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AFRICABIZ VOL 1 - ISSUES: 40 & 41
AUGUST 15 - OCTOBER 14, 2002
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Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

If you are a regular and faithful reader, welcome back.

- THIS DELIVERY STANDS FOR TWO ISSUES

AFRICABIZ Online's team is taking one month break from September 1 to September 30. This delivery therefore covers two months: August 15 to September 14; and September 15 to October 14. The next issue N° 42 will be online on October 15, 2002.


- REGIONAL MEETING ON EXPORT DEVELOPMENT OF CASHEW NUT FROM AFRICA / JULY 23 - 26, 2002 / COTONOU - BENIN

African producers of Cashew nut - raw and processed nut - used to be major players in dried fruits' business in the 1970's. (Benin, Burkina Faso, Cote d'Ivoire, Guinea Bissau, Senegal, Kenya, Madagascar, Mozambique, Nigeria, Tanzania - Click here for countries briefs).

Their market share was around 78 % of world production in the 1970's. Nowadays their part dwindled to 30%. More than 50 % loss within 30 years. During the same period other well organized big players, such as India, catched up and took the lead. Furthermore, African producers participate only to 20 % of cashew nut's international trade. Something in the range of US$ 880 million out of a global transaction level of US$ 4.4 billion.

In order first to stop production's decline in Africa and second to increase African producers' international market share, the International Trade Center (ITC) / UNCTAD / World Trade Organization (WTO) / Common Fund For Commodities (CFC), in collaboration with Benin's National Export Council ( Conseil National Pour l'Exportation - CNEX), organized at Cotonou, Benin, a Regional Meeting On Export Development Of Cashew Nut From Africa, July 23 -26, 2002.

Click for more on the meeting
Participants to Cotonou's Cashew Nut Meeting

60 delegates from African producing countries and cashew nut experts from India and Brazil attended the meeting.

After a welcome address by CNEX's president, an opening speech by the representative of Benin's Ministry of Industry, an introduction speech by ITC's Director of the Division of Product and Market Development and a keynote address by CFC's representative, Mrs. M. Maftei - ITC's Senior Commodity Officer - took the floor to speak about: "The international cashew nut market and the share of African exporters: evolution and prospects". Afterwards, experts in Production, Quality and Standards, Marketing, Business Development and Management delivered several supporting papers.

The causes deemed responsible for the collapse of production were exposed by international specialists and national experts of each producing country.

Four committees were then set up (Production, Quality, Processing and Marketing) to analyze constraints, obstacles and hindrances hampering the development of cashew nut in African producing countries. Suggestions and recommendations made by the committees will serve as background for follow up actions to improve productivity, processing and marketing.

Documents and papers related to the Conference are available
here at the International Trade Center's website. Click on the Events tag once on the website or make search with: Cashew nut, Cotonou, July 22-26, 2002.

Dr. Quenum attended the meeting and delivered a paper titled: "Cashew nut processing and marketing. The importance of adequate profit oriented strategies, investment decisions and business planning". That paper is written in line with a previous delivery posted online here about the collapse of Mozambique Cashew Nut Industry As Per May 2001. Dr. Quenum's paper is available on the International Trade Center's website.

- Cashew Nut's international market value is currently US$ 4.4 billion. African producers have 20% of said market against a production level of 30%.

The 10 % gap between African producer's market share and their level of participation into the international trade of cashew nut represents a formidable trade opportunity.

However a lot needs to be done, by the African producers, in terms of productivity, quality and marketing efforts in order to gaining additional points on the global marketplace of dried fruits.

Hence the importance and usefulness of the initiative planned by the International Trade Center to setup a website dedicated to Business to Business e-commerce trading and promotion of cashew nut from Africa.
For more click here about a development titled: The usefulness of Business to Business e-commerce for African commodities.

Contributor's Guidelines is here to review. Your contribution on "How African countries / entrepreneurs could bridge the developing gap" is welcome
.

Many thanks for dropping by and see you here on October 15, 2002.

