Agricultural cold storage

Agricultural cold storage
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Agricultural cold storage
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Food and Agriculture
Business Model Description

Provide affordable and energy efficient pre-cooling and cold storage facilities for small and medium farmers close to farming areas for perishable agricultural products (meat, dairy, fruits and vegetables).

Expected Impact

Enhance farmer yields and incomes, contribute to food security and foster a positive trade balance.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in ROI)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< USD 50 million
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Good health and well-being (SDG 3) Responsible Consumption and Production (SDG 12)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9)
Country
Regions
  • Rwanda: Eastern Province
  • Rwanda: Southern Province
  • Rwanda: Kigali
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
FB

Development need: According to latest data, half of Rwanda's working age population (49.3%) is employed in the agriculture sector.(1) Additionally the sector provides 91% of the food supply, 70% of export revenues and contributes to 32.7% of the country's gross domestic product (GDP).(2)

Policy priority: Rwanda's Strategic Plan for Agriculture Transformation 4 (PSTA 4) 2018-2024 identifies agriculture to be the backbone for sustained economic growth and a major factor in transforming Rwanda from a low income to a knowledge‐based, middle income economy.(3)

Gender inequalities and marginalization issues: Two-thirds (67.7%) of all professionally active females and less than half (43.2%) of men work in agriculture in Rwanda. 61% of men and women working in agricultural sector are engaged in subsistence agriculture. Only 39% of this group is engaged in market-oriented agriculture; fewer women (34.5%) than men (45.1%) are involved in market-oriented agriculture.(1)

Investment opportunities introduction: According to sectoral studies, cold storage can provide a return on investment in a short period. The studies suggest the probabilities of making profits are high in first four years (50%, 75%, 90%, 97% each year respectively).(4)

Key bottlenecks introduction: Rwanda’s agricultural land expansion is limited by severe constraints, and the growing population adds pressure on agricultural incomes and increases the risk of accelerating land fragmentation and soil degradation. It is crucial to accelerate industrialization and commercialization of agriculture, as well as improve land use.(5)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
FB.1

Development need: In Rwanda, post-harvest food losses reach up to 40%, and are caused, among other factors, by inappropriate storage.(6)

Development need: In Rwanda, post-harvest food losses reach up to 40%, and are caused, among other factors, by inappropriate storage.(6)

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Agricultural Products
FB-AG
Investment Opportunity Area

Agricultural cold storage

Business Model

Provide affordable and energy efficient pre-cooling and cold storage facilities for small and medium farmers close to farming areas for perishable agricultural products (meat, dairy, fruits and vegetables).

Market Size (USD)Describes the value in USD of a potential addressable market of the IOA.
< USD 50 million

In 2019, Rwanda imported meat worth USD 240,000, dairy products worth USD 13.2 million, vegetables worth USD 19.5 million and fruits worth USD 7 million.(10) This demand for perishable fresh products could be satisfied domestically if food losses were reduced via cold storage.

Rwanda's fresh milk production amounts to approximately 160 million liters annually.(11) This produce needs to be properly refrigerated to reduce its perishability. Domestically, 100,000 tons of fruits and vegetables are traded in Rwanda every year in official markets, while an additional 27,000 tons are exported.(12)

The total meat production in Rwanda was over 94,000 tonnes in 2016-17. Currently, meat availability and consumption in Rwanda is below the amount recommended by the Food and Agriculture Organization (FAO): 8 kg per person per year in Rwanda, while the recommendation is 50 kg.(13)

ROIDescribes an expected return from the IOA investment over its lifetime.
15% - 20%

This rate is a benchmark calculated as a cost of equity with a country risk premium, reflecting the average return required by investors active in the storage and packaging infrastructure subsector.(14)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)

A regional benchmark company takes 12 months to pay back invested capital expenditure.(15)

A project analysis of solar powered cold storage found the payback timeframe is 3 years.(16)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Business - Supply Chain Constraints
Lack of proper infrastructure for collection and transportation (8), unreliable energy supply (17)
Business - Supply Chain Constraints
Lack of market data and information on the volume of post-harvest losses (9)
Business - Supply Chain Constraints
Granulation of agricultural supply - most agricultural produce comes from smallholder farmers (18); subsistence farming model (9)
Sustainable Development Need

