Setting up and running a small-scale business producing high-value foods

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1 Setting up and running a small-scale business producing high-value foods Opportunities in food processing a series

2 Opportunities in Food Processing A handbook for setting up and running a small-scale business producing high-value foods Contributing authors: Yeshiwas Ademe, Barrie Axtell, Peter Fellows, Linus Gedi, David Harcourt, Cécile La Grenade, Michael Lubowa and Joseph Hounhouigan Edited by: Peter Fellows and Barrie Axtell Midway Associates Published by CTA (2014)

3 About CTA The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). Its mission is to advance food and nutritional security, increase prosperity and encourage sound natural resource management in ACP countries. It provides access to information and knowledge, facilitates policy dialogue and strengthens the capacity of agricultural and rural development institutions and communities. CTA operates under the framework of the Cotonou Agreement and is funded by the EU. For more information on CTA, visit or contact: CTA PO Box AJ Wageningen The Netherlands Citation: Fellows, P.J. and Axtell, B. (Eds), Opportunities in Food Processing: A handbook for setting up and running a smallscale business producing high-value foods. Wageningen: ACP-EU Technical Centre for Agricultural and Rural Cooperation (CTA). ISBN Copyright 2014 CTA, Wageningen, The Netherlands. All rights reserved. No part of this publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means without prior permission of CTA. CTA encourages the non-commercial use of the material in this publication. Proper citation is requested. ISBN Cover photo: Peter Fellows Disclaimer Although the content has been compiled with the greatest care, CTA is not able to guarantee that the information provided is accurate and/or exhaustive, and cannot be held liable for claims pertaining to use of the information. The authors of the publication are not to be held responsible for any consequences that may arise from the use of the information. Furthermore, the information shall not be construed as legal advice. The information does not release the reader from the responsibility of complying with any relevant legislation, regulations, jurisdiction or changes/updates of same. Design and production: FAB s.a., A handbook for setting up and running a small-scale business producing high-value foods - 4 -

4 Preface This book is the result of a collaborative effort by small business owners and advisers of small-scale food processors in ACP countries. The effort was supported by the Technical Centre for Agricultural and Rural Cooperation ACP- EU (CTA). The information contained in the handbook was gathered by the researchers below, who interviewed local enterprises that produce high-value foods and prepared reports that were then compiled by Midway Associates. We hope this book will meet the needs of small-scale enterprises and the agencies that support them by providing technical and business information on the production of high-value foods that was previously difficult to find. It is also intended to help small-scale entrepreneurs to update and improve their businesses to gain market share, benefit their consumers and, of course, improve their own profitability. If you find this book useful, please take a few minutes to complete the feedback form at the end of the book. Preface - 5 -

5 The Opportunities in Food Processing series This is the seventh and final volume of the Opportunities in Food Processing series. The first volume in 2001 was an overview of small-scale processing, including aspects of the science and technology of food processing and business management. The next five volumes applied the principles outlined in the first volume in more detail to the commodity groups: meat and fish products, milling and bakery products, cooking oils, fruits and vegetable products, and dairy products. The aim in each handbook was to provide information that would allow micro- or small-scale food processors in ACP countries to upgrade their businesses. The focus in each book was to improve the supply of processed foods to local markets using technologies that were likely to be available and affordable to ACP processors. Each book assumed a basic level of knowledge and provided detailed information on marketing, financial management, processing and quality assurance, written for people who have English as their second language. Each of the titles is available from CTA at A handbook for setting up and running a small-scale business producing high-value foods - 6 -

6 About this book This volume differs from the previous books in a number of respects. It is not commodity-focused and it groups together a variety of processed foods, or ingredients for cosmetic or medicinal products, that share a common factor of having (or with the potential to have) a high value. It assumes that the intended beneficiaries in ACP countries will already be moderately successful in their food processing businesses, and as a consequence it is written using higher level language than previous books. Additionally, because the value added to processed foods is often higher in industrialised markets, the book includes exporting as well as supplying local markets, with a focus on how ACP processors are able to enter and benefit from value chains 1 for these products. Because the quality requirements for high-value foods, and sometimes their volumes, are both higher than other commodity groups, some of the technologies and staff training requirements described in this book require considerably greater investment than in previous volumes. The book is therefore intended to illustrate potential opportunities for producing highvalue foods in ACP countries, rather than a handbook on how to do this. 1 Value chains comprise a set of actors who conduct a linked sequence of value-adding activities involved in bringing a product from its raw material stage to the final consumer. About this book - 7 -

