REPORT EXPORT FACTSHEET MANGOES
EXPORT FACTSHEET ECOWAS: MANGOES September 2011 i
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Foreword This ECOWAS export potential brief is the result of the intensive training on market analysis organized by the Market Analysis and Research Section of the International Trade Centre to build up the market analysis training capacity of a selected team members of ECOWAS-TEN expert networks with an objective to assist the Economic Community of West African States (ECOWAS), the trade support institutions (TSI) of the West African countries in the export potential analysis of the priority list of agricultural EXPECT products selected by ECOWAS secretariat. The results of this work take parts in the framework of the Programme for building African Capacity for Trade (PACT II), which is financed by the Canadian International Development Agency (CIDA). This export potential brief presents statistical analyses enabling the evaluation of export performances of a particular product from the ECOWAS regional perspective. Thus, it provides a first step in the development of a regional export strategy. Prepared by: Mr. Nanakaan Saave, Assistant Director, Nigerian Export Promotion Council Under the supervision of: Mr. Olivier MARTY, Market Analyst, Market Analysis and Research Section, ITC Mr. Kerfalla CONTE, Market Analyst, Market Analysis and Research Section, ITC With assistance from Ms.Christina Vonnahme, intern, Market Analysis and Research Section, ITC Acknowledgement from the author The Author would like to express the gratitude to Mr. Olivier MARTY and Kerfalla CONTE, Market Analysts and trainers at ITC, who demonstrated their commitment, availability and professionalism during the training; for everything that enabled the participants to master the ITC s market analysis tools and the export potential assessment methodology. The designations employed and the presentation of material in this study do not imply the expression of any opinion whatsoever on the part of the International Trade Centre (ITC) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mentioning of specific companies or of certain commercial products and brand names does not imply that they are endorsed or recommended by ITC in preference to others of a similar nature that are not mentioned. All efforts have been made to assure the accuracy of the information presented in this document. However, ITC and the ECOWAS Commission cannot guarantee the document is free of mistakes or omissions. Short extracts from this document may be freely reproduced, with due acknowledgement of the source. For additional information, please contact: marketanalysis@intracen.org iii
Table of Contents Executive Summary 6 A.Product Description 7 Definition and Description of the Product and its Applications... 7 HS codes and national tariff line codes for selected ECOWAS countries and national tariff line codes for selected importing countries... 7 B.World and ECOWAS Production and Consumption 9 World Production... 9 ECOWAS Production... 10 ECOWAS Consumption... 11 C.The Structure of ECOWAS Exports and World Demand 12 Evolution of World Trade... 12 World Import Characteristics... 13 World Export Characteristics... 14 ECOWAS Members Export Performance... 17 ECOWAS Major Importing Markets... 19 D.Market Access Conditions 20 Tariffs faced by ECOWAS countries in the world and ECOWAS tariff advantages against its competitors in major importing markets... 20 E.Prospects for Product Diversification 21 Identifying value-addition opportunities for current exported products and value-added products with export potential... 21 F.Prospects for Market Diversification 21 Market Screening: Identifying Attractive Markets (see Annex 1 for the methodology)... 21 Competition and ECOWAS Trade Performance in Attractive Markets... 24 G.Value Chain Analysis (Export Strategy) 25 Value Chain Mapping... 25 SWOT Analysis of the ECOWAS Mango Sector... 26 Annex 1: Market Attractiveness Index Methodology 28 Identification of attractive markets... 28 Annex 2: List of Sources 30 Annex 3: Mango Products in Swiss shops 31 iv
Table of Figures Figure 1: World s top mango producers in 2009... 9 Figure 2: Evolution of world import value of mangoes, 2006-2010...12 Figure 3: World s top 20 mango exporters in 2010...16 Figure 4: World map of mango exporters in 2010...16 Figure 5: Map of ECOWAS mango exporters and development of single ECOWAS countries export performance...18 Figure 6: ECOWAS mango exporters in 2010...18 Figure 7: ITC s methodology of identifying attractive markets...28 Table 1: HS Codes and NTLs for ECOWAS countries... 8 Table 2: National tariff line codes for major importing countries... 8 Table 3: World s top ten mango producers in 2009... 9 Table 4: ECOWAS countries ranking in world production of mangoes in 2009...11 Table 5: World s top ten mango importers in 2010...13 Table 6: ECOWAS mango importers in 2010...14 Table 7: World s top ten mango exporters in 2010...15 Table 8: ECOWAS mango exporters in 2010...17 Table 9: ECOWAS major importing markets in 2010...19 Table 10: Tariffs applied by main mango importers...20 Table 11: Tariffs applied to mango by other ECOWAS partners...20 Table 12: Attractive Markets and market characteristics index...22 Table 13: Attractive Markets and market dynamism index...22 Table 14: Attractive Markets and market access conditions index...23 Table 15: Top 10 Attractive Markets...24 Table 16: Competition in attractive markets...24 v
Executive Summary This Export Factsheet reviews the ECOWAS export performance for mangoes and trends in world market demand and identifies potential attractive markets (based on trade indicators) and product diversification opportunities. The purpose of this export potential brief is to provide a first step in the development of a regional export strategy whose implementation would fast-track the export development of the subregion, as well as attain poverty alleviation, employment generation and environmental regeneration goals of member countries. World production of mangoes is estimated at 35 million metric tons, out of which the ECOWAS region contributes 1.4 million metric tons, ranking 7th in the world compared to other countries. Regional discussions have estimated that with appropriate interventions, the region s production would easily triple within a few years. World market demand for mangoes is rapidly growing at an average of 9 percent per annum over the period 2006-2010. Main suppliers are Mexico, the Netherlands, Brazil and Peru, with ECOWAS taking only a paltry 4.1% slice of the world market. ECOWAS exports are mostly limited to fresh mangoes. Exporters of the region need to adopt value addition strategies with a view to diversifying their mango products (dried mango, mango juice, etc); as a base for them to exploit the opportunities inherent in trade. 6