Dr. B.M. Quenum
Editor of AFRICABIZ
Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


- Several business opportunities with high profit making potential which are economic catalysts and components to the Strategy for African Countries - here available - have been introduced to you. They are listed in following table.

a- SHEA BUTTER (Issues 5, 6, 7, 11, 12, 13)
b- BLUE GOLD (Issues 14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (Issues 20, 21, 22 and here)
d- KENAF (Issues 23, 24)
e- VEGETABLE OIL (Issues 25, 26, 27 and 28)
f- CEREALS (Issues 30, 31, 32, 33)
g- FRUITS (34, 35, 36, 37, 38, 39)

- TROPICAL FRUITS INDUSTRY AS INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY / PART VII : SOME ECONOMIC FIGURES ABOUT THE SETUP OF A PROCESSING UNIT TO PRODUCING TOMATO PASTE

In Issue 38 the existing potential market for fresh tomato in sub-Saharan African countries was estimated at 585,000 metric tons per year. And in Issue 39 the global revenues generated by tomato plantations were summarized in following table:

GROSS REVENUES X 1,000 US$
Hectares50100200300400500
Metric tons2,5005,00010,00015,00020,00025,000
Revenues21.943.887.6131.4175.2219

According to tomato industry' statistics - for well managed tomato plantations, established from high yield varieties of tomato seeds, and optimal tomato paste processing conditions - the quantity of fresh tomato to producing 1 kg of double concentrated tomato paste at 28° I.R. is around 5,89 kg.

If plantations are not well managed (insufficient manure, excessive sunshine, imperfect or non existent irrigation, etc.;) and if processing conditions are not optimized, the amount of fresh tomato needed to producing 1 kg of double concentrated tomato paste at 28° I.R. could jump to 8 - 9,2 kg.

- DOUBLE CONCENTRATED TOMATO PASTE PRODUCTION IN RELATION WITH FRESH TOMATO QUANTITIES

Let's consider medium range conditions of production and take the quantity of fresh tomato necessary to producing 1 kg of double concentrated tomato paste at 28° I.R. equals to 7 kg We obtain following table:

CONCENTRATED TOMATO PASTA / Metric Tons
Hectares50100200300400500
Fresh tomato2,5005,00010,00015,00020,00025,000
Tomato paste3577141,4292,1432,8573,571

- GROSS REVENUE / PROFIT ESTIMATION FOR A MEDIUM SIZE PROCESSING PLANT

In Issue N° 39 was given investment estimate to establishing 1 (one) hectare of fresh tomato plantation; and yield per hectare estimated at 50 metric tons. The resulting cost of production of one metric ton of fresh tomato being approximately: US$ 43.82, which compares well with figures in following Table . The selling price of fresh tomato was put at: US$ 52.58 per metric ton (20 % profit margin above cost of production).

Table below - adapted from Tomatoland / June 2002's figures - gives the selling prices (in red / US$) of various processed tomato products.


SELLING PRICES OF TOMATO PROCESSED PRODUCTS

Peeled 1 kg
Peeled 500g
Diced Peeled
500g
Paste
70g
Paste 500 g
Paste 1 Kg
Passata 500g
Spain
4.150
4.250
-
-
-
-
-
Italy
4.250
4.380
4.480
6.800
7.500
7.600
2.080
France
   -     -
5.300
7.300 -
-
-

- Let's consider investment related to establishing a medium size processing plant for the transformation of 15,000 metric tons of fresh tomato into 2,143 metric tons of double concentrated tomato paste at 28° I.R. One shift; 6 days / week (312 days / year); 48.077 metric tons of fresh tomato per operating day.

Items
Amount
(US$ x 1,000)
INVESTMENT

1- Land and buildings: Land acquisition - Plant (800 sq. meter) - Offices (150 sq. meter) - Housing for management (3 x 100 sq. meter)

350

2- Processing Equipment: Know How acquisition - Equipment purchase and setup - Blank Startup Assistance (for three months) - Spare Parts - Storage tanks - Cold room and so on.

1,475

3- Other Equipment: Offices equipment - Four 10 metric tons trucks - Three four wheelers - Housing furniture and so on

450

4- Starting expenses: Feasibility study / Business Plan for the processing plant - startup technical assistance (for six months) and so on. Click here for tentative terms of references covering the processing plant establishment (Plantation establishment's Feasibility Study / Business Plan excluded. Click here For plantation's figures).

185

Total investment

2,460
PRODUCTION LEVEL
Tomato Concentrate at 28° = 2,143 metric tons
OPERATING COSTS

Operational Expenses: Raw material purchasing (fresh tomato, salt and so on) - production costs - insurance - utilities - staff and hands / management salaries - external management assistance - amortization - interests on loan and so on.

1,419
PRODUCTION COST PER METRIC TON
2,143 metric tons of Double Tomato Concentrate Paste at 28° I.R. =662
GENERATED REVENUES*
2,143 metric tons of paste x 1,500 US $ per metric ton3,620
GROSS PROFIT2,201
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