7 About the authors Yeshiwas Ademe currently works as Country Representative and Ethiopian Branch Manager for Valid Nutrition (VN), based in the Republic of Ireland. He is engaged in supporting local production of ready-to-use therapeutic food, supplementary food and complimentary food for malnourished children and HIV/AIDS patients. His background is accounting and he was awarded a BA in Accounting from Addis Ababa University. He has worked in large companies to improve administration, auditing, finance and accounting, set up systems and software and implement computerized accounting systems and business models. Before working for VN, he was Export Manager for a company engaged in exporting oil seeds, pulses and spices to Europe, Middle East, Far East and USA where he set up systematic flows of information to improve reliability, consistency and timeliness of exports and boosted exports from 6,500 MT to 17,450 MT. He also saved the company 30% on the price of imported raw materials and agricultural chemicals. Previously, he was General Manager for a large company engaged in import, export, transport, agro-industry and dairy processing; with more than 600 workers and capital turnover of more than $US 62.5 million. His aim was to import agricultural inputs that improved production by farmers and buy their produce to help improve their livelihoods. Barrie Axtell is a food technologist with over 30 years experience working in Africa, Caribbean, Asia and Latin America. His particular interest centres on small-enterprise-based drying of fruits and vegetables and processing high-value crops, such as medicinal plants, spices and essential oils, and small enterprise development. He has co-authored more than 15 books and numerous articles on the role of appropriate technology in food processing. Dr Peter Fellows is a consultant food technologist and a director of Midway Associates. He has practical experience of assistance to food processors in 20+ developing countries and specialises in support to institutions that assist them. He has taught food technology at Oxford Brookes University, was Head of Agroprocessing at Intermediate Technology and has held the United Nations Educational, Scientific and Cultural Organization (UNESCO) Chair in A handbook for setting up and running a small-scale business producing high-value foods - 8 -

8 Post-Harvest Technology at Makerere University, Uganda. Since 2010 he has been Editor of Food Chain Journal for Practical Action Publishing. He is an experienced author and has published 34 books and more than 40 articles on small-scale food processing. Linus Gedi is an experienced agro-industry expert, who started his career as tutor and Principal at Ilonga Agriculture Training Institute in Tanzania in 1976, before becoming a consultant in For the past 31 years he has worked on various consultancy assignments, ranging from planning primary crop production, handling, storage and marketing of food products, project appraisal and evaluations. His commodity expertise includes cotton, cashew, sisal, oilseeds, grains, fruits and vegetables, beverages, fishery and meat products. From 1996 to 2003 he worked as the United Nations Industrial Development Organization (UNIDO) National Expert in food technology, training entrepreneurs and trainers and helping them set up small enterprises that achieve high quality production and a cleaner environment. From 2004 to 2012 he worked as a consulting food technologist with the Small Industries Development Organisation; involved in training, promoting/supporting SMEs to invest in agro-food processing and ensuring they produce quality and safe food products. He sits on various national and private advisory bodies on food and agro-industry including the Tanzania Honey Council Ltd. and as Trustee of the Private Agriculture Sector Trust. He is Director and Chairman of Traceability (T) Ltd., a private company that is involved in traceability and food industry consultancies. Dave Harcourt currently consults on food processing issues, writes sporadically for American blogs and the website Food Processing Africa. For many years he has run a blog that links to information of use and interest to food processors in Africa; in particular it identifies free online technical information. He qualified as a Chemical Engineer at the University of Natal and obtained a MSc in Biological Engineering from the University of Birmingham, UK. He worked at the South African oil from coal company for four years. The bulk of his career was at CSIR, South Africa s R&D organisation, mainly for the sorghum beer industry. During this period he undertook process development, brewery design and commissioning, process engineering, consultation and managed a 25-strong multidisciplinary research unit for the NSB and its About the authors - 9 -

