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Organisation: International Development Research Centre, Canada (IDRC)
Author: O.G. Schmidt
Edited by AGSI/FAO: Danilo Mejia (Technical), Beverly Lewis (Language&Style), Carolin Bothe (HTML transfer)

CHAPTER V OILSEEDS: Post-harvest Operations

5.1 Overview of costs and losses

5.2 Major problems

5.3 Proposed improvements

5 Economic and Social Considerations

Between 1975 and 1992, IDRC had supported 47 separately funded activities, for a total cost of over CAD $14 million, aimed at improving oilcrop research and the vegetable oil and protein systems in Africa and South Asia. IDRC's support for this subsector has strong justification. Edible oils and fats are essential components of the human diet, but these countries were among the lowest in per capita dietary oil and fats intake; had low yields of oil crops; yet they have land and climate suitable for increasing oil crop production without displacing other crops. In addition, oilseed crop improvement was given low official priority in most of the countries in South Asia and Africa. The first 12 projects, funded from 1975 to 1980, largely focused on oilseeds production improvement.

In 1981, the Oil Crops Research Network (ORN), based in Ethiopia, was established. The initial intention was simply to provide better linkages among IDRC-supported oil crops projects and to provide technical support to make these projects more effective. This objective was subsequently expanded so that the Network could interact with all oil crop improvement programmes in the two regions. The original breeding focus in national programs and in the Network expanded to include agronomy, plant protection, and on-farm research. The network and its four sub-networks (Brassicas; Sunflower; Sesame; Other Oilcrops) provided an important on-going focus for production-oriented research, and served as an important and valuable vehicle of inter-country co-ordination and communication via an annual newsletter (Omran, Abbas. 1984-1993, vols 1-10 respectively).

By 1991, after 10 years of supporting the Oil Crops Network, it was clear that breeding, agronomic research, and even farming systems research (FSR) approaches alone would not achieve the repeatedly stated goals of enhancing the subsector's contributions to improved nutrition and stimulation of the economy which countries in the region wished to see and believed to be feasible.

In part, because the Network had existed for ten years now and in part because of the relevance of the VOPS (K) work (described in the following sections) for defining a future strategy for the Network, a review process was initiated within IDRC in early 1991 (Zulberti et al. 1990).

5.1 Overview of costs and losses

The mid-1980 saw large surplus quantities of inexpensive palm oil becoming available from the Far East. The international price of palm oil dropped from a high of USD 750 per ton to below USD 300 within months, if not weeks. One impact of this palm oil surplus, taking Kenya, as a typical example, was a drastic reduction in the farm gate price being offered to sunflower farmers. The main refiner of edible vegetable oil in Kenya, through its subsidiary company established to promote oilseed production by smallholder farmers, adjusted the farm gate price of sunflower seed to match the international price of palm oil less the domestic crushing cost. Not surprisingly, in a period of 2-3 years, the number of small scale farmers participating in sunflower production plummeted from a high of 80,000 to around a tenth that number (Oilcrops Development Limited, Nakuru, Kenya). At the same time, many small to medium scale crushers, suppliers of oil to the giant refiner, saw their throughput (and the jobs of their workers) curtailed in similar measure as the refiner switched sourcing of raw vegetable oil from the indigenous crushing plants to importing palm oil from abroad.

The fundamental question which IDRC felt it needed to address in the light of these circumstances was the following: since oilseed farmers had been rendered non-competitive by the volumes of cheap palm oil, should the focus of research support switch to helping these farmers to find and grow alternate crops? Was further investment in applied research on mainly annual oilcrops now inappropriate or ill advised? Would national economies, especially from the perspective of consumers of edible oil, be better off if they switched to importing the palm oil and found alternative competitive employment for the farmers and processors thus affected by international events?

A healthy, vigorous debate ensued within IDRC. One group argued that as the countries of Eastern and Southern Africa were perpetually short of foreign exchange, importation of palm oil was unaffordable at any low price because it would increase the foreign exchange debits. The rural economy would prosper in the long run if oilcrop production remained an integral part of national agricultural policy and strategy.

It was agreed within IDRC, therefore, to fund an initial study by one consultant of the vegetable oil/protein system (VOPS) of Kenya, as a representative example. The Social Sciences Division and several programmes within the Agriculture, Food and Nutrition Sciences Division (< biblio >) provided financial support for the study. This work was well publicised within Kenya and within the Oilcrops Research Network.

Inter-divisional support followed for three phases of the project Vegetable Oil/Protein System (Kenya) followed--the VOPS(K) project from early 1988 onward (Anonymous. 1989). Seven teams of researchers, and subsector stakeholders and key players did quick surveys of key aspects of the national sub-sector. (Figure 1 gives a schematic presentation of the aspects of the subsector examined, and underlines the importance of looking at both present consumption and at future demand for the various end-products from the vegetable oil/protein system.)

