Agricultural crops storage

Agricultural crops storage
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Agricultural crops 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

Construct and operate silos and storage facilities for crops that can be leased or operated directly.

Expected Impact

Improve food security and therefore reduce income losses by small and medium scale farmers, as well as benefit other actors in the food market.

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).
> 25% (in IRR)
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.
Only one-third of agricultural output could be stored in 2019.
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
No Poverty (SDG 1) Good health and well-being (SDG 3) Life on Land (SDG 15)
Country
Regions
  • Rwanda: Eastern Province
  • Rwanda: Western Province
  • Rwanda: Northern Province
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: Agriculture dominates Rwanda’s economic growth, involving more than 70% of the population.(1) The sector also provides 91% of Rwanda's food supply and 70% of export revenues, and accounts for 32.7% of gross domestic product (GDP).(2)

Policy priority: Government policy aims to transform agricultural productivity, and achieve food security and related environmental actions.(3) The government also recognizes the importance of agricultural cooperatives, emphasizing them in its agricultural policy.(4)

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.(34)

Investment opportunities introduction: Agricultural performance needs to match rapid population growth, to feed the cities and provide rural employment.(5) Despite declining fertility rates, Rwanda's population is projected to grow significantly: from around 10 million to over 16 million by 2032.(1)

Key bottlenecks introduction: 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.(34)

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

Policy priority: The government recognizes agricultural storage as a key priority for agriculture development, as well as a way of overcoming hunger-related issues.

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.(34)

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 crops storage

Business Model

Construct and operate silos and storage facilities for crops that can be leased or operated directly.

Critical IOA UnitDescribes a complementary market sizing measure exemplifying the opportunities with the IOA.
Only one-third of agricultural output could be stored in 2019.

In 2019, Rwanda produced 960,000 metric tons of cassava, wheat, rice, sorghum and maize.(9)

As of 2019, Rwanda's agricultural storage capacity was estimated to be around 316,050 metric tons.(10) This means that only one-third of agricultural output could be stored in a sector that is is highly dependent on seasonal production.

IRRDescribes an expected annual rate of growth of the IOA investment.
> 25%

A regional case study of metal silos for maize found an estimated benchmark internal rate of return of up to 50%.(8)

The benchmark return on equity, based on cost of equity data for the subsector including a country risk premium is 17.2% - 21.2%.(11)

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)

Depending on size of the complex, the logistics and technology involved as well as materials used, it can take 2 months to 2 years for silos to be constructed, become functional and generate income. Positive cash flows are expected within 5 years.(12),(13),(14),(15)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Business - Supply Chain Constraints
Lack of proper infrastructure for collection and transportation (16), and lack of market data and information (17)
Market - Volatile
The majority of agricultural output is produced by smallholder farmers, who supply small quantities of products to stores.(18)
Market - Highly Regulated
Weak enforcement of agricultural laws and policies make it more difficult to obtain governmental support or handle formal requirements.(19)
Sustainable Development Need

Rwanda is significantly off track to attain SDG 2 - Zero Hunger.(7)

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

The hunger gap must be addressed immediately by improving food supply and quality. Investments must be directed towards agricultural infrastructure.

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.(34)

Expected Development Outcome

Reduced food waste, hunger and food insecurity

Improved distribution and value chains

Alleviated poverty levels due to a higher supply of agricultural products

Gender & Marginalisation

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

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

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

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

Current Level

34.9% (32)

USD 184.82 (33)

Target Level

N/A

N/A

8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)

8.1.1 Annual growth rate of real GDP per capita

8.2.1 Annual growth rate of real GDP per employed person

Current Level

3.57% (32)

3.7% (32)

Target Level

5% (31)

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)
3 - Good Health and Well-Being
Good health and well-being (SDG 3)
15 - Life on Land
Life on Land (SDG 15)
Directly impacted stakeholders
People
Farmers with higher yields and incomes
Gender inequality and/or marginalization
Women as a critical workforce in the agricultural sector
Planet
Environment due to reduced wastage of natural resources
Corporates
Food markets, processing facilities, wholesalers and retailers with improved access to food supplies
Public sector
Public institutions with greater agricultural productivity
Indirectly impacted stakeholders
Corporates
Secondary businesses providing e.g. transport solutions for crops
Outcome Risks

Land clearing

Soil sealing and degradation e.g. by removing the topsoil upper layer to develop a strong foundation for silos, which affects soil-related ecosystem services.

Soil sealing and degradation may reduce soil water holding capacity (affecting flooding), and threaten soil biodiversity (sealing prevents recycling of dead organic material).(7)

Soil sealing and degradation may interfere with the carbon cycle (due to topsoil and vegetation removal).(7)

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 storage for agricultural output has positive outcomes because it improves food security, increases employment opportunities and reduces post-harvest losses.

