EUROPEAN UNION – WEST AFRICA

AGRO-BUSINESS SECTOR MEETING

STRATEGIC EVALUATION OF THE AGRO-INDUSTRIAL SECTOR

-

MALI

Prepared for:PRIMS – CDE

on behalf of the European Commission and ECOWAS

EU/ECOWASWest African Agricultural Industry Study

This report, and the research behind it, is the work of SOFRECO, France assisted by a team of local consultants in West Africa under contract to Metra Sofres Ltd. of the United Kingdom.
The report has been prepared with financial assistance from the Commission of the European Communities. The views expressed herein are those of the Consultant and therefore in no way reflect the official opinion of the Commission.

TABLE OF CONTENTS

1. General country data

1.1. Key economic data

1.2. Economic development context......

1.3. The role of agriculture and agribusiness in the economy

1.4. Institutional and professional organizations in the agro-industrial sector

2. Selected agro-industrial sectors

2.1. The fruit and vegetables industry

2.1.1. General remarks

2.1.2. The mango industry

2.1.3. The potato industry

2.1.4. The Cyperus sugar pea industry

2.2. The animal feeds industry

2.2.1General remarks

2.2.2Production and economic data

2.2.3Development potential and constraints

2.2.4Partnering needs

2.3. The shea nut industry

2.3.1General remarks

2.3.2production and economic data

2.3.3Development potential and constraints

2.3.4Local and national processing

2.3.5Partnering needs

2.4. The sesame industry

2.4.1General remarks

2.4.2Production and economic data

2.4.3Development potential and constraints

1. General country data

1.1. Key economic data

Surface area1,248,574 sq. kms

Population (2000)10.8 Million

Population growth rate

(annual average1994-2000) 2.4%

GDP (2000)1,800 Billion CFA Francs (2.74 Bn Euro)

GDP per capita (2000)273 €

Exchange rate 1 € = 656 CFA Francs

GDP by sector input (2000)

Agriculture44.8 %

Mining and industry16.8%

Services38.5 %

199920002000-04

Variation in GDP +6.1%+4.5%+4.3%

19992000

Inflation rate (deflation)-1.2%-0.7%

External trade account1999

Exports FOB 536 Million €

Imports FOB 773 Million €

Principal primary sector exports: Cottonne (38%) and gold (42%)

(% of export revenues)

Source: IBRD

1.2. Economic development context

Under the combined impacts of an IBRD-IMF structural adjustment program, political and institutional stability regained after a period of turmoil, and favourable climatic conditions the Malian economy has made remarkable progress since the early 1990s, as reflected by leading macroeconomic indicators. Despite this progress, however, Mali remains one of the world’s poorest countries, with a GDP per capita below 300 US dollars per year.

Under the impulsion of the IBRD and the IMF, by compliance with its structural adjustment program, Mali’s economy has been progressively deregulated and liberalized. The State is disengaging from most commercial activities, with transfer of many enterprises to the private sector.

The agricultural and food-related industries, contributing about 40% of national output, is particularly targeted by this deregulation, and the new economic policies encouraging private initiative, both by nationals and by overseas investors and partners.

Mali’s investment legislation now includes major fiscal incentives for overseas enterprises investing in Mali and which have an added value component of at least 35%. The fiscal measures feature tax exemption on earnings for a period of between 5 and 8 years. Additional fiscal incentives apply on investments made in under-advantaged regions, and there are special conditions applying to tax exempt free zones (including exemption from customs taxes and duties on exports) for any overseas investor whose activity exports at least 80% of its production, this applying to processed goods utilizing local raw materials.

Mali is strongly dependent on export volumes and world prices for cottonne and gold, and price weakness for both these export items has characterized the world primary product pricing environment in recent years. The southern savannah belt’s typical agricultural activities, including cottonne production, have been seriously affected. This has resulted in the State owned Malian company for textile development (‘Compagnie Malienne pour le Développement des Textiles’) (CMDT), the monopoly producer in the cottonne industry of the country, experiencing major economic and financial difficulties.