The results from the work were published by Egerton University (PO Box 536, Njoro, Kenya) (Oggema et al. 1988; Odhiambo et al. 1988; Bartilol et al. 1988; Karau and Namwamba, 1988; Gichohi et al. 1988a; Gichohi et al. 1988b; Gitu et al. 1988; China et al. 1988; Zulberti and Lugogo 1989---the series of 10 working papers from Egerton University), and were presented as well to the substantial membership of the Oilcrops Research Network (Zulberti, C. 1990).

These results were discussed at a workshop of sub-sector participants in Kenya. Annual workshops followed, for discussion of sub-sector progress or of special themes such as the policy environment (Anonymous. May 1991).

VOPS(K) steadily developed and increased the (public) knowledge base of the subsector's structure, behaviour and performance. VOPS(K) produced a newsletter to serve the subsector through information exchange and research publication. Also, additional resources have been attracted to the subsector (from the World Bank for the Agricultural Sector Management Project (ASMP, Ministry of Agriculture, Livestock Development, and Marketing (MALDM), PO Box 30028, Nairobi, Kenya) phase II, and from FAO for the Rural Oilseeds Production and Processing Project (ROPPP, same address)) for training and further applied research. These achievements have increased local ability and confidence to develop sound policies for subsector improvement.

5.2 Major problems

The most important signals to smallholders are producer price, and costs of inputs. A national enabling policy will encourage value-added processing near the farm gate and redistribution of the co-products to the farming communities. The liberalised economies are now presenting smallholder farmers with new problems and new opportunities. Smallholder farmers are having increased difficulty in affording the cost of high-yielding hybrid seeds, now being marketed by the new private enterprise companies. Thus, the small holders still require a relatively powerful yielding species, the seed of which they can retain for planting the next season. National agricultural research and extension systems have, in the last five to ten years, been less able to supply those needs because of funding cutbacks. As well, smallholder access to agricultural credit has been eroding in the newly liberalised economies.

5.3 Proposed improvements

The concept, inherent in the VOPS (K) project, of mobilising the sub-sector's key players and stakeholders, rather than hiring independent consultants, to delineate, characterise and "troubleshoot" the subsector, was promising. Thus, even as the VOPS (K) work was ongoing, the Oilcrops Research Capacity (Eastern and Southern Africa)-ORCESA--project was initiated in 1991. The burden of this complementary project was to seek to "replicate" the VOPS (K) approach in two additional countries of the region, Zambia and Tanzania (Mbwika et al. 1992; Mbwika and Theora 1992). The intention was to have ongoing interaction by this project's implementers, the Agricultural Research Foundation (AGREF, PO Box 39189, Nairobi, Kenya), with the VOPS (K) project, and the ORN.

Several years after initiation these projects achieved considerable progress and accomplishments.

From the VOPS (K) and ORCESA work, the potential was recognised that the ORN could explicitly incorporate into its future scope the PCSR (production to consumption system research) approach which would help to focus on a broader set of interventions in national programs, more likely to remove constraints to farmer uptake of the technical results from the ORN's work to date.

A series of co-ordinated technical evaluations of the work of the Oilcrops Research Network and its components (Thomas Development Associates, 1992, 1993), vigorous interaction between the Network and the VOPS (K) project (Omran, Abbas (ed) 1988; Omran, Abbas (ed) 1989a.: Omran, Abbas (ed) 1989b.), and a special consultancy (Riley, 1992) culminated in the suggestion that the focus of the network should shift to include a Production to Consumption Systems Approach (PCSA). The PCSA framework emphasises a comprehensive understanding of the whole subsector as the basis for optimising its performance

However, IDRC's shrinking resource base coupled with its programmatic and structural reorganisation made it impracticable to achieve the recommendations agreed to in the last meeting of the Network in August 1992 (Navarro, 1995). Strenuous efforts to interest other donors to augment (and supplant) IDRC's waning support for the Network did not prove fruitful in the short lead-time available to the Network's Steering Committee.

The national oilcrops research programme in Nepal presented its own look at its complex vegetable oil/protein system at the meeting (Paudyal et al. 1992), and demonstrated that the PCSA was a tool useful to national agricultural research systems.

Although IDRC was unable to offer further substantial financial support to the ORN, progress in the PCSA based projects provided the impetus to apply the PCSA within another recent project, the Vegetable Oil and Protein System Improvement Network (VOPSIN).

