LAOS - FORAGE GRASS SEED

Forage grass seed among young rubber plants in Laos

One of the things that FoodWorks' Partners (see Our Team) do is to develop their own agribusinesses.  This means that while we spend much time consulting for others, we keep our feet firmly rooted in real world agricultural challenges.  These are not only agronomic, but sometimes involve international agreements, partnerships between groups with different goals and building relationships with local smallholders and communities. Of course there is always an environmental impact. Agricultural development is never simple – which is what makes it interesting.

Eddie Vernon, Senior Managing Partner, is a case in point. He has developed his own agribusiness, Happy Farmers Limited (HFL), in Laos (a country that probably falls into the new designation of a “non-permissive environment” - meaning dealing with the government and the legal system is a challenge all of its own) based on contract farming grass seed for forage. HFL has been an innovator in the producing ''Brachiaria'', a genus of grasses originating from savannas of eastern Africa. These grasses are widely used as livestock forage. The genus includes 97 species, which can be found in tropical and subtropical climates. He also has a successful exotic plant nursery in Thailand where he produces Tillandsias  – or so-called “air plants” used for decorative purposes. 

Eddie has also been heavily involved in agro-forestry, specifically with agarwood, which is the tree from which the highly valuable “oudh” incense is prepared. He’s always looking ahead – marketing and development go hand-in-hand with actual growing things -  and one possibility has been to produce forage grass seed between plantation tree crops. Now (as shown in the photo) this is starting to happen.

As Eddie reports, the farmer of the crop in the photo is harvesting about 300 kg of HFL grass seed per year worth about US$3.75/kg. The grass only needs to be planted once and can be harvested once per year for many years, though in the case of being planted between young rubber trees, it is likely that the rubber trees will shade out the grass around the 4th year. The grass also provides a forage for livestock and protects the sloping land from soil erosion. The farmers do not use any chemical fertilizers or pesticides so it is all organic (though not certified as organic).

The story of the development of HFL’s grass seed business is worth recording since it illustrates the extensive and complicated personal and enterprise relationships that go into this kind of work. Eddie started in Nga District of Oudomxay Province (Northern Laos) in 2006 with about smallholder farm 10 families  and reached over 500 families by 2011.  He has produced Mulato II hybrid brachiaria (Bracharia ruziziensis x B. decumbens x B. brizantha) in northern Laos under contract to Ubon Forage Seeds and Tropical Seeds LLC. Seed production in Laos has now expanded to include Cayman hybrid (B. ruziziensis x B. decumbens x B. brizantha) and Mombasa guinea. 

The Faculty of Agriculture at Ubon Ratchathanee University had been involved in tropical forage seed research since 1995 and had built up an international reputation for excellence in forage seeds (See Reference 1 below). A Memorandum of Understanding was signed in 2004 between TropicalSeeds LLC and the Faculty to produce brachiaria hybrid forage seeds. Tropical Seeds LLC made the business decision in 2003 to come to Thailand based on forage seed quality, smallholder experience and professionalism. Tropical Seeds LLC, a subsidiary of a Mexican seed company, Grupo Papalotla, now employs a seed producing and seed research group, Ubon Forage Seeds in the Faculty of Agriculture, Ubon Ratchathani University, to manage seed production, seed sales and export, and to conduct research on existing and new forage species.  

With the addition of Happy Farmers Ltd., over 200 tons of seed is the forecast output in 2013 which is mainly exported overseas (95%) the remainder being sold within Thailand. This is a great achievement and a classic example of how the academic world works with commercial agribusiness across borders benefiting smallholders and the final users of the grass seed - the cattle that eat the forage (and of course their owners who get increased productivity).

  

Reference #1: A paper entitled “Thailand and Laos: research to village farmer production to seed” authored by Dr. Michael Hare and colleagues (For a copy email: michaelhareubon@gmail.com) discusses in detail the seed production of the six forage species and how the development in villages of a smallholder-farmer seed production program has had positive social and economic outcomes for the village seed growers and enabled farmers in other countries to receive high quality forage seeds. The strong emphasis on seed quality, high purity, high vigour and high germination, has had a large impact on tropical pastures in more than twenty tropical countries in Asia, Africa, the Pacific and Central and South America, enabling pasture growers to establish more than 20,000 hectares of pastures over the past three years.

 For additional information or comment, please contact Eddie Vernon directly on eddie@foodworks.ag

SOMALILAND - FISHERY ASSESSMENT

FoodWorks' Robert Lindley inspects fish at Berbera

FoodWorks' Senior Fisheries Specialist Robert Lindley has been in Somaliland - and says he's impressed by what he found - at least in terms of the overall economy and civil society. Working with the CADG Group to look at investment possibilities for the fishery Bob visited fish shops in the capital, Hargeisa, and the fishing industry at Berbera.

Somaliland is NOT Somalia; what used to be the British Somaliland, a protectorate not a colony, is democratic and fiercely independent (since 1991).  It's peaceful, relatively secure and has a significant diaspora of British-Somalis many of whom are returning to their roots bringing investment and western expectations of the way things should be run. Food safety standards are still not what they should be, but at least there are people returning who know why it's important to have them.