A. Product Description Definition and Description of the Product and its Applications Mango is a tropical evergreen (deciduous) tree, of Asian origin, whose botanical name is Mangifera indica, cultivated for its edible fruit. However, for the purpose of this report, the term mango is used to refer to the fruit of this tree, having a smooth rind, sweet juicy flesh and a flat one-seeded stone. Mangoes vary in size and shape from round to oval, flat to full and symmetrical to asymmetrical. Their skin colour varies from green to yellow, with blushes of red or reddish purple. Flesh colour ranges from a light yellow to vivid orange. 1 Mango is one of the most consumed fresh fruits in the world, with worldwide production exceeding 35 million metric tons in 2009. It is a crop with one of the widest range of varieties. Some of these varieties include Julie, Palmer, Edward, Saigon, Keith, Haden, Peter, Dabsha, Hindi, Mummy, Tommy, Van Dyke, Benishan, Kesar and Lick, providing equally wide range of satisfaction in terms of taste, pulp quality, food value, etc. All over the world, mangoes are mostly consumed as a fresh, unprocessed, ripe fruit. But it is also consumed in processed forms as purée, juice, pickles, slices, chutney and flakes. These forms are generally found in the developed countries (who are the main mango importers) where technological developments and the industrial environment are favourable to processing. Thus, whereas ECOWAS and other developing economies, export mostly fresh mangoes, the importers, through processing, convert the fruits into a wide array of by-products, most of which are alien to the ECOWAS region. To optimally take advantage of the large world import demand, the ECOWAS countries should start full scale processing as well. As is the case with every product, consumer preferences are of immense influence in marketing decisions of companies. This is all the more important for mango which is a food product. Whether in raw form or processed, sanitary and phytosanitary measures requires pest and disease free products, handled under hygienic processes. And of greatest importance is the sensory quality of the product that is characteristics associated with the human senses such as colour and appearance, flavour, aroma and texture. These sensory characteristics vary widely, as there are many different mango cultivars. Mango exporters need to understand the specific preferences of their target market, especially if the market area has previously been exposed to mangoes, because consumers are very likely to prefer products with the characteristics they are used to. However, a very general development is the rise in organically produced mangoes due to health and environmental considerations becoming more important for consumers. HS codes and national tariff line codes for selected ECOWAS countries and national tariff line codes for selected importing countries Mangoes fall under the Harmonised System code (HS)08.04.50, comprising Guavas, mangoes and mangosteens, fresh or dried. However, the code differs at the national tariff line levels of countries, especially depending on the level of transformation. The table below shows the national tariff line codes of selected ECOWAS countries. 1 Source: http://www.thefreedictionary.com/mango 7
Table 1: HS Codes and NTLs for ECOWAS countries ECOWAS Countries HS Code NTL Code Labelled Product Cape Verde 080450 804501000 080450 804509000 Fresh or dried guavas, mangoes and mangosteens: Mangoes Fresh or dried guavas, mangoes and mangosteens: Others Gambia 080450 8045000 Guavas mangoes and mangosteens fresh or dried Ghana Nigeria Senegal Source: Trade Map, ITC 080450 804501000 080450 804509000 Guavas, mangoes and mangosteens, fresh or dried: mangoes Guavas, mangoes and mangosteens, fresh or dried: other: guavas, mangoes and mangosteens 080450 804500000 Fresh or dried guavas, mangoes and mangosteens 080450 804509000 080450 8045010 080450 8045090 080450 804500000 080450 804501000 080450 804509000 Fresh or dried guavas, mangoes and mangosteens : other guavas, mangoes and mangostee Fresh or dried guavas, mangoes and mangosteens (detailed label not available) Fresh or dried guavas, mangoes and mangosteens (detailed label not available) Fresh or dried guavas, mangoes and mangosteens (detailed label not available) Fresh or dried guavas, mangoes and mangosteens: No description at level 8 Fresh or dried guavas, mangoes and mangosteens: No description at level 8 Table 2: National tariff line codes for major importing countries Major importing countries United States of America NTL Code Labelled product 0804500000 Guavas, Mangoes And Mangosteens, Fresh Or Dried 0804508000 Guavas, Mangoes And Mangosteens, Dried 0804508010 Mangoes, Dried 0804504040 Mangoes, Fresh, If Entered During The Period From September 1, In Any Year, To The Following May 31, Inclusive 0804506040 Mangoes Fresh, If Entered During The Period From June 1 To August 31, Of The Following Year, Inclusive China 08045020 Mangoes, Fresh Or Dried Netherlands 08045000 Fresh Or Dried Guavas, Mangoes And Mangosteens Germany 08045000 Fresh Or Dried Guavas, Mangoes And Mangosteens United 08045000 Fresh Or Dried Guavas, Mangoes And Mangosteens Kingdom Source: Trade Map, ITC 8
B. World and ECOWAS Production and Consumption World Production Mango is produced in most regions of the world. It is estimated that a total of 35 million tons of mangoes was produced in 2009 globally, with a production area of more than 5 million hectares 2. According to FAO records, India is clearly the largest producer, accounting for close to half of world production (13.5 million MT), followed by China (4.1 million MT), Thailand (2.4 million MT), Indonesia (2.1 million MT) and Pakistan (1.7 million MT). The only ECOWAS producer that features in the league of top world producers is Nigeria, ranking 8th. Although mango production has become a generally widespread phenomenon, it is still quite concentrated as the top ten countries account for about 80% of the entire world mango production. As they are large importers but do not produce a lot of mangoes, the EU and the US (with only a marginal mango production) could be potential target markets for ECOWAS mango exports. Table 3: World s top ten mango producers in 2009 Rank Country Quantity Produced (metric tons) Rank Country Quantity Produced (metric tons) 1 India 13,557,100 6 Mexico 1,509,270 2 China 4,140,290 7 Brazil 1,197,690 3 Thailand 2,469,810 8 Nigeria 831,489 4 Indonesia 2,150,000 9 Bangladesh 828,161 5 Pakistan 1,728,000 10 Philippines 771,441 Source: FAO Figure 1: World s top mango producers in 2009 Source: FAO 2 Source : FAO 9
