A h m e d H u s s e i n

B e n a d i r l l c

3 4 7 1 P a t e R o a d

S n e l l v i l l e , G A 3 0 0 7 8 U S A

Ahmed Hussein

Food Scientist and Chemical/Food Engineer, both at master’s level from Cornell University and University of Toronto

New business development professional with extensive international food business experience.

Knowledgeable of agribusiness and value-addition processing, production and marketing.

Author/inventor of four international patents in food product development and food process improvement.

Contacts: Ahmedios@yahoo.com

Tel: +1-(678) 646-8977

Value Addition

Adding value: the word “value” implies the existence of a potential buyer who will value and “pay” for the added effort.

The value of farm products can be increased in many ways: care while handling, cleaning, sorting, hulling, drying, cooling, smoking, pickling, canning, freezing etc.

Value addition, besides bringing higher income to the farmer, can open new markets, create reputation for the farmer, expand market season, and make positive contribution to the community.

Agriculture

& Food

Value Chain

A ‘value chain’ in agriculture describes a

sequence of activities and a set of actors that

bring agricultural product from production in

the field to final consumption.

It is an approach that analyzes each stage of

production or service in the chain — from input

suppliers to final buyers — and the interaction

& relationships among them.

wherein at each stage value is added to the

product.

Agriculture

& Food

Value Chain

Somalia’s Agriculture Potential

Great potential in all the major segments: crops, livestock and seafood.

Current commercial crops include Sesame, Banana, sugar cane and lime.

Other potential crops; Maize, rice, cassava, oilseeds (sunflower oil & soya?), coconut, tropical fruits, horticulture, tree nuts and gum Arabic.

Livestock: one should look at dairies, slaughterhouses and poultry,

Seafood: processing & value addition of fish and fish by-products

Somali livestock

“Somalia’s 5 Million ..is the world’s largest on-the-hoof movement in the live animal trade” Financial Times 9/25/2013.

Wow! Somalia exported 5 million heads of live animals. Kudus to the Somali entrepreneurs and traders.

The bulk of the delivery goes to Saudi and occurs during Ramadan & Haj season.

That is better than Australia’s 2 million and Ethiopia 500,000 heads.

Somali livestock What is working

Somalia embraced livestock certification system required by the market.

Established in-country quarantine station

Enhanced infrastructure including loading and unloading ramps, watering points, shades and modern vaccination.

Capacity building for veterinary personnel by establishing “IGAD Sheikh Technical Veterinary School”.

Leveraging traditional and cultural relations and establishing partnership with buyers in the market.

Somali livestock

Berbera port data*

2014 3.4 million heads exported valued at $426 million.

Goats/sheep/camel mainly for Saudi, while cattle goes to Yemen and Oman.

Berbera market prices of Goats/sheep $78, cattle $596 and camel $650.

$15.5M revenue from port Taxes; $3/$15/$17 for goats/cattle/camel.

18 companies (all have Saudi partner) are engaged in the export business, however, two companies control 90% of the trade.

Average exporter margin is $5 per goat.

*ILIR research report 40

Somali livestock

Saudi market

Market requirements: age, body condition and commercially standard grades.

Market segments include commercial retail holding, wholesale holdings and large scale importer with slaughterhouses

Pricing: Saudi breeds $427 to $520;

Sudan $170 to $180 and

Somali $90 to $120.

Almost all Somali animals goes to local retail segment for working/middle class.

Some are sold to Haj customers to be slaughtered since size does not matter.

Somali livestock

Before Value addition?

Share market requirement info with Somali side value chain players.

Establish feedlots to increase animal weight to command higher prices.

What can we learn from the Sudan?

Better negotiation with Saudi partners to get a fairer share of the total margin.

Diversification: find other markets to reduce dependency on one market – high risk!

Somali livestock

Value addition?

5 million heads of animal can establish more than 10 medium size slaughterhouses – killing 20000 heads/day.

Same number of hides and leather plants.

Direct and indirect employment of more than 6000, while maintaining most of the other labour.

Use of edible offal (liver, kidneys, hearts, tongue) will enhance local community’s access to affordable protein.

By products such as trimmings, intestine, blood, bones can all be further processed and value added. e.g. Jewelry made from bones in Burao.

Better revenue from VA livestock business.

Livestock – Poultry

Poultry has great potential in Somalia to provide proteins – meat and eggs.

Lower entry barrier (capital & space) and offer to consumers lower priced meats.

Supply of good quality feed is very important in livestock business since up to 70% cost of production is in the feed.

For every 2 kg of poultry feed one can expect roughly 1 kg of proteins.

When it comes to livestock focus on feed and genetics

Livestock – Dairy

Somalia livestock number of 53 million heads – 28.7 M Goats, 13.6 M sheep, 6.6 M camels and 3.9 Cattles.

Yet Somalia imports huge quantities of milk powder.

Milking cows yield~3 to 4 liters per day is well below global milk production. Kenya’s average is 20 liters

Bovine Industry a local company is cross-breeding cows with initial success yielding 8 to 10 kg/cow/day.

New camel dairies are been established close to urban centers such as Mogadishu, Galkacyo and Hargeisa.