1.3. The role of agriculture and agribusiness in the economy

About 80% of Mali’s population depends on primary product activities, and some 40% of GDP is agriculture related. Within the agriculture sector, some 39% of output is for food crops and food production. By type of activity, Mali’s agriculture is dominated by livestock farming (25% of sectoral output), large scale industrial crop production, notably cottonne (21%) and forestry and fishing (15%) according to data from the National statistical department (DNSI) for 2000.

The agro-industrial sector contributes about 11% of GDP, with about one-quarter of activity being food related. If we exclude the activities of flour milling utilizing imported cereals, cigarette and tobacco manufacture, and the cottonne industry (which includes derived and related products such as edible oils production) we find that Mali’s modern sector, or agro-industrial sector is almost absent in any other major activity or industry, and this is despite the major potentials that exist for development of modern agricultural and related industries able to make a major contribution to national output.

Among the constraints on development of modern agro-industry in Mali we can cite the following:

Constricted, land-locked potential areas of production suffering from poor or non-existent transport infrastructures;

Absence of modern minded, industry-oriented entrepreneurs seeking to develop new industrial activity;

A general lack of infrastructures in many areas of the country (transportation, electricity and water, industrial development parks or zones, etc);

Special problems relating to electricity and water, with Mali having high or very high electricity prices. It can be noted that the recent commissioning (2001) of a hydro electric plant has not brought the fall in electricity prices that was initially expected, although this new supply source will reduce or eliminate national power supply brown outs and shedding interruptions.

1.4. Institutional and professional organizations in the agro-industrial sector

Other than State organizations, there are two main organizations providing support and organizations to activity and development, and also providing significant, reliable data on Mali’s emerging agro enterprises. These two organizations are:

  • The agency for agricultural commodities industries development (‘Agence pour la Promotion des Filières Agricoles’) (APROFA), financed by the IBRD;
  • The Agro Enterprise Centre (CAE), financed by USAID (

2. Selected agro-industrial sectors

What can be called ‘traditional’ agricultural industries (cottonne and cereals) are not considered in this report, and only that potential and emerging agro enterprise activities, with strong development potentials, will be discussed.

Thus the following selected agro enterprise sectors (and subsectors) will be discussed:

The fruit and vegetables industry (main potentials lying in the development of mango, sugar snap peas, beans, and potatoes);

The animal feeds industry;

The shea nut industry;

The sesame products industry.

2.1. The fruit and vegetables industry

2.1.1. General remarks

These activities have for many years been marginalized and given scant attention in Mali’s agricultural policy and development strategy. Now, however, horticulture has been recognized for its development potential, both for the domestic market, where demand is in constant growth (annual per capita consumption of horticultural products is about 30 kgs), and for exportation in the case of certain crops.

Regarding export crops, Mali only currently exports mangoes and haricot green beans, to European destinations. Mali is the second-largest West African exporter of mangoes (but trails Ivory Coast by a large amount), but only the fourth-largest exporter of green beans, behind Senegal, Burkina Faso and The Gambia, and despite the fact that this predominantly air freighted export good is not greatly affected by location constraints hampering other crop production and processing for export because of the land-locked, transport-poor nature of Mali’s rural areas.

The fruit and vegetables industry of Mali are currently little developed and have very major potentials. Other the general constraints already noted, there are specific constraints hindering development, including the following:

Frequent and widespread lack of coordination and organization between the upstream and downstream elements and players of this industry;

A weak level of producer organization, including their technical capacities and know-how;

As yet little developed professionalism amongst all players in the industry; and

Few, and ineffective professional organizations such as producer groupings.

