Natural Products Development
for Export Markets
Thursday 25th November
The Southern African Natural Products
Trade Association
www.phytotradeafrica.com
 Background: Rural households &
NTFPs/NPs
 PhytoTrade Africa’s Approach
 Lessons
 Conclusion
• Agriculture alone may be unsustainable hence emphasis
on other non-farming activities and need to pursue
MDGs on poverty reduction and conservation
• Rural livelihoods often have wide livelihood portfolio
• Low availability of capital, prone to risks, little formal
education
• Characteristics of NTFP: Common pool resources;
requires minimal capital investments; can be safety nets;
do not require high skill levels to bring into production
• The fit: the poor rely mostly on forest products
The story of PhytoTrade
•Objective: to develop and market new natural
products from indigenous plants to generate
supplementary income for poor rural producers
•Founded in 2001
•Realised that there were many duplications of
efforts across the region e.g. R&D, Marketing,
Market Development
•They realised that through systematic regional
integration supply chain management and market
development for Natural Products could become a
possibility on a regional scale
Budget and Funding
– Supply chain development 22.5%
– Product R&D 28.1%
– Market development 23.6%
– Institutional development 25.8%
Sources of funding:
– Donors (IFAD, UNCTAD-Biotrade, Kellogg Foundation, Ford Foundation, Hivos),
membership fees, services
Portfolio of products and pipeline
What we do and how we do it
Systematic approach to promoting positive social, environmental and
financial impact on the rural poor:
 Industry development
 Product development
 Market development
 Supply chain development
Industry Development
 As with any other trade associations PhytoTrade also promotes
the common interests of the producers in the natural products
industry. However there are 2 key areas in which it differs from
other trade associations:
1.
2.
It is operating in an industry which is entirely new to this region. Much of its
work is therefore orientated to nurture and develop the industry, rather than
servicing an already well established group
It has a clear development goal aimed at creating economic opportunities for
poor rural people
 Promote our member’s products and aims to industry, discuss
the triple bottom line goals with industry, conduct consumer
awareness raising campaigns, as well as assisting members by
providing grants to assist specific trouble spots
Product development
 Pool collective resources to develop new products which multiple
members can supply
 Use ‘Partnership strategy’ between PhytoTrade (representing its
membership) and the private sector to leverage resources e.g.
investment, Research and Development, regulatory knowledge and
compliance
 The R&D process:
 collation of all the secondary literature relating to the
commercially relevant properties of a particular species
 generate and analyse samples from the region to verify the
constituent components
 assess volumes and distribution of the raw material
 commission more advanced technical research on any
specific commercially interesting properties
 develop product specifications, quality and sustainability
standards
Market development
 Closely linked to R&D/Product development activities
 Partners that engage in R&D activities become the eventual buyer
of the product once it is developed and launched
 Once a product is launched then PhytoTrade’s role is to facilitate
a stable and equitable trading relationship between the buyer and its
members
 Through the London office PhytoTrade maintains permanent
European representation and ensures it retains a visible profile and
presence in its main market
Supply Chain development
 PhytoTrade is a service provider to its members, ensuring that
each one is equipped with the necessary skills and resources to do
business in a global market.
Support is given in quality control, production, processing
technologies, business development, freight logistics,
documentation, fair trade/organic certification.
 members are assessed for their adherance to export quality
standards = Pre Qualified Suppliers
 assist members to achieve social and environmental certification
e.g. Fair Trade and Organics.
Some products
Accredited Partners
- To encourage industry to consider social and
environmental criteria in the formulation of their products
and through their supply chain
Case study: Baobab
- In July 2008 Baobab was approved by the EU Novel
Foods Regulation (Regulation (EC) No. 258/97)
- This means that Baobab can now be legally sold in
the EU as an ingredient for food and drinks
- It took PhytoTrade Africa 4 years to overcome this
regulation
- Baobab is now being marketed in the EU. Many
companies are experimenting with the ingredient
Case study: Baobab
•
Adansonia digitata: Upside Down Tree, Monkey
Bread Tree.
•
Long history in African culture and folklore.
•
Traditional food and remedy, especially for
children, pregnant women and the elderly.
•
Hard shell. Powdery pulp and fibres coat the
seeds.
•
Lives for 1000 years or more.
•
Abundant across southern Africa.
•
Harvested by rural people.
•
Packed full of Ca, Mg, K, iron
The Baobab Case. It’s Value Chain
The aim of all the PhytoTrade supply chains is to maintain as much value
addition with the rural producer, and then within Africa whilst
recognising high product quality levels
1. Rural Producer harvests the fruit
2. Rural Producer cracks the fruit and remove the seeds/powder
3. Rural Producer sells the pulp to their local factory (sometimes this factory
is owned by their association)
4. The Factory further processes the products e.g. grades and sorts the
seeds from the powder
5. The Factory sells this product to an industry recognised Manufacturer
6. The Manufacturer adds further value e.g. Depectinized extract
7. The Manufacturer sells to distributors
8. The distributors sell to brand owners
9. The brand owners manufacture their final product and sell to the consumer
Socio-economic impacts of baobab (Adansonia digitata)
commercialization
-
-
-
Illustrates that the
Baobab trade helps to
reduce vulnerability by
raising their income
Poverty is a shifting
condition that with the
right means can be
reduced.
Although if elements of
their income are
removed e.g. Baobab
then vulnerability
increases
Lessons
•
•
•
•
•
•
•
Internal Impact assessment
External assessments
Sustainable funding
Government support
Diversity strategy for local/export markets
Commercially oriented research
Be adaptive
Conclusions
 Through a co-ordinated and systematic strategy a natural
products industry is being developed to benefit low income rural
producers in Southern Africa
 To ensure that the trade is pro-poor and environmentally
sustainable it has been essential to have a pro active trade
association to push these principles along the entire value chain
Recommendations
• Identify, synthesis and build on existing multidisciplinary
• Package it in an attractive and fairly simple way for
evidence and outcome based planning
• Engage policy to help push the agenda.
• Have a system for impact assessments and be adaptive
• Sustainable mechanisms to fund emerging research
demands