When it comes to livestock focus on feed and genetics

Fishery – The untapped

resources

With a coastline of 3300 km, Somalia’s seafood resources are estimated to be around 835,000 tons-really untapped.

Issues such as cultural attitude, lack of marine equipment, poor landing facilities and cold storage are some of the obstacles.

Small Tuna canning plants and dried fish are the only commercial value addition in fishery.

Fishery – Value addition

The establishment of landing facilities and cold chain (transport and storage) on coastal villages.

Fish processing including salting, smoking, drying, de-gutting and de-heading, fileting, freezing and canning will open distant markets.

Dried fish: big demand in Africa e.g. Angola imported ~8500 tons 2014.

Fishmeal and fish oil are lucrative by-products made from fish processing waste and small oily fish.

Global demand of fishmeal is growing due to the expanding aquaculture – prices of fishmeal is $1400/ton and the Oil is $2000/ton.

Commercial crops Dried Lime

One of the most successful commercial agriculture crop in Somalia.

Dried Lime are predominantly exported to the middle east.

Value added opportunity include processing Lime juice and/or juice concentrate, lemonade based beverages, flavoring and essential oil.

Banana

Somalia was one of the major exporter of banana pre-crisis period.

Various attempts made to revitalize the business did not pan well.

In addition to its unique taste, market proximity is a huge advantage.

Access to cold chain and pack-house are key.

Sesame Seeds

Sesame is the most important cash crop in Somalia.

The crop is hardy and can thrive in soils where most crops cannot.

Inputs such as fertilizers do not increase significantly the yield.

Sesame is harvested manually.

all the above favor poor farmers in the developing world.

Sesame requires wet climate during planting and dry one when harvesting.

It takes from 90 to 110 days from planting to harvesting

Sesame Seeds

Sesame yields between 400 to 600 kg/hectare in Somalia lower than global average of well over a ton.

Average cost of production is around $600/ton. Farm gate price of $1,700/ton (2013).

Current Bakara market price is $1050/ton. Sesame prices are affected by local as well global market situation.

Sesame is rich in both oil and protein (55% oil and 25% protein).

Sesame Seeds

Use of Sesame in Somalia is mainly in the production of oil -$2.2 to $3.63/liter 2014.

The remaining cake (Mankaal) is used as animal feed.

The bulk of global trade in sesame is in the raw seeds. Cleaning/dehulling can increase the value by ~$200/ton.

Al Mizan, Moumin Group, Horn of Africa Trading and Danwadaag and many more are engaged in the export of sesame.

Two companies produce clean de-hulled seeds – Somalia Sesame Hulling and Oil Industries and Dayah Company with a combined capacity of 3.6 tons/hour.

Sesame Seeds

Global market is around $15.44 Billion (2105).

55% of world production is in Africa.

Sesame export from Somalia is approaching 30,000 tons if not more.

2014 export revenue was reported to be $80 million, a figure that is 20 times the $1.98 million recorded in the 1980’s.

Export markets are UAE, India, China and Turkey

Sesame Seeds Global markets

Global sesame price in the last decade rose from $650/T in 2001 to $1300/T in 2009 to a 2013 peak of $1700/T.

Ethiopia export & prices; 2005: 200K MT@$790 and 2012: 317K MT@$1340.

Destination matters; European prices are 1.5X to 2X those in UAE and China.

Volumes offered also matters; Nigerian sesame commands higher price than Uganda’s in the Chinese market.

Growing sesame increases farmers income, create rural jobs in areas of marginal farmlands & contribute to GDP.

Sesame Seeds Impact on the farmer-Ugandan Study*

2008 Uganda produced 173,000 tons

Average farm size was 0.37 ha, can be planted twice per year-yield 600kg/ha

23% of sesame produced is unsold-home consumption, 42% exported

Family income of $190 for the local seeds and $282 for new and improved seeds.

89% of traders had no access to export quality standards.

93% had no awareness of phytosanitary certification.

29% knew production cost & good storage.

*ICRISAT Series paper number 6

Sesame Seeds

Competition

African producers dominate the export market, thus competition is African

Ethiopia, Uganda and Nigeria have a land freight cost disadvantage. Uganda freight cost: $1200 to Mombasa & $300 to china.

Somalia is starting from a much lower base – great room to grow.

Somalia can leverage traditional & cultural relationships with some markets, i.e. Middle east & Turkey.

Of course Somali diaspora can organize and help in their respective markets

Sesame Seeds Value added opportunities:

Animal feed as a protein source.

As a topping on baked goods – McDonald burger buns anyone! Turkish Simit!

Sesame candies made from sesame seeds and honey or sugar syrup.

Tahini – sesame seed paste like peanut butter, highly valued in the middle east and north Africa region

Halvah – a sweet candy made from sesame paste common in the middle east.

Hummus is a versatile spread made from pureed chickpea and Tahini.

Sesame Seeds

New value added opportunities:

Sesame Milk – an easy recipe of 1 to 4 makes a delicious and nutritious milk.

Sesame flour (~45% proteins) made from de-oiled sesame cake.

Sesame protein isolate (over 90% proteins) essential ingredient for Sesame milk and infant formulas.

Sesame tofu? - vegetable based cheese products

And many more value added products to be developed by the stakeholders to expand the market and increase return

Ballanteenu waa Somalia