VOPSIN was an IDRC-funded PCSA-based project for an integrated research and action endeavour to contribute to the sustainable development of the vegetable oil protein sub-sector in the Eastern and Southern Africa region. The primary recipient institution was the Preferential Trade Area (PTA) secretariat for Eastern and Southern Africa in collaboration with the Agricultural Research Foundation (AGREF). (In 1994, the PTA was renamed the Common Market for Eastern and Southern Africa (COMESA, PO Box 30051, Lusaka, Zambia). The project's purpose was improved performance and growth of the sub-sector. Its goals were improved human nutrition, rural employment and incomes, enhanced contribution to the economy and protection of the natural environment, with special attention to the numerous rural and poor populations who depend on the concerted collaboration of stakeholders and players in the sub-sector with the support of concerned governments and donors.

VOPSIN employed a PCS framework, which was developed from earlier project experiences in Kenya, Zambia and Tanzania. The PCS approach visualises the target Oil Crops Production to Consumption System as constituted by the groups of people, the resources and processes they command, and the interactions among themselves and with the environment, which affect the production, processing, movement, trade and final utilisation of the oil crops. This visualisation is the basis to understand the conditions and performance of the sector, and therefore to identify problems and opportunities to intervene in the sector and improve its performance.

The PCS approach calls for stakeholder participation and necessarily brings together multiple disciplines in an effort to impact the sector. It encourages the subsector participants to join in:

Building the necessary knowledge base about the subsector;

Continuous critical examination of the accruing knowledge and identification of the limiting constraints and action gaps;

Developing priority agendas for research, policy and organizational adjustments plus investments aimed at improving the performance of the subsector;

Fostering interest and resources from within the subsector.

The project ran from mid-94 to the end of 1996. IDRC resources were applied to install, operate, and to help raise additional funds for the continued operation of VOPSIN. Progress was achieved in furthering national and regional attention and action in the subsectors of a number of countries, and knowledge about the respective national subsectors was accrued and disseminated (Anonymous. March 1997).

The VOPSIN project also collaborated with the agencies involved in the APROMA-funded process f or the establishment of a regional soybean production database.

Work begun by the Junta del Acuerdo de Cartagena (JUNAC) in the early eighties (Dubois et el. 1984; JUNAC 1985; UNIDO/JUNAC 1985) led to UNIDO's collaboration and the formulation of an input/output model of production to consumption systems. UNIDO produced a computer-based simulation model, MEPS (method for the evaluation and assessment of production to consumption systems), using the Symphony spreadsheet software. This model was not fully achievable in many developing countries, because the required hard data were missing.

The IDRC-supported work in eastern Africa constitutes a mobilisation of sub-sector participants with the goal that they would ultimately be able to generate the data necessary for the more rigorous modelling. (such as MEPS and its successor, E-MEPS) Thus, the analyses of the systems research and the systems approach written by, primarily, IDRC staff at the time (Navarro et al. 1992; Navarro and Schmidt 1993) complemented the JUNAC/UNIDO work.

Further, IDRC also commissioned a useful and informative review of the methodologies useful to production-to-consumption studies (Sellen et al 1993).

In sub-Saharan Africa, the manual ram press appears to have the highest chance of success as a rural intervention to initiate small off-farm enterprises, a start for the evolution of more value added domestic activities. Edible oil, generated near the farm gate, and redistributed to households nearby, does not need to have long shelf life-it will be consumed quite quickly. Consequently, the oil needs to be only filtered, not refined, bleached and deodorised. The small-scale rural enterprises have a market niche, complementary to that of the large-scale crushers and refiners, which supply mainly the urban markets. Since on average, 80 percentage of the population is rurally located, the market niche is substantial in volume, and the number of potential rural enterprises is substantial in number.

While the total number of ram presses, in Tanzania as an example, are not sufficient yet to demonstrate a significant share of the national edible oil requirement, they do have substantial singular impact, on the rural economy of the smallholder.

Rurally located, off-farm processing adds value to the produce, and brings direct rural benefits, far more than the former "export" of the oilseed to distant (domestic) industrial installations and the costly redistribution of the co-products back to the rural areas.

Case studies on the profitability and viability of these enterprises

have been documented in Kenya, Uganda, Tanzania, Zambia, and Zimbabwe. The entrepreneur is limited by having insufficient cash supply to enable her/him to purchase enough oilseeds at harvest time so that the enterprise can run year-round. Commercial banks, and their interest and willingness to lend money for such off-farm processing businesses are vital to the process, especially since governments have ceased to administer rural credit.

From the view point of examining international competitiveness, a country has to first assess its niche for the domestic production of oilseeds and the total of their co-products, not of vegetable oil or protein cake separately. National planners will have to decide whether it is more cost-effective to fill national requirements and potential requirements from national production of oilseeds rather than from import of either edible oil or of protein cake.

Next comes the task of determining whether the country has a competitive edge for export of the oilseed, or its co-products to international markets, and the role which smallholder farmers can and will play in that export situation.


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