ECOWAS Production According to the Food and Agricultural Organization (FOA) data for 2009, the ECOWAS region as a whole ranks 7th in world production of mangoes compared to the leading exporting countries, with a total output of 2.4 million metric tons. Mangoes are grown largely by peasant farmers on homestead gardens, sidewalks and orchards, and only to a small extent by professional horticulturists on small to large-scale plantations. Indeed, large-scale production is not common in West Africa. Average farming communities within the main producing areas are made up of farmers who grow trees mostly raised from seeds. However, grafted seedlings have equally become widespread, even among peasant farmers. Most of the mango orchards are smaller than 10 hectares. They belong mainly to growers whose principal activity is centred on agriculture generally, but not mainly on mango. Few plantations of nearly 100 hectares are found in Senegal, Côte d Ivoire and, of more recent development, in Ghana and Mali. Cultural practices are limited to weeding, with little attention paid to enhanced plant nutrition methods. The crop relies mostly on natural soil nutrients. The advantage here is that little chemical fertilizers are used, making mangoes environment- and diet-friendly. The majority of orchards are poorly attended, thus leaving pests and diseases unchecked. Fruit flies are a major threat to the quality of the ECOWAS mango production. Mangoes produced in West Africa can be grouped into the following categories: a) the local or polyembryonic varieties; b) the monoembryonic varieties propagated by budding (Amelia, Julie, Sabot, Djibelor, etc.); c) the Floridian varieties, equally monoembryonic and propagated by budding and introduced much later (Kent, Keitt, Palmer, Zill, Valencia, Smith, Irwin, Haden); and d) others (Brooks, Davis-Haden, Miami Late, Springfels, Beverly, Eldon, Ruby). As opposed to foreign competitors such as Brazil, the Netherlands, Mexico and even Costa Rica, ECOWAS producers still largely rely on rudimentary methods, or at best low technologies in mango production, leading to lower quality outputs. The situation is compounded by the fact that processing is still at low ebb in the region, a situation which makes it impossible to realise the sector s potential in value addition. Thus marketing efforts are concentrated mostly on unprocessed fresh fruits. Some experts believe that as much as 40 to 50 percent of ECOWAS mango production ends up in losses due to these reasons and other poor post-harvest practices. The main value added product of the region is mango juice, which is almost entirely consumed locally but amount produced is not significant. Others are dried mango slices and mango pulp. Mango production mostly takes place in the rural areas, from where a small amount is transported to the few manufacturing facilities that are located in the urban areas for processing. Also, export consignments have to be moved over long distances to points of shipment. This leads to high costs, losses due to damage resulting from handling and time lapse. Sometimes even accidents occur and entire consignments are lost. Pests, especially the fruit fly and diseases such as anthracnose, pose a great danger to mango production in the region. 10
Table 4: ECOWAS countries ranking in world production of mangoes in 2009 Country Rank Quantity produced (metric tons) 1 Benin 49 14,412 2 Burkina Faso 51 11,203 3 Cape Verde 55 7,002 4 Côte d Ivoire 40 37,000 5 Gambia 76 1,343 6 Ghana 56 7,000 7 Guinea 26 165,000 8 Guinea-Bissau 59 6,098 9 Liberia NA 10 Mali 33 77,606 11 Niger 24 170,572 12 Nigeria 8 831,489 13 Senegal 29 105,000 14 Sierra Leone 54 7,761 15 Togo NA Source: FAO It is also of note that women involvement in mango production is not only important in assessing the social economic impact of the commodity, but is also an indicator of its poverty alleviating potentials. In most countries of the region, women are important players at the different levels of the value chain. In Ghana, women are not just providers of labour, but owners of most of the plantations. The role of women in providing the labour force in planting, maintenance, harvesting, sorting and other processes in the chain cannot be overemphasised. ECOWAS Consumption As indicated earlier, more than 40 to 50 percent of ECOWAS production of mangoes end up in damages because of several reasons, but especially because of poor post-harvest practices. The bulk of the production is consumed locally. Also, due to the seasonality of production, coupled with lack of appropriate storage facilities, mango supply cannot be maintained at a constant level all year round. Most consumers, both in the rural and urban areas, wait till the following season to taste mangoes again. However, a few people, including processors, still demand for the fruit in the off-season. To meet this demand, some ECOWAS countries have to import mangoes. Such importers include Ghana, Côte d Ivoire, the Niger, Cape Verde, Guinea-Bissau, Senegal and Nigeria, most of whom are equally exporters.. 11
World import value in US$ million C. The Structure of ECOWAS Exports and World Demand Evolution of World Trade Even though mangoes are produced in most regions of the world, a few regions still do not produce it. And some other producing regions only produce small quantities. These two categories of nations have to import mangoes to meet their consumption needs. Again, given that production periods vary from region to region, even producing countries have to import during their off-seasons. For these reasons, world demand for mangoes is always available all year round. According to ITC Trade Map, world import of mangoes (HS-080450) in 2010 was 1,206,768 tons, valued at US$ 1,419,501,000, showing significant growth over the previous years. The record indicates an average annual growth in value of 9% between 2006 and 2010 and 14% between 2009 and 2010; while an annual growth in quantity of 7% is recorded for the period 2006 to 2010. This means that global demand and thus market attractiveness for mangoes is increasing, which presents a window of market opportunity for producers of the commodity. It is also interesting to note that the average annual growth in value is higher than the average annual growth in quantity. The reasons for this development are not very apparent, but it could be that demand has increased more than supply, causing prices to rise. Moreover, it could also be because trade in mangoes has shifted to mangoes of premium quality. Figure 2: Evolution of world import value of mangoes, 2006-2010 1'600 1'400 1'200 1'000 800 600 400 World import value 200-2006 2007 2008 2009 2010 Source: Trade Map, ITC The total import is done by 160 countries from 115 exporting nations, meaning that more countries import than export. In fact, some exporting countries equally import. The scenario goes to emphasise the export potentials of the product and the continuing demand for it. The unit value for imports varies substantially between nations. The variation can be due to different reasons. It can show, for example, that countries (importing markets) that are further 12