Who

Small and medium scale farmers with reduced incomes due to perishability; processing facilities, wholesalers and retailers who will benefit from improved access to food supplies

Risk

Although the model is proven, exchange rate fluctuations and market price volatility can affect the business.

Impact Thesis

Improve food security and therefore reduce income losses by small and medium scale farmers, as well as benefit other actors in the food market.

Policy Environment

Strategic Plan For Agriculture Transformation 2018-24: 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 storage facilities.(17)

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 appropriate food storage infrastructure.(21)

Strategic Plan For Agriculture Transformation 2018-24: This policy focuses on increasing attractiveness of investment in the agriculture sector by promoting public-private partnerships (PPPs), especially targeting infrastructure investments.(17)

Financial Environment

Financial incentives: An allowance of 40% of the investment amount in new/used assets is provided if the amount invested is at least USD 44,000 and business assets are held for at least 3 tax periods. Grants and special capital access are available for investors who promote business and development in rural areas.(27)

Fiscal incentives: 50% corporate income tax reduction (to 15%) for agro-processing companies, accelerated depreciation rates, import duty exemptions for agricultural machinery, value added tax exemption on agricultural inputs and livestock material.(28)

Other incentives: Investors demonstrating capacity to add value and invest in the priority sector are offered greater incentives.(27)

Regulatory Environment

Law No 47/2012 of 14/01/2013 Providing Regulations on the Food and Pharmaceutical Products: This Act prohibits manufacturing, preparing, storing, packaging or keeping food products for sale without compliance with hygiene requirements.(22)

Law No.43/2013 of 16/6/2013 Governing Land in Rwanda: This Act determines the framework for allocating, acquiring, transferring, using and managing land in Rwanda.(23)

Annex 2 of the Ministerial Order 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations: This order provides the Rwandan building code with all construction standards and requirements.(24)

Building Faults and Administrative Sanctions Annex 4 of the Ministerial Order N° 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations: This order lists the sanctions that may be applied for breaching the regulations.(25)

Ministerial Order No 01/cab.M/09 OF 27/07/2009 Determining the Modalities of Constructing Buildings Providing Various Public Services to Ease the Access of Persons with Disabilities: This order defines terms and provides construction accessibility requirements for all public service buildings.(26)

Private Sector

InspiraFarms, Bolloré Africa Logistics, SDV Bollore, ENAS, Sarura Commodities, African Development Bank, DOB Equity, International Finance Corporation (IFC)

Government

Ministry of Agriculture and Animal Resources, Rwandan Grains and Cereals Corporation, Rwanda Development Board, Rwanda Horticulture Development Authority (RHODA)

Multilaterals

World Bank, VestedWorld, United Nations Development Programme (UNDP), Food and Agriculture Organization of the United Nations (FAO)

Non-Profit

AgriProFocus Rwanda, Rwanda Youth in Agribusiness Forum (RYAF)