9 predecessors. He switched his attention to the potential of food processing as a tool for the development of small businesses after the end of apartheid in 1992, focussing on drying, milling, baking, production of traditional alcoholic beverages, juice processing and oil extraction. Later he worked on alternate fuel, aspects of global warming and the processing of traditional medicines. While at CSIR, he acted as a food processing specialist in many opportunity identification and feasibility studies in Zimbabwe, Mozambique and South Africa. Dr. Djidjoho Joseph Hounhouigan is Professor of Food Science and Technology at the Faculty of Agricultural Sciences of the University of Abomey-Calavi, Benin. He has been Head of the Department of Nutrition and Food Science of this Faculty from 1992 to 2005, National Director of Scientific and Technological Research at the Ministry of Higher Education and Scientific Research from 2007 to He is Scientific Adviser and member of the Food Science Advisory Committee of the International Foundation for Science and has 28 years experience in teaching, research and transfer of technologies for micro- and small-scale enterprises. He has co-authored six books and more than 90 articles in international journals on traditional and improved African food processing and quality assurance. In January 2013, he was appointed Dean of the Faculty of Agricultural Sciences at the University of Abomey- Calavi. Dr. Cecile La Grenade is a food technologist with over twenty years experience, particularly in the field of product development. She holds a Doctoral Degree in Food Science from the University of Maryland, USA. She is also an accomplished food technologist and microbiologist. For the past 20 years, Dr. La Grenade managed her family business, De La Grenade Industries, which is a limited liability company in Grenada. The company is well known for the utilisation of nutmeg pericarp, a former unutilised part of the nutmeg fruit, for the manufacture of award-winning, value added nutmeg products, including nutmeg jam, jelly, syrup and savoury sauces. The company s Morne Delice nutmeg Syrup received a grand Gold Medal from Monde Selection in Brussels in Over the years, the company continued to receive awards including one for the most innovative product at the inaugural Nutmeg Festival held in Grenada in 2012, for her nutmeg-tamarind and nutmeg-ginger A handbook for setting up and running a small-scale business producing high-value foods

10 sauces. Dr. La Grenade has sat on several steering committees of regional private sector organisations, including the Caribbean Export Development Agency and Compete Caribbean. She was also a director of the Grenada Chamber of Industry and Commerce, focusing on the creation of value added products from indigenous raw materials. In May 2013, Dr. La Grenade became the first female Governor General of Grenada. Michael Lubowa is a consultant with over 20 years of experience in agrobased industry with a focus on strategic planning, developing business plans and feasibility studies, conducting baseline and diagnostic sector studies, fabrication of food processing equipment, and practical training of trainers in food processing. He is a qualified industrial economist who began his career in 1988 as a production planning executive in BATA, a multinational footwear manufacturing firm, and later worked as a Senior Industrial Economist at a desk for the foods and beverages sub-sector at the Ministry of Trade and Industry in Uganda. He has worked as a consultant on several agro-processing projects, initiated not only by bilateral and multilateral agencies, but also by public/private partnership organizations and SMEs in Uganda. Currently Mr. Lubowa is an associate of Midway Centre Ltd., Uganda. About the authors