These Red Snappers are some of the largest we've seen

The economy is driven by livestock - live cattle, goats/sheep and camel exports to Saudi Arabia and the UAE via the deep water international port at Berbera. But the long coast line should offer rich pickings for artisanal fisher folk. In this case what Bob Lindley found was surprising.  There is a fishing industry and various aid agencies (e.g., DANIDA) have built cold stores, ice-makers and worked  with the fishing community. But the reality at Berbera (which is the only place where fishing is done on the entire coast) is that the industry has pretty much collapsed. The fish that are taken are all mature - check out the red snappers in the photo - an indicator that marine stocks are hardly fished. There are less than 50 operational boats, the infrastructure is broken and the international projects have been abandoned.

What's the reason? Fisher folk say they would rather work in the more climatically comfortable capital city of Hargeisa in the uplands. Fishing is a hard, dangerous job and temperatures get up to  around 42 deg C. Equally the rewards are limited compared with other livelihood options. With the economic boom in the capital, jobs are easier to come by and the living conditions are better.  The removal in 2009 of a ban by Saudi Arabia led to a surge in live animal exports that created jobs for truck drivers and handlers so there are just too many other better paying opportunities.

What remains of the fishing fleet

What remains at Berbera's fishing port is a quaint village, largely abandoned by its labour force. There are still some shops and some people fish, mainly for the local market and to send the occasional truck up-country.  Things probably get more lively in season, but overall the impression is one of terminal decline.

So what are the opportunities? We won't disclose our commercial advice to our client, but we know that it will take a rather large investment of public funds to rehabilitate the fishery.  The World Bank apparently has a project in the pipeline that we'll watch with interest. It will have to deal with a complex of problems starting from the competition for labour from more attractive jobs, the collapsed infrastructure, a lack of boats or serious boat-building capability and the fact that the market demand for fish is limited.

It's this last piece that is most puzzling, because looking at the quality/size of what can be caught it seems that there should be a great high-value market, especially in the rich Gulf States. The reality is somewhat different. In fact the UAE gets supplied with the same kind of fish from the Gulf of Aden more cheaply from Oman and nearer to home. With lack of volume, no quality control, high shipping costs and lack of air transport, Somaliland can't compete. Hopefully this situation will change as Somaliland continues to develop, but meantime the fishery remains one of the few in the world that is under-exploited. Not necessarily a bad thing.

Please do contact Robert Lindley directly on rhlindley@foodworks.ag for more information on this article or any other fishery related business.

WORLD TRADE IN SPICES - SAFFRON

Saffron trader in Herat City - Photo: Geoff QB

Earlier  this year we worked for the USAID-sponsored Afghan Small and Medium Enterprise Development Program (ASMED - see Note 1) on the value chain development of the saffron industry. This took us to the old historical city of Herat in the west of the country and then further afield internationally to track the saffron trade through Turkey, the UAE, Spain and beyond to its final markets in Europe and North America.

In its modern incarnation the Afghan saffron industry has developed with labour returning from refuge in Iran and donations of planting material from the Netherlands.  The main industry is to be found in the districts around Herat City.  Production is low (1,800 kgs), and the value chain analysis shows that while the retail price of saffron can be very high (as much as $8,000 to $10,000/kg in western markets) Afghan farmers receive very little of this ($1,300/kg).  

We disputed the popular notion that saffron (derived from the Crocus Sativa flower) can substitute for poppy at any meaningful volume. Profits accrue to merchants who have links through “friendship channels” to markets in e.g., Germany and the USA. In our analysis, the Afghan saffron industry is seen from the perspective of the international industry that is dominated by Iran which exports 80 to 90 percent of the available world supply of saffron.  

Over half of this is exported to Spain where it is re-processed and re-packaged as “Packed in Spain”; the more unscrupulous Spanish companies sell it on as “Spanish Saffron” at a premium price.  Prices for saffron have trended upwards but are seen as responsive to production, albeit with a rather inelastic price-supply function. Iran has tried to push the price up with some success, aided perhaps by a drought in 2008. 

Saffron cultivation in Iran - Photo courtesy of Reuters

Elsewhere Iranian saffron meets the consumer in Dubai, and through traders in Istanbul. Consumption is primarily for food use in ethnic cuisine but saffron has medicinal and other traditional uses. Part of its value accrues from being a traditional gift especially within the South Asian community; much of the saffron purchased expensively in the markets of Europe and North America travels back to the sub-continent where saffron used to be grown but is now in decline, partly as a result of these imports. 

The Assessment Report provided recommendations for the development of the saffron industry in Afghanistan that include a focus on industry structure and regulation especially related to maintaining a distinct brand image for the product together with its current relatively high standard of quality.  Suggestions were made for further work by the donors and the possibility of investment in contract farming on a public-private partnership basis (Note 2).

Keywords: Crocus sativus L., saffron, Afghanistan, Iran, Spain, Greece, Morocco, Mashhad, Herat, Alicante, Novelda, Kashmir, corms, bulbs, Dubai Old Souk, Spice Bazaar, Istanbul, paella, Saffron tea, poppy.

Note 1: This Assessment Report was produced for review by the United States Agency for International Development. It was prepared by the joint venture partnership of Development Alternatives, Inc. (DAI) and Agland Investment Services, Inc. under Contract 306-C-00-07-00503-00. Currently the report document is not for publication and the opinions expressed in it and above are solely those of the Study Author, Geoffrey Quartermaine Bastin. 


Note 2: Agland Investment Services, Inc contracted FoodWorks and provided an enormous amount of support that we wish to acknowledge and thank them for.


We will be quite happy to answer your questions: contact Geoff on gqb@foodworks.ag