Regardless of recent improvements in nutrition and alleviating poverty levels, Rwanda underscores significantly in SDG 2 - Zero Hunger.(6)

In Rwanda, approximately 40% of all perishable agricultural products (fruits, vegetables and others) were lost before reaching the market in 2016.(19)

Rwanda's milk availability and consumption is 63 liters per person per year, while the recommendation is 220 liters. Similarly, egg availability and consumption is 1 kg per person per year against the recommendation of 90 kg.(13)

Gender & Marginalisation

Two-thirds (67.7%) of all professionally active females and less than half (43.2%) of men work in agriculture in Rwanda. 61% of men and women working in agricultural sector are engaged in subsistence agriculture. Only 39% of this group is engaged in market-oriented agriculture; fewer women (34.5%) than men (45.1%) are involved in market-oriented agriculture.(1)

Expected Development Outcome

Fewer food losses and improved food security, which will alleviate poverty in rural areas as reduced food waste leads to higher incomes

Improved trade balance due to increased exports and reduced food imports

Improved access to proteins for the whole population, improving health and human capital development

Gender & Marginalisation

Investments could help female farmers, by increasing access to markets, improving efficiency, and thereby increasing their revenues.

Primary SDGs addressed
2 - Zero Hunger
Zero Hunger (SDG 2)

2.1.1 Prevalence of undernourishment

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.5.1 Number of plant and animal genetic resources for food and agriculture secured in either medium- or long-term conservation facilities

Current Level

36.8% (33)

USD 184.82 (36)

Passport data for 43 collected plant genetic resources were entered into computers for better management (34)

Target Level

0 (33)

N/A

N/A

3 - Good Health and Well-Being
Good health and well-being (SDG 3)

3.9.3 Mortality rate attributed to unintentional poisoning

Current Level

1.32 per 100,000 individuals (35)

Target Level

N/A

12 - Responsible Consumption and Production
Responsible Consumption and Production (SDG 12)

12.3.1 (a) Food loss index and (b) food waste index

Current Level

N/A

Target Level

N/A

Secondary SDGs addressed
1 - No Poverty
No Poverty (SDG 1)
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)
9 - Industry, Innovation and Infrastructure
Industry, Innovation and Infrastructure (SDG 9)
Directly impacted stakeholders
People
Smallholder farmers with stable and increased incomes
Gender inequality and/or marginalization
Female farmers as a critical workforce in the agricultural sector
Planet
Natural environment, reflecting greater productivity and less harmful agricultural practices
Corporates
Food markets and processing facilities with more stable agricultural supply
Public sector
Government with higher productivity in the agricultural sector
Indirectly impacted stakeholders
People
Population in general benefitting from additional food supply
Planet
Natural environment reflecting use of renewable energy
Corporates
Secondary businesses benefitting from safe transportation, such as car manufacturers
Outcome Risks

Pollution caused by compounds used for refrigeration and electricity generation

Health problems for workers exposed to cold temperatures (20)

Significant increase in energy consumption

Impact Risks

Evidence risk because it may be difficult to track impact generated through this investment opportunity area given limited data availability

What

Scaling up cold storage for perishable agricultural products would improve food security, reduce food losses, increase employment opportunities and create a positive trade balance.

Who

Farmers with reduced incomes due to high product losses. Processing facilities, wholesalers and retailers who will benefit from improved food security.

Risk

Unreliable electricity supply poses the risk of frequent power shortages.

Impact Thesis

Enhance farmer yields and incomes, contribute to food security and foster a positive trade balance.

Policy Environment

Vision 2050: This policy outlines 'sustained food security and nutrition for all households and age groups' as one of Rwanda's basic development needs. Meeting that need requires investments in an appropriate food storage infrastructure.(21)

Strategic Plan For Agriculture Transformation 2018-24 (PSTA 4): This plan recognizes storage as one of the key pillars for the agricultural value chain and food loss reduction. The document indicates a need to scale up, modernize and improve the accessibility of cold storage facilities.(9)

National Agriculture Policy: This policy focuses on encouraging better post-harvest management and the further development of agri-food processing through 'continuing to subscribe to a family-farm-centric model, enhanced farmer cooperation and private-sector-led development of the agri-food economy'.(22)