11 Acknowledgements This book is the result of a collaborative effort by the authors, researchers and small-scale industrialists and many people who gave their time to assist in its preparation and publication. We would particularly like to record our thanks to the following people: the specialists who reviewed the draft publication and made valuable contributions to the text from the perspectives of their own specialisations - Andrew Jones of Fair Venture Consulting and Dr Peggy Oti- Boateng, Senior Programme Specialist for Science and Technology for Africa, UNESCO Eastern Africa, former Director, Technology Consultancy Centre, KNUST, Kumasi, Ghana; Dharadipika Hopkins for some of the illustrations; the contributors of photographs and FAB s.a. for the design and layout. We also wish to thank the following small-scale ACP industrialists for sharing their experiences of the problems and successes of operating their processing enterprises and, in doing so, contributing to the success of others. Contributing ACP company owners: 1. Ato Tadele Yismaw, owner/manager, Tadele Pure Bee Honey, Bole Woreda, Kebele 02, PO Box NA, Addis Ababa, Ethiopia. Tel: (+251) , (+251) Dr Cecile La Grenade, Managing Director, De La Grenade Industries Ltd., P.O. Box 788, St. George s, Grenada. Tel: (+473) , (+473) , website: 3. Madam Félicité Djivoh, Owner, Magnificat Enterprise, 01 BP 760 Cotonou, Benin. Tel: (+229) , 4. Madam Flore Adohinzin, Owner, Reish Enterprise, 03BP 2538 Cotonou, Benin. Tel: (+229) , 5. Madam Houndonou, Owner, Ets 2-Distribution, 072 BP 96, Cotonou, Benin. Tel: (+229) Madam Léonie Akpado, FAMASEP (a non-governmental organisation), 03 BP 4138, Cotonou, Benin. Tel: (+229) / , 7. Mr Jerome Sekpon, Manager, CRTT enterprise (Cooperative for Revalorisation of Traditional Technologies), 01 BP 2474, Benin. Tel: (+229) / / , A handbook for setting up and running a small-scale business producing high-value foods

12 8. Mr Sönke Hobbensiefken, Topqualitea (Pty) Ltd., 9 Jagersfontein Lane, Oranjezicht, 8001, Cape Town, South Africa. Tel: (+27) , website: 9. Mr Thys Slabbert, Director, Mirma Products Pty. Ltd., Mirma Products Pty Ltd., Linamax, 1 1st Street, Phalaborwa, Limpopo, South Africa. Tel: (+27) , Mr. Abdulkarim Farid Karama, Sulma Foods, Bulema Lwogi Kikyusa, Luwero District, P.O Box 6046, Kampala, Uganda. Tel: (+256) / (+256) , website: 11. Mr. Alex Wambi, APA Holdings, PO Box 70075, Kampala, Kawempe- Kampala, Uganda. Tel: (+256) / , website: 12. Mr. Ali Sesanga, Aloe Vera Farmers Association Ltd., Plot 34, Rashid Khamis Road, Kampala, Uganda. Tel: (+256) , Mr. Dimus Mulagwe, Uganda Market Services Ltd., P.O. Box 10043, Kampala, Uganda. Tel: (+256) (+256) , Mr. Joseph Balamaze, Managing Director, Jossy Food Processors Ltd., Makerere University Food Technology and Business Incubation Centre, P.O Box 7062, Kampala, Uganda. Tel: (+256) , website: 15. Mr. Kadala M. Khalid, Managing Director, Nkoola Agencies International Ltd., Plot 29/29A Nasser Road, Kampala, and Kawempe Jinja Karoli, Buwedde Road, P.O Box 14121, Kampala, Uganda. Tel: (+256) , (+256) , website: and 16. Mr. Leoporde Lema, Owner, Mwanza Quality Wines Ltd., PO Box 10467, Mwanza, Tanzania. Tel: (+255) , Mr. Mohamed Abubakar, Owner, Al-Qudaymy Halwa, Bububu- Zanzibar, Tanzania. Tel: (+255) / (+255) , Mr. Mohamed Adam Kassa, Owner, Mohamed Super Senene, PO Box 927, Bukoba, Tanzania. Tel: (+255) Acknowledgements