country static map
semi-urban
Rwanda: Eastern Province
The highest production of maize is reported in Nyagatare and Gatsibo districts while the highest production of beans is reported in Nyagatare, Kirehe, Gicumbi and Gatsibo districts.(29)
rural
Rwanda: Western Province
The highest production of cassava is reported in Ruhango, Nyanza and Rusizi districts.(29)
rural
Rwanda: Northern Province
The highest production of wheat is reported in Musanze district.(29)
Sector Sources
  • 1) United Nations Development Programme (2020). Sustainable Development Report 2020. https://unstats.un.org/sdgs/report/2020/The-Sustainable-Development-Goals-Report-2020.pdf 2) 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 3) National Institute of Statistics of Rwanda (2014). RPHC4 Thematic Report: Labor Force Participation. http://www.statistics.gov.rw/publication/rphc4-thematic-report-labour-force-participation 4) World Bank (2020). Rwanda Food Smart Country Diagnostic. http://documents1.worldbank.org/curated/en/288911601302842762/pdf/Rwanda-Food-Smart-Country-Diagnostic.pdf 5) Food and Agriculture Organization of the United Nations. Decent Rural Employment. http://www.fao.org/rural-employment/work-areas/youth-employment/ica-programme/rwanda/en/ 6) World Bank (2020). Rwanda Food Smart Country Diagnostic. http://documents1.worldbank.org/curated/en/288911601302842762/pdf/Rwanda-Food-Smart-Country-Diagnostic.pdf 7) Food and Agriculture Organization of the United Nations. Decent Rural Employment. http://www.fao.org/rural-employment/work-areas/youth-employment/ica-programme/rwanda/en/ 34) 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
IOA Sources
  • 8) Regassa, S. (2014). Does it Pay to Invest in Post-harvest Management? An Ex-Ante Cost Benefit Analysis of Reducing Maize Storage Losses in Darimu Woreda, Ethiopia. https://www.shareweb.ch/site/Agriculture-and-Food-Security/focusareas/Documents/phm_regassa_cba_ethiopia.pdf 9) Regassa, S. (2014). Does it Pay to Invest in Post-harvest Management? An Ex-Ante Cost Benefit Analysis of Reducing Maize Storage Losses in Darimu Woreda, Ethiopia. https://www.shareweb.ch/site/Agriculture-and-Food-Security/focusareas/Documents/phm_regassa_cba_ethiopia.pdf 10) Allafrica (2019). Rwanda: Why Agro-Processing Factories Reject Local Maize Produce. https://allafrica.com/stories/201901220046.html] 11) PwC analysis based on Prof. A. Damodaran data, 2020. 12) International Silo Organisation (2020). Nothing works like a tower silo. https://silo.org/storage-methods/ 13) Štaba, D., Blanda, M. and Dolaček-Alduk, Z. Organization and technology during construction of cement silo. https://www.irbnet.de/daten/iconda/CIB15859.pdf 14) Silos Cordoba (2019). Silos Córdoba has signed a contract for the construction of a grain terminal in Nigeria. https://siloscordoba.com/blog/new-projects/silos-cordoba-has-signed-a-contract-for-the-construction-of-a-grain-terminal-in-nigeria/ 15) AgroMet (2015). Agrom Met silos provider. https://www.silos.com.pl/faq,64.html 16) Malabo Montpellier Panel (2016). Off The Ground: Investing In Rwanda's Agriculture Value Chains. https://www.mamopanel.org/resources/reports-and-briefings/ground-investing-rwandas-agriculture-value-chains-/ 17) Ministry of Agriculture and Animal Resources (2018). Strategic Plan for Agriculture Transformation 2018‐24. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 18) Willoughby, R. and Forsythe, L. (2012). Farming for impact – a case study of smallholder agriculture in Rwanda. Technical Report. Concern Worldwide. 19) Booth, D. and Golooba-Mutebi, F. (2014). 'Policy for Agriculture and Horticulture in Rwanda: A Different Political Economy?' Development Policy Review, 32(S2), S173-S196. https://onlinelibrary.wiley.com/doi/pdf/10.1111/dpr.12081 20) Smith, P., House, J. and Sobocka, J. (2016). Global Change Pressures on Soils from Land Use and Management. Global Change Biology, Wiley. https://hal.archives-ouvertes.fr/hal-01444070/document 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) Republic of Rwanda. Official Gazette n° Special of 17/01/2013. http://extwprlegs1.fao.org/docs/pdf/RWA131821.pdf 23) Republic of Rwanda. Official Gazette no Special of 16/06/2013. http://gmo.gov.rw/fileadmin/user_upload/laws%20and%20policies/Law_N_______43-2013_of_16-06-2013_governing_land_in_Rwanda.pdf 24) Republic of Rwanda. Annex 2 of the Ministerial Order 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations. https://www.mininfra.gov.rw/fileadmin/user_upload/Annex_II.pdf 25) Republic of Rwanda. Building Faults and Administrative Sanctions is Annex 4 of the Ministerial Order N° 03/Cab.M/019 of 15/04/2019 Determining Urban Planning and Building Regulations. https://www.mininfra.gov.rw/fileadmin/user_upload/Annex_IV.pdf 26) Republic of Rwanda. Ministerial Order No 01/cab.M/09 OF 27/07/2009 Determining the Modalities of Constructing Buildings Providing Various Public Services to Ease the Access of Persons with Disabilities. https://www.mininfra.gov.rw/fileadmin/_migrated/content_uploads/ITEKA_RYA_MINISITIRI_RIGENA_UBURYO_INYUBAKO__ZOROHEREZA____ABAFITE_UBUMUGA.pdf 27) Africa Legal Network (2015). Investment Guide - Rwanda. https://www.africalegalnetwork.com/wp-content/uploads/2015/12/Rwanda-Investment-Guide-2015.pdf 28) Rwanda Development Board (2015). The Law on Investment Promotion and Facilitation. https://rdb.rw/wp-content/uploads/publications/Investment%20Promotion%20Law%202015%20(Investment%20code)).pdf 29) National Institute of Statistics of Rwanda (2019). Seasonal Agricultural Survey - 2019 Annual Report. http://www.statistics.gov.rw/publication/seasonal-agricultural-survey-2019-annual-report 30) 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 31) Republic of Rwanda (2019). Voluntary National Review Rwanda 2019. https://sustainabledevelopment.un.org/content/documents/23432Rwanda_VNR_Document__Final.pdf 32) SDG Tracker (2021). Measuring progress towards the Sustainable Development Goals. https://sdg-tracker.org/ 33) United Nations. Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/database/