and processor Eastern Province

Key Findings• Groundnut production and area planted to groundnuts

have increased considerably since 2007,• Yields have remained low, • Exports declined significantly mainly because of aflatoxin

and changes in consumer tastes,• Lack of an organised commodity association• Limited investment in improving yields and product

quality through extension services, seed breeding and multiplication, labour-saving technology transfer and aflatoxin control mechanisms.

• Insufficient confidence in the private sector to invest in outgrower schemes for groundnuts in the country.

• Absence of a legal framework for agricultural marketing

Recommendations• Government should put in place a deliberate

programme for seed breeding and multiplication and sensitise smallholder farmers on the benefits of using certified seeds.

• Government should facilitate the development of a strong agro-processing industry to improve the prospects of the groundnut subsector which has the potential of creating strong backward and forward linkages in Zambia’s economy.

• More research in the areas of technology development, transfer and adoption, value addition, post harvest handling, and farmers institutional strengthening and change management.

Recommendations cont.• Since weed control is critical throughout and extremely

labour intensive in the later stages of groundnuts production, it may be worthwhile investigating appropriate herbicides for weed control.

• For Zambians to remain competitive there is need to better understand farmer and market preferences and to ensure that the groundnut breeding programme develops and delivers suitable varieties and sufficient quantities of breeder seed to satisfy these preferences. There is therefore need for traders and processors to work closely with the breeders such as ZARI to communicate market requirements, and these breeders need secured funding to maintain a long term, sustainable breeding programme.

Recommendations cont.• In order to improve the quality of groundnuts for the

local and export market, there is need to ensure that aflatoxin levels are measured and if necessary addressed through improved knowledge transfer.

• Given that one of the most labour intensive aspects of groundnut production is the stripping of the pods from the plants, it is proposed that the potential for introducing pod strippers to farmers be investigated.

• In order to address the competitiveness of the industry, government should look into the issues of the high cost of finance and enact the draft legal framework for agricultural marketing in the country.

• There is need for government to encourage out-grower schemes for groundnuts in the country. This may address some of the marketing challenges being faced in the groundnuts industry.