13 19. Mr. Mohamed Said Ali, Managing Director, Madawa, Tel: (+255) , (+255) , Mr. Moses Namungi, Bulika Honey Processors Ltd., P.O Box 2838, Kampala, Plot 5/6 Mabwa Road, Jinja, Uganda. Tel: (+256) , Ms Fatma Riyami, Managing Director, Natureripe Kilimanjaro, PO Box 5496, Plot 743 Mindu Street, Upanga, Dar es Salaam, Tanzania. Tel: (+255) , (+255) , website: 22. Ms Hajjat Rehema Jjuko, Adingana Obutiko Mushroom Packers Ltd., PO Box 1391, Kampala, Kireka Kampala, Uganda. Tel: (+256) / (+256) Ms Pamela Nyakato, Manager, Uganda Medicinal Plant Growers Ltd., Plot 26 Sebagala Street, P.O Box 214, Masindi, Uganda. Tel: (+256) , website: 24. Natalie Tourk and André Grové, Wildebraam South Africa, Wildebraam Berry Estate, S4 Hermitage Valley, Swellendam 6740, South Africa, Tel: (+27) , website: 25. Pierre Cresus Gbado, Manager, Merveilles Tropicales, 04 BP 1154 Cotonou, Benin. Tel: (+229) / , Prof. Dr William Kyamuhangire (owner) and Mr. Michael Kiggundu (Manager), House of Russa Ltd., Makerere Univ. Food Technology and Business Incubation Centre, P.O Box 7062, Kampala, Uganda. Tel: (+256) , (+256) , website: 27. SLD Liquor Manufacturers, PO Box 756, Eppindust 7475, South Africa. Tel: (+27) /7, website: 28. Weizero Almaz Birara, Owner/Manager, Almaz Coffee, Bole Woreda, Kebele 07, around hayahulet PO Box NA Addis Ababa, Ethiopia. Tel: (+251) Weizero Mulu Gebeyehu, Owner/Manager, Mulu Tej, Woreda, Kebele, Addis Ababa, Ethiopia. Tel: (+251) A handbook for setting up and running a small-scale business producing high-value foods

14 Finally, we gratefully acknowledge the following companies, organisations and individuals for giving permission to use the following illustrations: Figure number: 2.1. De la Grenade Industries at last accessed February 3, Screen grab from last accessed January 25, Thailand Unique at last accessed January 25, Jialiang Gao at Grandidieri_Baobab_Morondava_Madagascar.jpg, last accessed November 11, Derek Gaston at last accessed February 3, Screen grab from De la Grenade Industries at last accessed February 3, Screen grab from Golden Tree at ourproducts-chocovarieties.html, last accessed November 11, Pistol River Mushrooms at html, last accessed November 20, Selena, N. B. H., Mr. Ollivanders Magic Potion fruit tisane, available at Potion_fruit_tisane.jpg, last accessed October 30, Popperipopp at Hibiscus_sabdariffa_dried.jpg, last accessed November 11, Practical Action at last accessed November 11, heydrienne at jpg, last accessed November 11, a,b Seasoned Pioneers at last accessed February 9, a. Botanischer Garten TU Darmstadt at File:Vanilla_pompona_%28Botanischer_Garten_TU_Darmstadt%29.jpg, last accessed November 11, b. B. navez at planifolia_cluster_of_green_pods.jpg, last accessed November 20, Acknowledgements

15 3.2.6a. Sunil Elias at curing.jpg, last accessed November 20, b. Suma Foods at uploads/2010/06/vanilla_pod.jpg, last accessed November 11, Arria Belli at orellana_fruit_roucou_kourou_2.jpg, last accessed November 11, Sheabutter Cottage at last accessed November 11, Carib Brewery at ShandyCaribBrand/tabid/111/Default.aspx, last accessed November 11, Badagnani at Erin Silversmith at last accessed November 11, Jmhullot at last accessed November 11, Takeaway at Rai_province_03.JPG, last accessed November 11, Dirk van der Made at coffee-drying.jpg, last accessed November 20, Medicaster at Cocoa_Pods.JPG, last accessed November 11, Prefamac at last accessed November 20, Vinayaraj at hanging_on_a_cashew_tree.jpg, last accessed November 20, Nile Sprague/TechnoServe at last accessed November 20, Practical Action at Marco Schmidt at MS_6687.JPG, last accessed November 20, G. Baldwin & Co. at last accessed February 10, and Macadamia Processing Co. Ltd. at last accessed November 20, A handbook for setting up and running a small-scale business producing high-value foods

