Across Africa, there is untapped potential for agribusinesses to contribute to Sustainable Development Goal 8 (SDG 8) by providing decent work for farm labourers.. However, Farmers in Rwanda and Kenya often get stuck in a low-income trap: traditional crops are sold as bulk commodities, meaning they are subject to price volatility in local markets and rarely viable for export. In response to this, SITA has been supporting agri-businesses in Rwanda and Kenya to start growing rosemary commercially alongside their main crops. By diversifying into high-value horticultural produce with increasing demand, agribusinesses get a secondary income that is consistent. Consistent income means greater resilience, which means better employment opportunities for farmers, predominantly female workers.
Most herbs or spices are a good option for boosting incomes and resilience in this way. According to CBI, global demand is high: the EU imports 97% of its herbs and spices from developing countries. Horticultural crops also tend to be lightweight, which makes shipping viable. Crucially, herbs and spices can be sold for a diverse range of purposes (for example, in the nutrition, food, and cosmetics industries), which means prices are less volatile than traditional crops sold as bulk commodities.
In the case of Rwanda and Kenya, rosemary fits the bill particularly well. Rosemary likes sun, sandy soil, good drainage and ample air circulation – conditions easily achieved in both countries. Also, thanks to its popularity as a natural preservative in food manufacturing and other industries, rosemary is both a high-earner and a safe bet in terms of market trends. It is also an excellent good choice from the perspective of SDG 8 – rosemary is harvested three to four times a year and is labour-intensive, meaning more employment opportunities. In other words, all roads lead to rosemary.
However, crop diversification can be risky business. Entering emerging markets is high risk for a small-scale farmer with little familiarity with a sector. Plus, best practices for farming less known crops aren’t well established or easy to access. These risks make it difficult for farmers to diversify their businesses completely solo. Where do they begin? First of all, they need the appropriate knowledge to understand and then initiate the process, then they need to develop farming methods with enough confidence to justify the initial costs. Next, how can smallholder farmers find a buyer and develop a trusting relationship? This is where SITA comes in!
Having identified the potential of rosemary, SITA sought out Bruce in Rwanda and Caroline in Kenya (among others). Bruce is Managing Director of agri-business Stevialife Ltd, based in Rulindo, Rwanda; Caroline is CEO and Founder of Eldo Tea, a SITA supported agri-business in Kenya. Thanks to SITA support, their rosemary cultivation has gone from strength to strength and will be profitable in less than two years. Here’s how.
After a successful venture into chili with SITA’s support last year, Bruce was looking to further strengthen his agribusiness through export diversification. He carried out trials on other horticultural crops, SITA reconnected Bruce with an Indian investor – who was interested in his successful rosemary trial. SITA fostered a long-term commercial agreement between them. This mutually beneficial arrangement enables the Indian spices company to reliably source quality raw materials and Stevialife Ltd to boost its revenues and resilience, which creates decent work for farm laborers in Rulindo, Rwanda.
Through this relationship facilitated by SITA, Bruce also gets support on the best practices to maintain quality and get high yields, which will be one tonne per hectare in the first year. As a result, Bruce describes the future as “bright!” In fact, things are moving ahead of schedule: yield for the second year was at first expected to be three tonnes per hectare, but current rates of progress mean it’s set to be four.
“We are confident following our trials and seeing ourselves expanding. We are going to invest in an outgrowing scheme. And we hope to see one day an extraction facility in the country”, Bruce explained. An extraction facility is a game-changing prospect to have on the horizon: it would mean the rosemary could be processed in Rwanda, further increasing its value prior to export and creating more skilled work.
SITA have been supporting Caroline since 2018 through its Mitreeki programme for women entrepreneurs. Caroline received mentoring and online training through the SME Trade Academy and received extensive insights from SITA’s Indian experts. Following her subsequent success as founder of Eldo Tea, Caroline was selected by SITA to attend ITC’s flagship event World Export Development Forum (WEDF), in November 2018. There, SITA exposed Caroline to the potential of diversifying into spices. Afterwards, SITA clarified what the venture would entail and connected her with an Indian spices company. Since then, SITA has supported Caroline and her potential buyer to foster a constructive and profitable relationship.
By April 2019, the Eldo Tea founder had trialled rosemary and sent samples to India. From there, the two entered into a buyback arrangement. Caroline herself explained the significance of such an arrangement: “Our Indian buyer has provided a very good opportunity to diversify into the Indian spices and herbs industry. It has been a very good start, because they have given us a 10-year contract – which means we will supply them consistently with a buyback guarantee.”
The long-term commitment of contract farming arrangements paves the way for a sustainable approach. The Indian spices company also advises Caroline on Good Agricultural Practices (GAP) and agricultural inputs that can be produced locally, such as quality seeds. This helps to ensure a high-quality crop. Together with the security of a 10-year contract, the support has given Caroline the means and the confidence to ‘take the plunge’ and diversify into rosemary.
As of April this year, Caroline’s recently-transplanted rosemary seedlings are now growing in the main field; Eldo Tea expects to ship its first container by the end of 2021. Once rosemary cultivation is fully up and running, Eldo Tea will look to diversify even further into ginger and turmeric.
The resilience that Caroline’s agribusiness will gain from diversifying is all the more important in light of Covid: “Since Covid-19, I have learnt that my business was not so resilient… Being a small business, we have no muscles to absorb the shocks.” Thankfully, having a buyback arrangement means that Caroline’s buyers are “very understanding.” Caroline highlights how this resilience has a positive knock-on effect for their farmers and labourers, too: “Diversification is a very good opportunity for our enterprise’s resilience, and therefore for our farmers as well.”
Supporting farmers to develop buyback arrangements is just one of the many ways SITA is supporting the emerging Spices sector in East Africa. For regular updates, follow SITA on Twitter @ITC_SITA.