away from the countries of origin bear higher unit costs. Of equal importance to the variation is the quality of product. Premium products attract higher prices and some countries insist on only premium quality products. These two justifications may thus be responsible for the high unit value paid by countries such as Japan, Australia, France, Switzerland and other developed economies. World Import Characteristics Mango import is a thriving activity especially in the developed countries of Europe and America. Top ten mango importers are the United States of America, the Netherlands, China, Germany, the United Kingdom, Canada, France, Japan, Hong Kong and Spain in that order, clearly pointing to the fact the developed countries are the main importers. Table 5: World s top ten mango importers in 2010 Source: Trade Map, ITC Of the ten top importing countries, the USA, the Netherlands and China, account for 49% of total world imports. Using the Herfindahl market concentration index, this converts to a concentration value of 0.09, indicating that world demand for the product is not very concentrated. But growth rates in markets such as China propose that the world market could still open up much more and present new market opportunities for a number of potential exporters. However, the concentration value does not give any evidence about the concentration of world supply for mangoes. ITC data shows that the three biggest importers have a variety of sources. In fact, variation in supply seasons among different regions of the world ensures that the concentration in supply is relatively low, with a Herfindahl index value of supplying countries concentration of 0.11. For now, the importers whose demand lasts throughout the year due to their purchasing power and evolving diet needs buy from different markets to ensure that their consumers can buy mangoes at any time of the year. 13
It is instructive to note that many ECOWAS countries are not only mango exporters, but also importers, though ranking distantly in position and share of the world import market as can be seen in the table below. Their imports enable them to make up for short production periods as well as to meet off-season requirements, particularly for processing. Table 6: ECOWAS mango importers in 2010 Source: Trade Map, ITC World Export Characteristics Mango export is a high profile business, attracting several countries of the world, despite the delicate and difficult nature of the enterprise. At least 115 nations are involved in the billion dollar and a half trade. Records generated from ITC Trade Map show that the ten world s largest exporting countries are: Mexico, the Netherlands, Brazil, Peru, Thailand, the Philippines, Ecuador, Egypt, Pakistan and Côte d Ivoire in that order. In 2010, these countries exported 947,343 metric tons of mangoes, generating a total export value of US$ 766,897,000 which represents 74.3% of total global exports. Of these top ranking exporters, the three main ones Mexico, the Netherlands and Brazil provided an export total of 544,776 metric tons, valued at US$ 436,420 and representing 42.4% of total world exports. (For more detailed figures, see the table and graph below.) This proposes that supply of mangoes is concentrated. However, using the Herfindahl Index formula, a market concentration value of 0.11 results which states that the market is not very concentrated. 14
It is pertinent to point out that mango exports have recorded growth both in value and quantity, with an annual growth of 9% in value and 7% in quantity between 2006 and 2010. As indicated earlier, the difference between the growth rate in value and quantity could be explained by a number of reasons. On the one hand, it could be because demand is shifting towards premium products that are highly priced. On the other hand, it could be because production has grown slower than demand why prices may have risen following the theory of demand and supply. Moreover, it is important to mention the fact that the growth in value between 2009 and 2010 was much higher than the 5-years annual average. The world growth in value was 17%, 19% for Mexico, 51% for the Netherlands, 23% for Brazil, etc. Only a few countries like Thailand and France recorded a decline in export value during this period. This implies a real challenge to ECOWAS exporters whose export growth rate was on average lower for 2009-2010, although some countries as Guinea, Burkina Faso and Cote d Ivoire experienced high growth rates of 99%, 60& and 14%. Table 7: World s top ten mango exporters in 2010 Source: Trade Map, ITC 15
Figure 3: World s top 20 mango exporters in 2010 Source: Trade Map, ITC Figure 4: World map of mango exporters in 2010 Source: Trade Map, ITC 16
ECOWAS Members Export Performance ITC Trade Map data for 2010 shows that the ECOWAS region ranks 7 th among the other regions of the world with a paltry 4.1% share of world exports of mangoes, generating US$ 42,775,000. According to this data, ECOWAS exports have generally not shown any reasonable growth, either in value or in quantity. Out of the ten exporters of the region, only four enjoyed growth in export value for their export for the period 2006-2010, with relatively small growth rates: Burkina Faso (3%), Ghana (7%), Guinea (8%) and Togo (48%). Moreover, only 3 of them grew their export quantity during the same period. These were: Mali (2%), Ghana (10%) and Gambia (3%). During the period 2009-2010 when most ountries enjoyed a boom in their growth in value, some ECOWAS countries also experienced similar high growth: Côte d Ivoire (14%), Burkina Faso (60%), Ghana (9%) and Guinea (99%) were part of the trend, though on average still experiencing less growth than the world export market. On individual ranking and market share, too, ECOWAS countries do not perform outstandingly, as can be seen in the table, chart and map below. The best performance is that of Côte d Ivoire, ranking 10th in the world, with a market share of 2.2%. The others are more distantly ranked and with smaller, nearly negligible export market shares. Table 8: ECOWAS mango exporters in 2010 Source: Trade Map, ITC 17
