Impediments to Marketing African Natural products From Ghana: Preliminary Results
Creators: name: Govindasamy, Ramu
name: Onyango, Benjamin M.
name: Puduri, Venkata S.
name: Simon, James E.
name: Asante-Dartey, Juliana
name: Arthur, Hanson
name: Diawuo, Bismarck
name: Acquaye, Dan
name: Govindasamy, Ramu
name: Onyango, Benjamin M.
name: Puduri, Venkata S.
name: Simon, James E.
name: Asante-Dartey, Juliana
name: Arthur, Hanson
name: Diawuo, Bismarck
name: Acquaye, Dan
Publisher: name: Unknown
Year: 2006
Subjects: International Relations/Trade

description: For most of the African countries agriculture still remains the mainstay of the economies supplying both food and incomes via marketable surpluses. However, many odds against agriculture such low productivity, poor prices, and drought among others make it unsustainable. Results thus far show that such dependence has contributed little to neither economic development nor growth. Still many of its people living on and from agriculture remain poor, and are susceptible to hunger and malnutrition. Additionally, their over reliance on a few traditional exports such coffee, tea, and cocoa etc., products whose world prices keep declining has not helped either. At most this is futile response to raising incomes of its people, let alone spur any meaningful development. Agricultural may still contribute to development, if the countries could diversify from traditional products to the untapped areas. The continent's rich botanical heritage offers an excellent opportunity to diversify away from traditional exports. The natural products have a greater appeal to consumers especially in the rich west. Thus, development of natural products as alternative or complimentary to the current mix of tradable products will positively impact the social and economic lives of many people, especially those in the rural areas. Additionally, diversification of the production systems to include natural plants provides a superior route to the creating viable agribusinesses in rural communities currently lacking. Natural products happen to have enormous advantages; First, indigenous African plants occur naturally and so are relatively easy to cultivate commercially. Second, natural plant production is labor intensive rather than capital intensive, and so minimizes capital investment while at the same time maximizing job-creation potential. Third, African communities have extensive knowledge of indigenous plants, creating a natural competitive advantage in this sector. ASNAPP (Agribusiness in Sustainable Natural African Plants Products) a non-profit organization formed in 1999 with funding from USAID (United States Agency for International Development) is helping create and develop successful African agribusinesses in the natural plant products sector. The organization focuses on the development of high-value natural plant products that enable African agribusinesses to compete in local, regional and international markets. These products include herbal teas, culinary herbs and spices, essential and press oils, as well as medicinal plants. Currently, ASNAPP operates in five countries, namely South Africa, Ghana, Rwanda, Senegal and Zambia, working with 25 agri-enterprises that represent more than 2000 small-scale natural plant suppliers. The prospects for natural products market is very bright, for example the global nutraceutical market alone is estimated to be worth $60 billion annually in sales of dietary and meal supplements, as well as specialty products. There is also increasing demand for organic and natural products such as herbal teas, essential oils, herbs and spices, phytomedicines and phytocosmetics. This growth has been supported by a global swing away from synthetic products to those that are natural, healthy, sustainably produced and fairly traded. In the context of world trade in natural products, African country's natural forests supply more herbs, medicinal plants and natural food ingredients. The Americans and Europeans are the major consumers of natural products in the global market. Products such as the herbal tea's, essential oils, cosmetic and spices have readily available markets. Natural product sales was estimated $34 billion in 2001, It is estimated that Global sales for organic and natural products will reach about $100 billion by 2008 at an annual growth rate of 20-30% (Organic Natural Health, 2001; Marty T. S., and Patrick R., 2004). The United States also happens to be the largest user of essential oils and flavor and fragrance, the aroma therapeutic market alone in has grown from a $316 million dollar business in 1996 to over $454 million in 2001(Alberta Essential Oils, 1996; Datamonitor, 2002). Indeed there is untapped potential ranging from raw products to processed ones, which could fetch even higher returns to the farmers. However, it is only a few large enterprises that are active in the sector, leaving rural communities who had in fact been the first to discover the health and nutritional properties of indigenous plants out in the cold. The ASNAPP Ghana program which commenced in 2000 is currently working on essential oils, lippia tea, grains of paradise, cryptolepis, kombo butter, shea butter and Artemisia, with the focus on the Eastern, Central, Ashanti, Volta, Greater Accra and Northern regions of Ghana. The natural products industry in Ghana is characterized by low input- low output; mostly operated by small-scale farmers (suppliers) with low levels of levels of formal education and agricultural production knowledge. In this respect the supply side problems may be summarized as regularity of the supplies, quality and timeliness. Organizationally, the scale of the operations may be a bottleneck one hand, on the other hand, information, capital; product quality and assurance mechanisms hinder successful commercialization. The domestic markets are largely at the low levels of commercialization; the operators have limited technical knowledge about natural products, and limited capital to expand their businesses and exploit the readily available foreign markets. Similarly, on the demand side, there may be lack of consumer information as to the range of products, where to find them and what remedies they offer. This paper has the objective of highlighting the marketing impediments facing the natural products market in the retail and wholesale portions of the chain in Ghana. Specifically, (i) profile the technical, financial, organizational, etc., constraints the traders face (domestically and externally), (ii) profile the natural product range and their functions (iii) suggest policy interventions. Preliminary results from the Ghana business survey show that seven out of ten of the businesses are retailer operated, whose two-thirds supply is dependent on the small-scale farmers. There results also show that virtually all the traders have not received any technical, financial or trade assistance from any organization. At most only 1 out of ten businesses have ventured into external trade. The preliminary results show tremendous potential, however a lot need to be done to tap on this potential. The analysis will be based on a survey that was carried out in Ghana to correct information on; product ranges; the supply chain (from production to the retail stores and potential for exports. The analysis will contribute toward inform policy of which marketing to be addressed and inform domestic and foreign consumers of the presence of such products. References: Alberta Agriculture, Food, and Rural Development, Herb/Spice Industry Fact Sheet. Compiled by Dennis Dey. AG-Ventures, Agdex 263/830-1, www.agric.gov.ab.ca, September 1996. Datamonitor, Nov 15, 2002. Marty T. S., and Patrick R., "Natural Product Sales Top $42 Billion" Natural Foods Merchandiser, 2004, volume XXV/number 6/ p. 1 Organic Natural health, 2001. http://www.health-report.co.uk/organic-cosmetics-usa- opportunity.htm#Organic/natural%20industry%20profile