One consequence of these mainly organizational weaknesses is that many operators note that they are seeking better working knowledge, and better-adapted professional organizations for their sector of activity, enabling industry-wide integration to occur. Because of upstream weaknesses, including producers’ lack of know-how, their under-capitalization, and their inability to comply with contractual requirements (notably technical specifications and delivery schedules) certain exporters tend to consider most horticultural producers as unreliable. This has led to moves by potential exporters to shift the producer system from its current state of small scale, often peasant farmers operating individually, to centralized and collected supply with centralized buying organizations (‘régie’ production), offering much greater control. Here, however, the problem of investment becomes important, because the setting up of centralized producer organizations will require both infrastructure spending and a sufficient level of working capital.

2.1.2. The mango industry

a. General remarks

Mango cultivation in Mali is mostly located in the Bamako, Sikasso and Koulikoro regions. More than 35 varieties of mangoes are cultivated, of which 3 types provide the bulk of exports (‘Amelie’, ‘Kent’ and ‘Keitt’).

Mango tree orchards are highly dispersed and small scale, with more than 90% of orchard being of less than 5 hectares (ha).

With growing competition for mango shipment by maritime operators and the failure of the Fruitema Company (mainly due to mismanagement) mango shipment by air freight from Mali has considerably declined. The current export industry is typified by many small operators whose core business is often outside the horticultural field. At the time of study, no mango exporter entity was equipped with sufficient and operating cold storage facilities, and all attempts to restart air freight shipment of Malian mangoes to overseas markets had met with failure.

Conversely, the only notable development of mango exportation has been in the Sikasso region, where Ivory Coast producers have organized maritime shipment of production.

b. Production and value data

At present there is insufficient reliable data on Mali’s mango exportation industry, those furnished by FAOSTAT indicating that 1999 export volume was of 50,000 tonnes, which is completely in error. The same year, and only for the previously mentioned Sikasso region activity, production attained about 205,000 tonnes (of which 101,000 tonnes was of the three main export varieties).

Total tonnenage of Malian mango production is probably as follows, for the period 1994-2000 (Table):

Year / 1994 / 1995 / 1996 / 1997 / 1998 / 1999 / 2000
Tonnes / 837 / 756 / 716 / 1,448 / 1,006 / 818 / 1,148

Source: COLEACP

Transport costs and charges for air shipment of mangoes is estimated at an average of 650 CFA Francs / kg, against 350 CFA Francs / kg for maritime shipment in refrigerated containers and via the port of Abidjan (Ivory Coast).

Air shipment of mangoes from Mali is only feasible from the Bamako region because of airport facilities, while the construction of Mali’s second major airport at Sikasso, related to Mali’s hosting of the CAN 2002 African cupwinners’ cup matches, has not resolved the air transportation problem for mango shipments from the Sikasso region, because of the landing strip being too short, at 1,500 metres, for standard size air cargo planes.

b. Local processing

Mali currently lacks any industrial processing plants for mango processing, but small scale and traditional or artisanal operators produce dried mango products (essentially through solar drying), mango juice and mango jam. This production is of small volume and entirely absorbed by the domestic market.

The industrial processing company SOCAM, which produced mango juice until January 2000, has ceased operating.

Sun dried mango products from artisanal processing are not of export quality, but studies are under way into the utilization of electric drying for production of exportable processed products.

c. Development potential and constraints

Mali has great potential for the volume production, and export of mangoes. Its current production is recognized for its quality. The major constraints on development and growth of the industry are transport infrastructures and facilities, and the lack of organization both of production and downstream commercialisation of production.

Maritime shipment of mangoes is currently hindered by the large number of problems facing potential exporters of the Bamako region, because of insufficient availability of refrigerated containers and poorly organized, insufficient return freight cargo opportunities for commercial operators. Current rental costs and conditions for refrigerated containers are high and demanding, precluding this solution for bottlenecks in maritime shipping of mangoes for export. Conversely, maritime shipping facilities are much more developed for the Sikasso region, because of the previously mentioned initiative of and participation by Ivory Coast operators. In fact, the economic weight of operations by Ivory Coast nationals is such that, in reality, a considerable part of so-called ‘Ivory Coast’ mango exports are in fact from Mali, and are simply relabelled by the Ivory Coast exporters.

d. Partnering needs

The very large production and export potentials of Mali’s mango industry, with major downstream and employment impacts, are currently not sufficiently addressed. At present, it is only the presence of foreign players that is dynamising activity in this industry, and this situation will likely remain in existence.