Figure 5: Map of ECOWAS mango exporters and development of single ECOWAS countries export performance Source: Trade Map, ITC Figure 6: ECOWAS mango exporters in 2010 Source: Trade Map, ITC 18
ECOWAS Major Importing Markets The main importers of ECOWAS mangoes are the Netherlands, Belgium, France, Germany, UK, Spain, Switzerland, Norway, Austria and Luxembourg, who jointly imported 99.56% of the total ECOWAS mango exports in 2010 worth US$ 51,177,000. Table 9: ECOWAS major importing markets in 2010 Source: Trade Map, ITC. 19
D. Market Access Conditions Tariffs faced by ECOWAS countries in the world and ECOWAS tariff advantages against its competitors in major importing markets ECOWAS faces a wide range of tariffs in the global market for mangoes. Some of these regimes are favourable, while others are not. The table below shows the average tariff faced by ECOWAS (all members considered as one entity) in top import markets. Table 10: Tariffs applied by main mango importers Major importers Average tariff applied to ECOWAS by major importers 20 Exporters tariff advantage in importing market EU (Belgium, France, Germany, Netherlands, Portugal, Spain and UK) 0.0% 0.0% Canada 0.0% 0.0% China 19.3% -19.3% Hong Kong (SARC) 0.0% 0.0% Japan 0.0% 0.6% Saudi Arabia 0.0% 0.0% Switzerland 0.0% 0.1% United States of America 0.0% 0.0% Source: Market Access Map database, ITC ECOWAS benefits from the Most Favoured Nations (MFN) tariff from WTO multilateral trade agreement which provides in some importing markets a zero percent tariff. Other types of trade regimes give preferential treatment to the ECOWAS mango exports such as the African Growth and Opportunity Act (AGOA) providing a tariff free and quota free access to the US market. As shown in the table above, ECOWAS members face on average a zero percent tariff in its majors importing markets and despite the preferential access in some importing countries, this do not provide a tariff advantage over the competition. The case of China is the exception where ECOWAS members face on average a 19.3% tariff whereas their main competitors face lower tariffs. Within the ECOWAS region, the multilateral agreement between ECOWAS members provides usually a better access for different products. However, as shown in the table below, tariff applied on mangoes between ECOWAS are not encouraging the development of intra-regional trade. Table 11: Tariffs applied to mango by other ECOWAS partners ECOWAS Countries Average tariff applied to ECOWAS partners Average of Exporter tariff advantage (Competitors- Exporter) Average of Average distance (Exporter-Market in km) Average of Distance advantage (competitors MINUS exporter to the market, km) Cape Verde 0,0% 0,0% 2,071 1,376 Ghana 0,0% 6,2% 1,181 3,763 Niger 10,0% -10,0% 1,579-66 Guinea 20,0% 0,0% 1,060 5,472 Nigeria 20,0% 0,0% 1,583 3,135 Liberia 1,108 1,943 Source: Market Access Map database, ITC
E. Prospects for Product Diversification Identifying value-addition opportunities for current exported products and valueadded products with export potential More than 90% of mango products exported from the ECOWAS region are fresh fruits. This shows that little processing takes place. Main exporters are Côte d Ivoire, Mali, Burkina Faso and Ghana. In all countries, export performance would be enhanced if processing industries are established to enhance value addition. Other products that would thus emerge would include mango juice, dried mangoes, fresh mango cubes (slices), puree, chutney, pickles, jam and mango pulp. These products would ensure longer shelf life of output, easier and more convenient local and export marketing. They would also, to some extent, take care of the problem of seasonality of supply as products could be preserved to be used during the off-season. India represents one of the most successful stories in the export of value added mango products, with over 50% of its US$ 12.6 million mango export income coming from processed products. Another similar successful processing country is Costa Rica, where exports of dried mangoes compete reasonably with its fresh fruit exports. However, achieving this goal for ECOWAS mango exports is constrained by a number of challenges, mainly emanating from a poor production environment due to weak infrastructures such as power and roads, inadequate finances, high cost of funds, etc. F. Prospects for Market Diversification Market Screening: Identifying Attractive Markets (see Annex 1 for the methodology) Market diversification analysis is based on the screening of markets, an analytical process based on factors used to identify an international market of particular interest for a country or an export sector. In the previous sections of this study, we determined the situation in terms of production, imports and exports of mangoes, both globally and in terms of the ECOWAS region. This section seeks to identify attractive markets for mangoes through a methodology that has been set up by ITC, to enable ECOWAS countries to diversify their export markets. The calculation of the market attractiveness index involves different variables grouped into three dimensions: market characteristics, market dynamism and the market access conditions. Index 1: Markets characteristics Market characteristics are based on trade data available on Trade Map (www.trademap.org) and provide quantitative information on the relative importance of global demand for mangoes. For each importing market, this index takes into account: - The total value of imports in 2010; - The trade balance in value); - The unit value ($/unit) The index on market characteristics is obtained by calculating the weighted average of these three standard indicators according to the methodology of identifying attractive markets (see Appendix 1). The table below shows the top 10 most attractive markets on the basis of this index. 21