7 Years Government Programme - National Strategy for Transformation (NST 1) 2017 – 2024): This programme recognizes modernizing and increasing the the productivity of agriculture and livestock as one of the key priorities for Rwanda's development.(23)

Financial Environment

Financial incentives: The government provides an investment allowance of 40% in new/used assets for investment amounts of at least USD 44,000, and if business assets are held for at least 3 tax periods. The government also presents grants and special capital access for investors who promote business and development in rural areas.(28)

Fiscal incentives: 50% corporate income tax reduction (to 15%) for agro-processing companies, accelerated depreciation rates, import duty exemptions for agricultural machinery, and a value added tax (VAT) exemption on agricultural inputs and livestock material.(29)

Other incentives: access to logistics resources (e.g. trucks, packhouses), support to acquire land and capital, dedicated support team, free business registration, no restrictions on foreign ownership and no restrictions on capital flows.(29)

Regulatory Environment

Law No 47/2012 of 14/01/2013: This law regulates food and pharmaceutical products, and prohibits manufacturing, preparing, storing, packaging or keeping food products for sale without compliance with hygiene requirements.(24)

National Cooling Strategy 2019: This strategy provides minimum energy performance standards for cooling equipment, maximum energy use requirements, functional performance requirements, refrigerant requirements and labelling requirements.(25)

The Ministry of Agriculture is responsible for providing frameworks and resolving issues related to agricultural productivity and handling.(9)

Rwanda Green Fund (FONERWA) publishes numerous guidelines and laws and policies relating to sustainable agriculture.(26)

The Ministry of Health is responsible for all regulations and Ministerial orders and guidelines related to food production and handling.(27)

Private Sector

InspiraFarms, DP World, AgriProFocus, Freshbox

Government

Ministry of Agriculture, Rwanda Green Fund (FONERWA), Ministry of Health, Rwanda Agriculture and Animal Resources Development Board (RAB)

Multilaterals

Food and Agriculture Organization of the United Nations (FAO), World Agroforestry Centre (ICRAF), International Fund for Agricultural Development (IFAD)

Non-Profit

German Corporation for International Cooperation (GIZ)

