Strengthening African Food Processing (SAFPP)

The workshop, offered by FAIRTRADE Assistance (Netherlands) was attended to provide a quick and effective development of an understanding of FAIRTRADE and the role it can play providing market access to Europe and the United States for the Eshowe Hibiscus and Herbal Tea Growers Association.

The workshop, the title of which was "Marketing and Exporting of Food Products", was run by FAIRTRADE Assistance the support section of FAIRTRADE Organasatie of the FAIRTRADE movement in Netherlands. Representatives of Tradecraft and Oxfam Wereldwinkels of Belgium also attended and gave information on their organisations. Delegates attended the course from Kenya, Mauritius, South Africa and Zimbabwe.

It is a well-known fact, at least within South Africa, that capturing, supplying and keeping a large enough market for an enterprise’s product is probably the most frequent cause of small enterprise failure. The cause for such failure are many but are often a result of competition, lack of market knowledge, quality and reliability.

Because of this SAFPP is looking for solutions that assist enterprises to find and maintain markets. One approach is to seek niche markets where small enterprises actually have an advantage. While there are a number of possibilities such as enterprise branding, indigenous food and small business contracting, FAIRTRADE is a niche market that is specifically designed to give opportunities to small enterprises to enter the export market.

FAIRTRADE is a widespread movement in Europe, USA and Japan (the North) which operates with developing countries (the South – dark green in the map below).

There are a number of associations that represent the large number of organisations active in FAIRTRADE, as well as those operating in similar areas such as ethical, organic and environmental issue.

The FAIRTRADE movement was founded on coffee, cocoa and tea but has diversified and now also sells processed foods, craft and textile items.

FAIRTRADE Netherlands offers the small food processing entrepreneur direct access (avoiding middlemen as far as possible) to Northern markets, a premium price, production cost advances, technical and business support and undertakes to ensure that the benefit of the trade reaches the needy in the South. All FAIRTRADE organisations offer similar support and assistance although there do appear to be differences in emphasis and focus.

FAITRADE gives the SMME access to a group of consumers who are prepared to pay above the market value for a product, this allows them to contribute towards the development of people in the South. However, SMMEs need to understand that nobody will buy something they don't want or don't like. Products therefore have to have commercial potential in the mainstream SA and Japanese consumer markets that FAIRTRADE supplies.

This clearly eliminates the very special Indigenous foods that would not be attractive to the bulk market. For example the Masonja Snack could not be sold – most of the attendees were not even prepared to taste it. However, there is definitely a group of consumers, mainly those who traditionally ate the product, who would be a potential market. Although there are significant numbers of these consumers in Europe, their needs cannot be met through FAIRTRADE. These special products will require a linkage into the wholesalers supplying the large and strong African Diaspora markets.

There is no doubt that FAIRTRADE is a real opportunity for the smaller manufacturers of food products in the South. This is been proved by the achievements of a range of National FAIRTRADE organisations over the last 10 to 20 years and their continued growth.

It would appear, if the three organisations at the workshop are representative of the overall trend, that most of the growth being achieved is in food products. In the last period there has been a significant growth in the trade in processed food products eg mango juice, sauces, jams and relishes.

There are a number of organisations that represent, support and certify the FAIRTRADE companies trading with the retailer or consumer. FAIRTRADE seems to be concentrated in Europe although there is also activity in USA, Canada and Japan. The products handled and the importance of advocacy within the organisations varies greatly – this note focuses on the product range of the three organisations at the workshop which are fairly similar being food products, handicrafts and coffee.

What was very clear, is that the products that are sold must be of a quality (HACCP produced, consistent taste, quality packaging etc) and appeal that can compete with products on the supermarket shelves of the country where the product must sell. Traidcraft in the UK previously sold below standard products but found through market research that this has damaged the market for the products and the organisation’s credibility.

Some of the food products displayed and contained in the product catalogues are very elaborate – in fact the largest selling product in FAIRTRADE Organasatie’s range currently is a chili sauce with a wire handcrafted neck. This product appears to be as much a curio as a food. Also important is the high standard of packaging required and the absolute insistence on quality.

The workshop clearly identified that fact that the FAIRTRADE organisations do not only trade in products that are 100% produced in third world countries by the poor. As an example Traidcraft has developed a snack bar (Geobar) that includes 30% raw material from the South(and FAIRTRADE Organasatie sells a pineapple product that is produced by Summerpride (a commercial processor) using pineapples produced by small farmers.

The workshop provided detailed information on the export requirements, FAIRTRADE Assistance’s requirement and European market trends. The workshop information is available from D A Harcourt (+27 12 361 3703 / dharcourt@csir.co.za)

Meru Herbs of Kenya who produce hibiscus / lemongrass tea blends and hibiscus jam attended the workshop and appear to have substantial experience of supplying Italy. Meru Herbs seems to operate as a development project rather than a financially sustainable enterprise but could still provide important inputs to the Eshowe Hibiscus and Herbal Tea Growers Association.

The workshop identified a major need for information on the preparation of business plans and HACCP implementation manuals. In particular there was a feeling that what was required was manuals and examples of successful documents for related enterprises operating in similar environments.

There is no doubt that FAIRTRADE has the potential to become a market for hibiscus teas and jams produced by Eshowe Hibiscus and Herbal Tea Growers Association. There is also the potential that the hibiscus could become an ingredient in FAIRTRADE products introduced by others. It will, however, be necessary to lift the quality systems to be able to supply.

Various discussion outside of the workshop identified the opportunity for a South Africa FAIRTRADE that would follow the principles of FAIRTRADE but would operate within South Africa. This confirmed previous discussions with Oxfam. However, it is also clear that the whole concept relies on those being able to pay being willing to pay and indicates the need for a market survey in South Africa.

SAFPP website will establish and populate Business Plan and HACCP information pages hich would hold links to simple information and examples that are appropriate to small rural operations as are the bulk of similar information on the INTERNET.

The SAFPP website will develop material on FAIRTRADE as a market option for African food processing SMMEs.

FAIRTRADE is a market that matches the characteristics of the small food processing enterprise and as a such requires serious focus from entrepreneurs and those supporting entrepreneurs.