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Koga Veg Agricultural Development

Ethiopia

Koga Veg introduces new crops and markets to smallholder farmers in Ethiopia

2012

Koga Veg is getting ready for the installation of a nucleus farm and the construction of a packaging facility. In the meanwhile, field trials and logistical tests are showing promising results. The company plans to be fully operational in 2015.

Description

Koga Veg will be a farm aimed at the production of a wide range of horticultural crops for both local and international markets. One of the main goals of the project is the introduction of peas and other export crops to smallholder farmers in Ethiopia. These crops will complement volumes exported from other countries to the European market and should generate an interesting income for smallholder farmers that currently produce mainly for local markets and household consumption. 

Considering the limited experience of smallholder farmers in export crops, the project initially focusses strongly on a nucleus farm that will serve as a production basis and farmer training centre at the same time. Gradually, smallholders will be trained in the production of new crops and in the application of good agricultural practices. A packing plant will serve to grade and pack the product for its respective market and will generate employment for approximately 250 people after 4 years. 

Workers

  • 2013 : 20 29
  • 2014 : 100 40
  • 2015 : 150 45
  • 2016 : 200 45
  • 200
  • 150
  • 100
  • 50
  • 0
  • 50
  • 40
  • 30
  • 20
  • 10
  • 0
Number
Low. sal. (€/month)
Year
  • Number of workers
  • Lowest salary in the company

Smallholders

  • 2013 : 20 282
  • 2014 : 40 697
  • 2015 : 60 1340
  • 2016 : 80 1436
  • 100
  • 80
  • 60
  • 40
  • 20
  • 0
  • 1500
  • 1000
  • 500
  • 0
Number
Afv. rev. (€:season)
Year
  • Number of farmers
  • Average revenue per farmer per season

Peas & Beans value chain

Production
Packaging & export
Repacking
Sales & marketing
Market
Smallholders Guatemala
not neccessary
US
Europe
not neccessary
Other providers worldwide
Other providers worldwide
  • Durabilis Business
  • External
  • Market

Risks and opportunities

  • Blue flag
  • Green flag
Status
Explanation
Investors
Status
Explanation
Challenge

Agricultural production and the export of perishable products have certain inherent risks which may result in periodic low productivity or quality problems. These risks imply that budgets must anticipate and be able to absorb unplanned setback

Opportunity

Labour costs in Ethiopia are low, which contributes to the competitiveness of export oriented agriculture from Ethiopia

Opportunity

Assuming that setting up the logistics for sea freight through the harbour of Djibouti will be successful, logistics will be much cheaper in comparison to competitors who solely rely on air freight

Challenge

Smallholders in the vicinity of the farm have little experience with production for export, which introduces a higher risk for quality and productivity problems

Smallholders
Status
Explanation
Opportunity

Smallholders receive higher prices in formal and transparent supply chains

Opportunity

Smallholders receive training and participate in certification programs, improving their competitiveness and future market opportunities

Challenge

Strict requirements regarding export quality and pesticide use mean that farmers have to participate in training and certification programs. This requires an extra effort which should be recuperated in terms of better market opportunities

Opportunity

Training and the availability of better inputs and production technology for export crops will create spill over effects that will contribute to higher productivity of crops for local markets and hence regional food security

Workers
Status
Explanation
Opportunity

The fresh vegetables sector is a good source of employment

Opportunity

Workers receive a fair wage and good working conditions

Challenge

Workers in the packing plant work in cooled areas. Agricultural workers on the farms are handling agrochemicals that are potentially dangerous. It is crucial to control worker health and safety by appropriate training programs, the right clothing and infrastructure and adequate follow up in case of incidents

Challenge

No minimum wage is established by law in Ethiopia and average wages for labourers in the agricultural industry are rather low. Even when complying with industry standards for wages, this may not be equivalent to a basic needs wage

Environment
Status
Explanation
Challenge

The production of fresh vegetables requires the application of chemical fertilizers and pesticides which – if applied incorrectly – may cause pollution in the natural environment 

Opportunity

Export requirements and increasingly strict legislation on pesticide residues create a trend in which pesticides are increasingly replaced by less harmful alternatives. In addition, farmers are trained in the responsible use of pesticides and waste management, reducing risks of environmental contamination 

Consumer
Status
Explanation
Opportunity

The production of new crops for local and export markets will improve the availability of fresh vegetables for Ethiopian consumers

Community
Status
Explanation
Opportunity

Access to markets and employment for workers are an economic boost for rural communities

Evolutions

Koga Veg started its field trials in November 2012 with excellent results. After receiving approval of the authorities of the state of Amhara for the use of 50 hectares of irrigated farm land, Fair-Fruit has formally registered Koga Veg as a company under Ethiopian law.

Outlook

Koga Veg is in the process of starting up and becoming operational as a business. Designs of pack house and irrigation system are being finalized in order to install and build all necessary infrastructure in 2014. Fair Fruit Ethiopia plans to be fully operational early 2015. 

Commitment tracker

  • Work in Progress
  • Reconsidered
  • New
  • Achieved
Commitment
Due Date
Status
Comment
New Due Date
Investor
Commitment
Due Date
Status
Comment
New Due Date

Make company operational and reach financial break even

2014
New

The basic commitment towards the investor is doing the investment as planned and making sure that the projected return on investment will be materialized.

Workers
Commitment
Due Date
Status
Comment
New Due Date

Create employment

2014
New

We aim to create employment for around 100 workers in the packing plant and another 50 workers on the farm in the course of 2014.

BSCI Compliance (‘Business Social Compliance Initiative’)

2014
New

We strive to comply with the BSCI code of conduct regarding working conditions and worker rights from the very beginning. We project our first external audit in 2014.

Smallholders
Commitment
Due Date
Status
Comment
New Due Date

Launch outgrower programme

2014
New

We aim to include the very first farmers in an outgrower programme by the end of 2013, or early 2014. In consecutive years the number of outgrowers to be involved in training and production programs will gradually increase

Environment
Commitment
Due Date
Status
Comment
New Due Date

Implement sustainable production methods

2014
New

Our farming operation aims to adopt sustainable production processes including crop rotation, integrated pest management, soil management and drip irrigation to optimize water use. 

Community
Commitment
Due Date
Status
Comment
New Due Date

Local sourcing

2014
New

We aim to source as many materials, services and human resources from local villages as is reasonably possible.