Natural Products Industry Market

							  Getting Serious about the
 Business of Natural Products:
SANProTA, the Southern African
    Natural Products Trade
          Association
            Presented by


          Gus Le Breton
Rural livelihoods in southern
             Africa

    Where are we now?
           Facts about southern Africa
   Southern Africa is predominately arid or semi- arid.

   Soils are mostly infertile.

   Range animal production is limited by rainfall in arid areas
    and by nutrients in moist areas.

   Arable land covers about seven percent of the region and
    irrigable soils less than one percent.

   Staple food products are not keeping pace with population
    growth
   Conventional agricultural production
    systems in marginal lands in southern
    Africa have failed to provide food and
    livelihood security for all

   There is a strong need for the development
    of an alternative approach to rural
    production in such areas
          In parallel to this…….
   CBNRM has emerged as a powerful
    movement for the promotion of sustainable
    management of natural resources, and

   A somewhat less powerful movement for
    the promotion of more sustainable
    livelihoods for rural communities
   CBNRM’s focus in southern Africa has been
    predominantly on wildlife (not surprisingly, given
    that it was originally promoted as a wildlife
    conservation strategy, rather than a strategy for
    improvement of rural livelihoods)

   Even from a livelihoods perspective, there was a
    strong rationale for this – high value resource,
    strong market, little product development required,
    comparatively easy to raise donor money for etc etc

   But this has limited the scope of its achievements
   Consumptive use of wildlife, from which most of the profits
    of CBNRM have been derived, is a highly emotive issue in
    the West (the main market), and this makes it vulnerable

   The high profits generated have also created ‘sticky
    fingers’, intercepting the proceeds before they reach
    communities

   Wildlife is a fugitive resource, over which it is sometimes
    difficult to have secure tenure, and which is never around
    when you need it most!

   Most rural communities in southern Africa do not have, or
    have access to, wildlife, anyway
   If CBNRM is to become a serious alternative or
    complementary approach to the improvement of
    rural livelihoods in southern Africa, it will have to
    expand its focus beyond wildlife alone

   This, inevitably, brings us to natural products
      What are natural products?
   Natural products are products derived from
    naturally occurring biological resources, harvested
    from the wild by rural producers

   Given extensive attention already devoted to
    faunal resources, SANProTA restricts its focus to
    floral resources

   Sometimes called veld products, or non-timber
    forest products
How are natural products
    currently used?
     Medicinal plants in the SADC
                market
   SADC Market consumes over 50 000 tonnes of
    medicinal plant per annum

   Some 450 000 traditional healers

   Regional trade worth over US$700 million

   Total trade (including export) probably over US$1
    billion per annum
     Harpagophytum procumbens
            (Devils Claw)
   Namibia produces 600 tonnes per year of cut,
    dried Devils Claw

   Rural producers are paid R12 per kg (i.e. R7,2
    million)

   Some 15 000 people are involved in the trade,
    mostly from poorest sectors of society

   Secondary trade generates US$7-10 million per
    year in Namibia
                   Marula oil
 Partners in 4 countries have developed a
  system of shared marketing
 Selling marula oil to an international cosmetic
  company at UKP12.50 a litre, at source
 Estimated annual demand of 30 000 litres per
  year
 Low-grade oil used to make soap
 Trade worth US$560 000 a year
                  Baobab oil
 Still under research in southern Africa
 Established international market, previously
  met from Tanzania and West Africa
 Oil sells from US$20 a litre (crude) up to
  US$30 a litre (refined)
 Potential global sales of several hundred
  tonnes per year
 Potential value of annual sales, US$5-10
  million
        Other natural products
           already available
 Herbal Teas (Zimbabwe, Botswana)
 Fruit Jams (Zimbabwe. Botswana, Malawi,
  RSA)
 Fruit juices (Malawi, RSA, Botswana)
 Fruit confectionaries (RSA, Botswana)
 Other tree seed oils (Malawi, Namibia,
  Botswana, Zimbabwe)
 Cosmetic skin-creams (Zimbabwe)
      Prospects for trade in the region
   Natural products industry has been growing rapidly
    world-wide over the last few years

   Trade in the region will inevitably increase

   This presents huge opportunities to rural communities

   It also poses several threats, including those of adverse
    ecological impact, bio-piracy and the threat that
    benefits will not accrue to rural producers
            Threats to growth of trade
   Failure to give natural products the serious attention they
    deserve. Some natural products can be spontaneously
    commercialised (e.g. wild mushrooms), but many require
    investment in product development, ecological
    management, production and processing, and marketing

   Our own fears: over-protectionism, stifling the
    opportunities we might have

   Donors moving in
      Threats to growth of trade (2)
   Orientation towards trade with the North

   Bio-piracy

   Barriers to trade

   Domestication/replication

   Biological threats to genetic base
      Why haven’t natural products
       already assumed greater
            prominence?
 Although the global bio-trade market is huge,
  there is a fundamental gap that remains
  unbridged between rural African producers and
  the market
 This gap is manifested in the fact that the
  products themselves do not exist
 Without products, rural communities have nothing
  to sell
Why hasn’t there been more
  investment in product
      development?
Barriers to private sector investment