country static map
semi-urban
Rwanda: Eastern Province
The Eastern and Southern provinces have the majority of cattle, and therefore the largest quantities of dairy and meat for cold storage.(30)
semi-urban
Rwanda: Southern Province
The Eastern and Southern provinces have the majority of cattle, and therefore the largest quantities of dairy and meat for cold storage.(30) The Southern and Central provinces produce and process the majority of fruits and vegetables, so have the largest need for cold storage.(31)
semi-urban
Rwanda: Kigali
The Southern and Central provinces produce and process the majority of fruits and vegetables, so have the largest need for cold storage.(31)
Sector Sources
  • 1) National Institute of Statistics of Rwanda (2020). Labour Force Survey Trends August 2020 (Q3). http://www.statistics.gov.rw/publication/labour-force-survey-trends-august-2020q3 2) International Fund for Agricultural Development (2019). Country Strategic Opportunities Programme 2019 – 2024 for the Republic of Rwanda. https://www.gtai.de/resource/blob/45938/fe1c62c39e821a638471d69ef0ee5261/pro201904175029-data.pdf 3) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 4) Yilmaz, D.and Yilmaz, I.C. (2020). 'Comparative Cost Assessment of Cold Storage Plants and Natural Storage Structures for Potatoes', Potato Resources. https://doi.org/10.1007/s11540-020-09454-0 5) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 6) World Bank (2020). Rwanda Food Smart Country Diagnostic. http://documents1.worldbank.org/curated/en/288911601302842762/pdf/Rwanda-Food-Smart-Country-Diagnostic.pdf 7) Gatete, C. (2016). The Rwanda we want: Towards ‘Vision 2050’. https://www.minecofin.gov.rw/fileadmin/user_upload/Minecofin/Speeches/Hon_Gatete_Umushyikirano_Presentation_2016.pdf 8) African Development Bank (2013). Rwanda Transport Sector Review and Action Plan. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/Rwanda_-_Transport_Sector_Review_and_Action_Plan.pdf 9) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf
IOA Sources
  • 12) Rwanda Development Board. Horticulture – The Rwanda opportunity. 13) Food and Agriculture Organization of the United Nations (2019). Modernizing Rwanda's livestock to attract investment and enhance food security. http://www.fao.org/rwanda/news/detail-events/en/c/1185157/ 14) PwC analysis based on Prof. A. Damodaran data, 2020. 15) Alliance for a Green Revolution in Africa (2019). The Agribusiness Deal Room at the 2019 African Green Revolution Forum (AGRF). https://agrf.org/dealroom/wp-content/uploads/2020/07/Agribusiness-Deal_Room-AGRF-booklet_020919.pdf 16) Badelt, G. (2019). 'De-carbonizing the post-harvesting phase of the agri-food chain Viability and smart business modeling', GeoCode International. https://unfccc.int/sites/default/files/resource/UNFCC_pptHandout.pdf 17) De Dieu Niyonteze, J., Zou, F., Norense Osarumwense Asemota, G., Bimenyimana, S. and Shyirambere, G. (2020). Key technology development needs and applicability analysis of renewable energy hybrid technologies in off-grid areas for the Rwanda power sector.[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7002852] 18) International Fund for Agricultural Development (2019). Country Strategic Opportunities Programme 2019 – 2024 for the Republic of Rwanda. https://www.gtai.de/resource/blob/45938/fe1c62c39e821a638471d69ef0ee5261/pro201904175029-data.pdf 19) Alliance for a Green Revolution in Africa (2019). Major Initiative to Boost Cold Storage Capacity in Africa Launched at World Economic Forum in Rwanda. https://agra.org/ifc-and-wfp-collaborate-to-finance-smallholder-farmers-in-rwanda-and-tanzania-2/ 20) Badger Australia. Is Working in Cold Storage Bad for your Health? https://www.badgeraustralia.com.au/blog/is-working-in-cold-storage-bad-for-your-health/ 21) Gatete, C. (2016). The Rwanda we want: Towards ‘Vision 2050’. https://www.minecofin.gov.rw/fileadmin/user_upload/Minecofin/Speeches/Hon_Gatete_Umushyikirano_Presentation_2016.pdf 22) Ministry of Agriculture and Animal Resources (2017). National Agriculture Policy. 23) Republic of Rwanda. 7 Years Government Programme: National Strategy for Transformation (NST 1) 2017 – 2024. 24) Republic of Rwanda. Official Gazette n° Special of 17/01/2013. http://extwprlegs1.fao.org/docs/pdf/RWA131821.pdf 25) Republic of Rwanda (2019). National Cooling Strategy. http://www.fonerwa.org/sites/default/files/Rwanda%20National%20Cooling%20Strategy.pdf 26) Rwanda Green Fund. Publications. http://www.fonerwa.org/publications 27) Ministry of Health. About us. https://moh.gov.rw/index.php?id=380&L=1%27%22 28) Africa Legal Network (2015). Investment Guide - Rwanda. https://www.africalegalnetwork.com/wp-content/uploads/2015/12/Rwanda-Investment-Guide-2015.pdf 29) Republic of Rwanda. The Law on Investment Promotion and Facilitation. https://rdb.rw/wp-content/uploads/publications/Investment%20Promotion%20Law%202015%20(Investment%20code)).pdf 30) Mazimpaka, E (2017). 'Characterization of Cattle Production Systems in Nyagatare District of Eastern Province, Rwanda', Rheolology open access, 1(2): 107. https://www.omicsonline.org/open-access/characterization-of-cattle-production-systems-in-nyagatare-district-ofeastern-province-rwanda.php?aid=91895 31) AMIS Rwanda. http://www.amis.minagri.gov.rw/maps?field_coverage_tid=All&field_commodity_chain_tid=All&field_stakeholder_type_tid=All&field_keywords_tid= 32) Alliance for a Green Revolution in Africa (2019). Major Initiative to Boost Cold Storage Capacity in Africa Launched at World Economic Forum in Rwanda. https://agra.org/ifc-and-wfp-collaborate-to-finance-smallholder-farmers-in-rwanda-and-tanzania-2/ 33) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press.https://dashboards.sdgindex.org/profiles/RWA 34) Republic of Rwanda (2019). Voluntary National Review Rwanda 2019. https://sustainabledevelopment.un.org/content/documents/23432Rwanda_VNR_Document__Final.pdf 35) SDG Tracker (2021). Measuring progress towards the Sustainable Development Goals. https://sdg-tracker.org/ 36) United Nations. Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/database/