Table 122: Importing markets Attractive Markets and market characteristics index Import 2010 Index: Import 2010 Trade Balance 2010 22 Index: Trade Balance 2010 Unit Value $/unit 2010 Index: Unit Value $/unit 2010 Market characteristics A Japan 47,130 100-46,964 100 4,470 81 95 France 60,296 100-46,052 100 1,877 77 94 Germany 88,036 100-70,978 100 1,817 77 94 UK 74,658 100-72,527 100 1,569 77 94 Netherlands 195,695 100-43,020 100 1,378 76 94 Canada 62,879 100-62,798 100 1,348 76 94 China 154,602 100-152,425 100 1,343 76 94 USA 345,355 100-325,985 100 1,040 76 94 Spain 35,485 75-13,817 100 1,101 76 82 Belgium 29,840 63-7,335 100 1,821 77 76 Index 2: Market Dynamism The dynamism of markets is the trend of world imports of mangoes. We measure the market dynamism index by calculating the simple average of two standard indicators: the relative growth and absolute growth in imports over the period 2006-2010. The index is higher in countries where imports are growing faster and reflects a strong growth in demand over the period considered. Very dynamic global markets thus seem more conducive to the development of exports and markets where demand is stagnant or declining. Proportionately, more imports increase in a country, the more likely that world exports destined for that country rise in the future is high. The table below lists the countries where imports are growing faster as the index of dynamic markets. We can see that 6 of the 10 largest markets are in the top 10 fastest growing markets. China is the country that registered the highest growth in imports of mangoes over the period 2006-2010. The table below shows the list of markets that have been most dynamic during the period 2006-2010. Table 133: Top 10 Importing markets Attractive Markets and market dynamism index Value: 2010 Relative growth 2006 to 2010 Index: Relative growth 2006 to 2010 Absolute growth 2007 to 2010 Index: Absolute growth 2007 to 2010 Market Dynamism B China 154,602 51 88 124,680 100 95 Russian Federation 11,737 38 81 8,493 100 92 Italy 15,019 20 70 7,803 100 88 Switzerland 24,542 15 67 10,576 100 87 Netherlands 195,695 14 67 81,263 100 87 Spain 35,485 14 67 14,551 100 87 Germany 88,036 11 65 30,801 100 86 Lithuania 6,445 78 100 5,809 76 86 Canada 62,879 9 64 18,203 100 85 USA 345,355 6 62 76,034 100 85 Index 3: Market access Unlike the two previous indices, the index of the market access conditions depends on the situation of ECOWAS countries. It is obtained by calculating a weighted average of two indices underlying the advantage of the ECOWAS average tariff over its competitors in each market and the advantage of distance through the ECOWAS compared to other suppliers. It should be noted that:
- The ECOWAS distance advantage is the average distance of competitors to the importing market minus the ECOWAS distance to the importing market - The tariff advantage of ECOWAS is the average tariff applied to the rest of the competitors in the importing market minus the average tariff applied to ECOWAS countries. Note: the average tariff faced by ECOWAS in each importing country is the average tariff faced by each ECOWAS members weighted by the bilateral trade with the importing market. All things being equal, suppliers of mangoes are more likely to export to countries that are geographically close enough and where they have preferential access conditions. The table below lists the top 10 importers of mangoes that provide ECOWAS countries with a better access to their markets. We can notice that a large numbers of the top ten countries providing the best market access conditions in terms of tariffs, tariff advantage and distance to markets are ECOWAS s direct competitors such as Brazil, Ecuador and Dominican Republic. Ghana logically appears to be the top market for the ECOWAS region as the country re-exports mangoes from the region to the international market. Morocco could be consider has an attractive market regarding the easy access in terms of distance and the large tariff advantage towards ECOWAS competitors (essentially due the preferential given to Senegal and Least Developed Countries of ECOWAS). Table 144: Top 10 Importing markets Attractive Markets and market access conditions index Tariff applied to exporter Exporter's tariff advantage* Index: Market Openne ss Average distance* (Exporter- Market in km) Distance advantag e* (for exporter to the market,km) Index: Market remote ness Market access conditons C 1 Ghana 0% 6.2% 100 1,181 3,763 65 82 2 Brazil 10% 0.0% 63 5,192 11,023 100 81 3 Ukraine 0% 0.0% 75 5,714 4,708 81 78 4 Croatia 0% 0.0% 75 4,554 4,634 80 77 5 Dominican Republic 20% 0.0% 50 6,805 9,415 100 75 6 Bulgaria 0% 0.0% 75 4,818 4,063 70 73 7 Azerbaijan 15% 0.0% 56 6,438 5,132 89 72 8 Bosnia and Herzegovina 0% 0.0% 75 4,544 3,989 69 72 9 Morocco 10% 17.3% 88 2,737 3,245 56 72 10 Ecuador 25% 0.0% 44 8,102 10,561 100 72 The top 10 attractive markets The market attractiveness composite index examines the possibilities of development and diversification of export markets with mangoes and ECOWAS countries. The index of attractiveness of the market is calculated as the weighted average of three indices previously calculated. Only the top ten most attractive markets are presented in the table below. The attractive markets are concentrated in the EU market, followed by Canada, China and USA. 23
Ranking Table 155: Top 10 Attractive Markets Top 10 Attractive markets Market Attractiveness Index (A+B+C) Weigthed Avg Market characteristics A Weight :0.4 Market Dynamism B Weight :0.4 Market access conditons C Weight :0.2 1 Netherlands 86 94 87 70 2 Germany 85 94 86 66 3 Spain 82 82 87 71 4 Canada 79 94 85 38 5 China 78 94 95 13 6 USA 77 94 85 28 7 Russian Federation 71 57 92 60 8 Switzerland 68 71 87 25 9 Italy 67 60 88 38 10 Norway 65 56 78 58 Competition and ECOWAS Trade Performance in Attractive Markets ECOWAS competitors in the top 5 attractive markets are mainly Brazil and Peru which represent around 45% and 25% market share respectively. Those two countries do face the same type of export constraints related to distance to the EU market comparing to ECOWAS countries. Peru is yet highly competitive and is gaining market shares in Netherlands, Germany, Spain and Canada. ECOWAS is not exporting in Canada and China. Those two countries are getting their suppliers in closer regional markets than the EU, respectively Latin America and South East Asia. The table below shows the first three competitors in each attractive market and ECOWAS performance. Table 166: Competition in attractive markets Top 5 Marchés attractifs Imported Value in 2010 World Market share (%) Annual Import growth rate 2009/10 1,000 USD % % Netherlands 195,695 24.3 15 Germany 88,036 6.2 24 Spain 35,485 2.5 29 Canada 62,879 4.4 12 China 154,602 10.9 1 1st competitor 2nd competitor 3rd competitor (Market share ; Annual Growth Rate 2009-2010) Brazil (47.6%; 63%) Brazil (35.9%, 9%) Brazil (57.8%; 25%) Mexico (59%; 8%) Thailand (81%; -4%) Peru (25.1%; 47%) Peru (21.5%,92%) Peru (15.3%, 64%) Peru (7.6%; 113%) Indonesia (15.2%; 65%) Mexico (3-3%,, 210%) Spain (7.5%, 62%) Netherlands (4.6%, 77%) Brazil (6.6%; 0%) Myanmar (1.7%, -27%) ECOWAS Performance (Market share ; Annual Growth Rate 2009-2010) 7.8%,45% 10.6%, 24% 2.5%,29% 0%, 0% 0%, 0% 24