    Uncertain macro-economic and political
     environment
    Poor market access and transport infrastructure,
     high transaction costs
    Higher levels of plant biodiversity in Latin America
     and SE Asia
    Most plant diversity found on common land
    Geographically dispersed production base (within
     and between countries)
     Barriers to development sector
                investment

 Natural resource management viewed as
  conservation issue, not development issue
 Hard to justify financial support for product
  development, given the uncertainties that
  this will result in tangible benefits to rural
  communities
Barriers to public sector investment

 Lack of available finance
 Fears for Intellectual Property Rights
 Segmented and sectoralised information
  (i.e. information kept by scientists)
 Insufficient capacity at community level
 Duplication and loss of synergy in research
        What can we do about it?
 We have made extensive, subsidised investments into
  mono-cultural cash-cropping
 If we were to make a similar subsidised investment
  into natural product development, we might be able
  to capitalise on the economic opportunities presented
 Focus on resources that are relatively abundant and
  familiar, but for which substantial actual or potential
  market demand exists
            What is SANProTA?
 Southern African Natural Products Trade
  Association
 Conventional trade association, but with
  additional functions as a development institution
 Intended to develop and promote trade in
  natural products accessible to rural communities
 Operational in 5 countries: Botswana, Malawi,
  Namibia, Zambia, Zimbabwe
               SANProTA’s Goal
     To enable poor rural communities in the
    southern African sub-region to generate
    supplementary incomes through the sustainable
    exploitation of natural products

   To establish a viable and enduring natural
    products industry in the region, in which por
    rural communities are the primary producers
            SANProTA’s objectives
   To provide a platform for regional professional
    exchanges in Natural Product trade development

   To research and develop existing and new NPs

   To create and engage in markets for NPs from rural
    communities, leading to a sustained increase in
    community-based domestic and export NP trade
    How does SANProTA operate?
 Legally, SANProTA is an autonomous trade
  association
 Initially, it is hosted by SAFIRE in Zimbabwe
 Ultimately, it will have its own offices
 Three-tier management structure:
Full Membership



Management Board



 Executive Office
         Executive Office Staffing
 Chief Executive Officer – CEO of SANProTA.
 Liaison and Information Officer – responsible for
  members liaison, as well as acquisition, compilation
  and dissemination of info on NP trade and
  development
 Research and Market Development Officer – manages
  SANProTA’s relations with commercial R&D partners
  and buyers, and represents members in export
  markets. Based in UK
 Finance officer – manages finances
               Other Staffing
 NP Business Development Advisor – advises
  members on the development of NP
  businesses, market linkages etc.
 NP Technical Development Advisor – advises
  members on the technical side of NP business
  development, including production, processing
  etc.
 Also support staff: secretarial,
  driver/messenger etc.
                TimeFrame
 Official Launch at the Botswana International
  Trade Fair, Gaborone, September 2001
 Full implementation: January 2002 – December
  2005
 Established as a permanent, and ultimately
  self-financing, institution
           SANProTA Activities (1)
   Networking
    – Fact-finding visits and exchanges
    – Information exchange – web-site, newsletters etc.
    – Policy analysis and advocacy on NP trade and
      development
    – Business Meetings for members
           SANProTA Activities (2)
   R&D
    – Establish and maintain R&D database
    – Sponsor R&D by members and partners on NPs of
      specific relevance/importance to SANProTA (total
      budget US$750 000)
    – Facilitate sharing of R&D activities/information
      amongst members
             SANProTA Activities (3)
   Marketing
    – Develop and maintain NP Market Information
        System
    –   Identify and develop existing and new market
        opportunities
    –   Develop selected NPs commercially
    –   Advise members on NP market-related issues
    –   Operate agency services in strategic markets
      SANProTA Selected Species
4 species have been selected for its initial focus.
  These are:
 Adansonia digitata
 Schinziophyton rautanenii
 Kigelia africana
 Cucurbitaceae (wild melons)
        What is SANProTA currently
                working on?
   Expanding its membership
   Consolidating its funding
   Developing a bioprospecting policy for its members
   Preliminary R&D work on its chosen species
   Developing partnerships with commercial R&D
    institutions
   Developing a web-based R&D and market information
    database
   Selling members’ products!
     What can SANProTA do for you?
   direct market information, support and advice, on
    request;

   access to a web-based database on natural product
    research, development and marketing;

   preferential access to grant funds to facilitate the
    development of new natural products;

   the opportunity to participate in exchange visits with
    other natural product producers in the region;
     What can SANProTA do for you?
   regular technical newsletters and updates on
    natural product research, development and
    marketing;

   linkages to a global network of natural product
    buyers and trade promotion agencies; and

   representation at international trade fairs and
    other marketing fora.
               How can you join?
   Fill in application form

   Submit it to SANProTA Executive Office before
    31st March 2003

   Applications will be considered by Management
    Board in early April, for approval at the AGM in
    Blantyre, mid-April