Tropical Fruit Juice Project Helping to Spur Economic Revival in Ethiopia
April 18, 2011—Global demand for tropical juices is on the rise. Consumers are lured not only by the intense flavors, but also by the potential health benefits. Historically, countries in sub-Saharan Africa outside of South Africa have not been major exporters of tropical juices, but a company called africaJUICE is trying to change that.
“Many locations in sub-Saharan Africa offer conditions that are close to optimum for growing tropical fruits,” says Werner Griessel, General Manager, africaJUICE. “But significant amounts of investment and technology transfer are required to help these countries realize the revenue potential from fruit juice production. These investments will also boost overall agricultural output by helping farmers adapt modern farming techniques. This is essentially what our project is all about.”
In April 2009, africaJUICE Tibila Share Company, a joint venture between africaJUICE BV of the Netherlands and the Ethiopian government, took operational control of Tibila Farm in Ethiopia’s Upper Awash Valley. MIGA is supporting the investment by providing $10 million in guarantees to africaJUICE BV and to the Industrial Development Corporation of South Africa, a lender to the project.
The farm produces passion fruit, mangoes, papayas, and other tropical fruits. Originally the farm produced mostly vegetables and grains and some fruit. Now, neat rows of drip-irrigated yellow passion fruit—a new commercial crop for Ethiopia—dot the landscape. In addition to rehabilitating and expanding the newly acquired farm, africaJUICE has built a new fruit-processing facility with state-of-the-art processing, sterilization, and packaging equipment. This means the processed juice can be stored long enough to make the 650 kilometer journey to the port in neighboring Djibouti and on to markets in Europe and the Middle East, overcoming issues often blamed for food shortages and reduced earning potential from agriculture. The World Bank estimates that nearly half of Africa’s total farm yield is lost between the harvest, warehousing, post harvest marketing, and transport to the final consumer. In November 2010, the first drums of passion fruit juice were loaded into containers for export to Europe.
The company directly employs 2,400 people in roles ranging from security guards to production line managers. On the Degaga passion fruit farm, each hectare employs four to six people per day—mainly women. Their primary role is to collect the ripe fruit and manage each plant, including the pollination of each passion fruit flower by hand—necessary for this self-sterile plant. “Each woman is responsible for maintaining her own row,” notes africaJUICE Plantation Manager Gerard Pothuis. “They take great pride in their work.”
A fundamental aspect of the project is the Outgrower Incubator Program that partners with local farmers to supply fruit to africaJUICE for processing. The program’s goal is to develop and support over 1000 hectares of outgrowers, organized as cooperatives, to supplement the supply of fruit to the processing facility and extend community participation. The farmers participating in the program stand to earn a much higher income than they are currently earning producing primarily onions and tomatoes.
Passion fruit can bring in upwards of 135,000 Ethiopian birr per hectare—a significant income in this poor community. “Another advantage to growing passion fruit is that it grows on a trellis system, so farmers can practice intercropping with their tomatoes and onions between the rows, while benefitting from the new irrigation systems,” explains Dr. Abayneh Esayas, africaJUICE’s Technical Manager. “This is essentially one huge on-the-job training project.”
To introduce local farmers to this new crop, the company has launched an “Outgrower Incubator Scheme” in cooperation with ICCO of the Netherlands, GTZ of Germany, and the Rabobank Foundation. In March 2011, africaJUICE and the first cooperative signed an “Outgrower Commercial Contract”. The contract gives both parties security of purchase price and contributes to building beneficial long-term relationships. Ultimately a broader community organization will become a shareholder in africaJUICE Tibila S.C. enabling the community and farmers to take the lead in their own growth and development. The farmers are already benefiting from better use of the irrigation scheme. “When we first started, it was like a desert. You couldn’t believe anything could grow here,” observed Melkamu Negassa, Outgrower Project Manager.
africaJUICE is also tapping into MIGA’s Environmental and Social Challenges Fund for Africa that allows MIGA guarantee holders to receive expert advice from consultants to implement environmental and social enhancements to their investments. The grant proceeds are providing capacity building to support the formation of the Outgrower Fair Trade Body. If successful, africaJUICE will be the first Fair Trade tropical juice producer in sub-Saharan Africa.
A tour of the surrounding community shows some early indications that the project is already spurring economic revitalization. A new restaurant has opened and markets are bustling. The company has also made significant investments in improving access to clean drinking water and electricity for workers housed on the farm. “When we acquired the farm, the infrastructure was in very poor condition, so we had to move quickly on electrical upgrades, road improvements, construction of sanitary facilities, and other immediate needs,” explained Griessel. “These investments are critical in our view. From the outset, we design our projects to be models of sustainable development, incorporating elements to ensure they deliver substantial social, environmental and economic returns.”