G. Value Chain Analysis (Export Strategy) Value Chain Mapping Challenges: Weaknesses and Threats of the Value Chain of Mangoes in ECOWAS countries Inputs (Seeds, Fertilisers, Nursery, etc.) - Disease prone and low yielding varieties - Lack of fertilizers, pesticides and other inputs - Poor cultural practices - Lack of awareness of current developments in the area Production (Productivity, Diseases, etc.) - Pests and diseases - High turnover of workers - Poor pay for labour - Unstable weather conditions - Poor Research and Development - Lack of awareness of current developments in the area Harvest, Transportation, Drying, Peeling, Pulping, Fermentation, Packing - High costs of transportation - Lack of appropriate technologies - Poor infrastructures (roads, power, communication, etc.) - Lack of awareness of current developments in the area Services (Standards, Finance, Insurance, Customs, Transport, Quality Control, Exportation) - High interest rate on loans (capital) - Inadequate Finance - Low local consumption - Pricing system - Lack of awareness of current developments in the area Solutions: Inputs (Seeds, Fertilisers, Nursery, etc.) - Introduction of high yielding and disease resistant varieties (seedlings) - Subsidies for seedlings - Provision of fertilizers - Input capacity building for farmers - Provision of adequate extension services Production (Productivity, Diseases, etc.) - Provision of pesticides and other chemicals - Subsidies for pesticides and chemicals - Improvement of working conditions - Construction of dams and water management facilities - Improvement in Research and Development and implementation of research findings - Improvement in product quality standards - Introduction of an ECOWAS Label of Origin - General awareness creation 25
Harvest, Transportation, Drying, Peeling, Pulping, Fermentation, Packing - Improvement in the enabling environment through the provision of requisite infrastructure - Acquisition of appropriate technologies - Motivate indigenous shipping lines to link the region directly to export destinations Services (Standards, Finance, Insurance, Customs, Transport, Quality Control, Exportation) - Access to low interest finance - Installation of processing outfits - Improvement in Marketing Techniques - General awareness creation SWOT Analysis of the ECOWAS Mango Sector The SWOT analysis endeavours to assess the current status of the ECOWAS export market for mangoes, HS Code 080450. Strengths/ Opportunities 1. Abundance of production factors of rich land and labour for export production. 2. Geographical proximity to vast markets of Europe and the Americas. 3. Endowment with geographical areas with diversified climate and soil conditions. 4. Availability of vast tracts of rich agricultural land and water bodies. 5. Availability of human capital in form of educated and skilled workforce. 6. Endowment with high annual rainfall in most parts of the country. 7. Previous experience of having a huge, strong and vibrant non-oil export sector dominated by agricultural products up to 1960. 8. Existence of at least 50 Agricultural Universities, Polytechnics and Research Institutes. 9. The large vibrant domestic market has the potential of attracting domestic marketseeking FDIs which develop the domestic industrial capacity to also serve export purposes. 10. A well established export infrastructure with key functional institutions. 11. The current rising prices of food and other agricultural products provide immense opportunities for ECOWAS to organize its agriculture to take advantage of the world market situation. 12. The seasons are inverse to those of the northern hemisphere. 13. The strong emergence of India, China, Brazil and other South American states Weaknesses/ Threats 1. Infrastructural deficiencies especially in electricity, water, roads and rail network that result in high operating costs. 2. Insufficient orientation of trade policy to export promotion. 3. Inadequate value chain infrastructure for export goods. 4. Difficult access to land for large scale farming of possible export products. 5. Inadequate skills of the right type set to match current and emerging needs of the international fruit market 6. Unreliable and unstable regulatory environment due to drastic and sudden policy changes. 7. Poor urban/rural and regional planning resulting in unattractive business environment outside the large cities. 8. Difficult access to bank/institutional finance and high interest rates. 9. Limited management capacity of SMEs which dominate the external trade sector. 10. Weak synergy among government agencies. 11. Expected foreign direct investment (FDI) inflows not being realized to develop production capacity for export and to take advantage of opportunities under trade pacts such as AGOA and EPA. 12. Political instability in the West African subregion causes high risk assessment by foreign direct investors. 13. The large, vibrant and lucrative domestic market may prove to be more attractive to potential exporters and lure them to produce for the local market instead of the export 26
provides vast new market opportunities for ECOWAS exports. 14. Vast opportunities in the ECOWAS market. 15. Growing export market. (ECOWAS exports of this product group grew by 9% in value and 7% in quantity between 2006 and 2010) 16. High demand in world market 17. New technologies available/ not yet exploited for further improving the quality of products (value addition) 18. Preferential tariff application due to Bilateral/multilateral agreements such as WTO giving free access to world markets 19. Tariff and quota free access to US market due to AGOA 20. Possibility for new markets (new markets are developing because of higher purchasing power associated with their newly achieved levels of development). 21. Favourable policies of governments to boost agricultural commodities export. 22. Provides employment for rural people, especially women. (Agriculture, to which this product sector belongs, provided 58.75% of total national employment between 2003 and 2007). market. 14. Competition from other regions whose production costs and export constraints are less than ECOWAS. 15. The vagaries of the weather make consistency and prediction of production impossible. 16. Low production technology and lack of value addition. 17. Poor/inadequate storage facilities leading to post-harvest losses. 18. Low wages. 19. High labour turnover. 20. Urbanization leading to the depletion of labour force in rural areas. 27