16 3.4.8a. Lưu Ly at grandidieri_fruit.jpg, last accessed November 11, b. Rafael Medina at last accessed November 11, d,e. Aduna at last accessed February 6, Zz411at last accessed November 11, ChildofMidnight at commons/8/86/candle_nuts_%28kemiri%29.jpg, last accessed November 11, Rotational at Marula01.jpg, last accessed November 11, Paul Venter at last accessed November 11, Fushi at last accessed February 12, Noodle Too at last accessed November 25, Healing Earth at last accessed February 4, a-c. Moringa Source at last accessed November 11, C. E. Timothy Paine at Flickr, N00/ , last accessed February 3, Cebra Ethical Skin Care at last accessed January 28, Paul Venter at last accessed November 11, b. Cebra at last accessed November 12, Esoteric Oils at last accessed November 12, a. Aaron Landry at last accessed November 23, Rusty Burlew, Honey Bee Suite at last accessed November 11, Acknowledgements

17 3.5.3 Ben pcc at last accessed February 3, b. Ben pcc at ExtractorMotion.jpg, last accessed February 3, b. Kandschwar at WinzerMitRefraktometer.jpg, last accessed November 11, Screen grab from Huadacn at watch?v=rvivcwdmg8g, last accessed March 12, Well Bee-ing at last accessed November 11, Paul Davies of Heathmont Honey, at last accessed February 3, Simon Rees at last accessed November 11, b. Takoradee at Insect_food_stall.JPG, last accessed November 12, Ryan Wood at JPG, last accessed November 11, last accessed February 7, com/photos/fao_forest_health/ /sizes/o/in/photolist-a9x5nda9zsn5-a9x5ct-a9x5hd-a9zsrh-cdwe7y-e61cud-9ahsxy-9ahsiq-9aeisiedzh3q-dekluq-7jj9hg-dvjczz-enqqve-edt9ys-ba1nwb-duybgq/ a. Hsuepfle at Permission for use granted by Arne Larson from last accessed November 11, b. Edible at last accessed November 26, c. ComQuat at gekocht.jpg, last accessed November 21, last accessed February 7, Smooth-O at Peter Fellows Barrie Axtell February 2014 A handbook for setting up and running a small-scale business producing high-value foods

18 Contents Page Preface 5 The Opportunities in Food Processing series 6 About this book 7 About the authors 8 Acknowledgements 12 Contents 19 How to use this book Introduction Access to markets and value chains The need for investment and access to finance Marketing and selling high-value foods Start with the consumer - meeting consumers needs The need for feasibility studies and product development Product differentiation Product development Packaging Types of markets National and local markets Exporting Fair trade organisations Using the internet Production of high-value products High-value dried foods Dried mushrooms Herbal teas Herbs, spices, spice mixes and pastes Plant extracts Flavoured oils Essential oils and oleoresins Natural flavourings 171 Contents

19 3.2.4 Natural food colourants Aloe-vera Coffee, cocoa and chocolate Coffee Cocoa Chocolate Tree nuts and nut products Cashew nuts Kola nuts Macadamia nuts Baobab Chilean hazelnuts Gabon nuts Irvingia (or Dika) nuts Kukui nuts Marula fruits Mongongo nuts Moringa Trichilia Ximenia Insect products Honeybee products Edible insects Alcoholic liqueurs Quality assurance and legislation Introduction - the need for high quality products HACCP Methods of quality management Control over raw material supplies Ingredient weighing and process control Packaging Product quality Hygiene and sanitation Traceability, customer complaints and product recall Internal audits and verification of the QA plan 410 A handbook for setting up and running a small-scale business producing high-value foods

20 4.4 Summary of food legislation Hygiene and sanitation legislation Composition and labelling Water supplies and waste disposal Weights and measures Licensing and control International regulations on exported foods and other high-value ingredients 416 Annexes A Further reading 427 B Glossary and acronyms 431 Index 437 Readers questionnaire 454 Contents

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