Partnering potentials notably include the construction of plant and equipment for the cold storage and refrigerated shipment of mangoes, and the processing of export goods from mangoes.

2.1.3. The potato industry

a. General remarks

Potato consumption in West Africa is relatively recent, and is predominantly an urban phenomenon. Demand for potatoes is buoyant, with growth rates being above than of population. Current annual regional consumption levels are about 16 kgs per capita in Mali and Ivory Coast, and 31 kgs in Senegal; current supply is mainly by import from European producers.

Production of potatoes in Mali is however relatively long established, and potato farmers and operators have generally good knowledge of techniques and management. Production of two crops per year is possible, one in the humid season, and one in the dry season, with production in this latter or ‘counter season’ being by far the largest.

b. Production and economic data

Total regional production of potatoes was estimated at 155,000 tonnes in 1999, of which some 107,000 tonnes was produced by Nigeria. Mali’s production the same year was estimated at about 30,000 tonnes, making it the second-largest regional producer. The main production region is the Sikasso region, and is concentrated in 44 bottom-land areas, covering close to 1,700 hectares of that region.

Average annual yields obtained in Mali are around 20 tonnes/ha, much greater than those typically obtained in Nigeria (about 6 tonnes/ha/year). In some bottomlands production of 40 tonnes/ha/year can be obtained.

Domestic potato production in Mali covers a large part of total national consumption (estimated at 23,000 tonnes/year) with imported quantities only being about 1,000 tonnes and essentially for covering seasonal supply variations. Mali already exports limited quantities of its potato production to regional countries, and these outlets can be considered the natural or primary target for development.

c. Development potential and constraints

The technical know-how of current producers in Mali is undeniable and these operators often have considerable potential for expansion of their output. As noted before, regional countries are the main focus for export development, and potential will exist wherever Mali’s supply offer is competitive with other potato suppliers.

The main export outlets that can be identified are therefore Senegal and the Ivory Coast, which were already importing about 15,000 tonnes each of Malian potatoes in 1999. Another regional country of potential is Mauritania, which in 1999 took some 7,000 tonnes of Malian potato exports.

Among the major constraints of development of Mali’s potato production and exports one of the major problems is that of seed potatoes of reliable and sufficient quantity. Currently, all quality seed potatoes are imported from Europe, for a total of about 700 tonnes per year, and this cost element weighs heavy on earnings and profitability of Malian potato producers, for whom seed potato purchases represent about 70% of their total production costs and charges. European seed potato imports are landed at Abidjan and then onward transported to Mali. With a view to reducing the high costs of this current situation certain operators in Mali’s potato industry envisage the start up of local seed potato production, and are actively seeking overseas partners in order to do this. Other than CAE activity in this domain, research towards this end is being carried out at the Rural polytechnic institute (‘Institut Polytechnique Rural’) at Katibougou.

There are however possible doubts as to the economic significance of starting a national industry for seed potato production, for the following reasons:

Production of good quality seed potatoes is technically demanding, and local producers and their organizations may have difficulty responding to this;

Current import volumes, though costly, are not large and those costs for creating a domestic substitution industry may outweigh the savings on imports from local production (scale of production and economies of scale).

The most important of all constraints facing this industry is in fact that of preserving and conditioning production before its arrival at sales outlets, both domestic and export. At present, the industry has levels of wastage due to mediocre preservation and conditioning, and this constraint applies both upstream and downstream, from after-harvest storage and shipment through to retail sales outlets. Consequent to this, there is marked seasonal variation in supplies and therefore prices, due to surges and shortages, which can vary by up to 100%. This is all due to insufficient, or absent storage, conditioning and transportation infrastructures, and to insufficient know-how on these aspects of the industry by potato producers.