Annex 1: Market Attractiveness Index Methodology Figure 7: ITC s methodology of identifying attractive markets Identification of attractive markets Identifying potential products and markets is a necessary step in the process of diversifying exports. While acknowledging the existence of sophisticated methodologies, we have employed composite indicators to help us identify exports and markets with potential. This methodology is based on combining indicators discussed earlier into composite indicators. Composite indicators allow the identification of those markets or products in which enterprises in Country X have the potential to export more. ITC employs a composite indicator because it reflects all information about the trade performance of products and markets, both negative and positive, and may easily be re-adjusted by changing the weightings of the sub-indicators depending on Country X s situation. Thus, all indicators are important; combining them into a single summary measure allows the identification of those product / market combinations that are dynamic, open, granting a preferential access and where Country X is currently under-represented. The sub-indicators are expressed in a variety of different statistical units and different variable sets have different ranges or scales. These need to be translated to a common basis to avoid problems in mixing measurement units (e.g. $ value, % growth, km distance). Thus, they must be standardised or normalised before they are aggregated into a composite indicator. Several techniques can be used to standardise or normalise variables, with each method having its advantages and disadvantages. The normalisation method used here converts each indicator into a range of 0 (weak performance) and 100 (best performance). It gives 0 points to markets with values below a certain threshold value and 100 points to markets with values above the threshold value. All other markets obtain points between 0 and 100 depending on their relative distance between these two thresholds. The thresholds are used to avoid having extreme values dominate and also to partially correct for data quality problems, as values extremely far from the average or normal range are more likely to reflect poor underlying data. The thresholds used here vary from one indicator to another. For example, regarding the openness indicator, the markets applying a zero percent ad valorem tariff gets 100 points whereas markets applying a tariff superior to 40% get 0 points. The following formula is applied: Value Lower limit 100 * Upper limit Lower limit The sub-indicators are composed of Market characteristics, Markets trends and Market Access Conditions: Market characteristics The market characteristics indicator is a composite indice including the size of world demand (the total value of imports in 2010); the trade balance in value and the unit value ($/unit). World demand is characterized by the size of import value. Large markets are potentially more interesting than small ones. The value of the country s total imports for the selected sector indicates the importance of the sector. Market trends The market trend indicator looks at market dynamism, as measured by the import growth rate from the World and absolute growth (i.e. absolute change in value of imports) from the World (the relative growth and absolute growth in imports over the period 2006-2010). The strong growth suggests that enterprises in Country X have a potential to export more to those markets. 28
Market access conditions The market access conditions examines two elements: 1) the preferential access to import markets, as measured by the tariff differential between Country X and the tariff faced by the rest of competitors in each import market; and 2) the relative distance, as measured by the difference of distance between Country X and an importing market and the distance between Country X s competitors and the same market. Distance The relative distance indicator aims to measure if Country X (i.e. exporting country) is more advantaged than its competitors when exporting to the same market. The closer Country X is to its markets and the further away are its competitors from the same market, the greater is Country X s advantage. In order to measure this, we compute the difference of distance between Country X (i.e. exporting country) and trading partner and the distance between competing exporters and the target market, weighted by each exporter s trade flow at HS 6-digit level. We employ trade flow by partner level at HS 6-digit level and distance data between exporting countries and demanding markets. 3 Thus the more negative this indicator, the better for Country X. Figure: Overview : Identification of attractive markets Identification of attractive markets Market Characteristics Market Trends Market Access Conditions World Imports (value US$) Trade balance in value (value US$) Unit Value (value (US$/unit) Growth rate of imports from the World (% p.a.) Absolute growth from the World (value US$) Market openness (Weighted tariff advantages, %) Relative Distance 3 TradeMap dataset and CEPII distance dataset. 29
Annex 2: List of Sources Vannière, Henri; Christian Didier; Jean-Yves Rey; Thierno Mamadou Diallo; Sidiki Kéita and Morodjan Sangaré (2004). La mangue en Afrique de l Ouest francophone : les systèmes de production et les itinéraires techniques. Fruits, 59, pp 383-398 doi:10.1051/fruits:2005001 Cavaletto, Catherine G (1993). Sensory quality of mango fruit. In: Chia CL, Evans DO, editors. Proceedings, Conference on Mango in Hawaii; March 9-11, 1993; Honolulu, Hawaii. Honolulu (HI): University of Hawaii. pp. 48-50. http://hdl.handle.net/10125/16478 Food and Agricultural Organization of the United Nations (FAO) www.fao.org, Agriculture Statistics (FAOSTAT-Agriculture) ITC Trade Map www.trademap.org ITC Market Access Map www.macmap.org themangofactory.com wwww.tradeandexports.com www.bar.gov.ph www.ammaservices.com 30
Annex 3: Mango Products in Swiss shops 31
In partnership with: Street address: ITC, 54-56, rue de Montbrillant, 1202 Geneva, Switzerland Postal address: ITC, Palais des Nations, 1211 Geneva 10, Switzerland Sponsored by: Telephone: +41-22 730 0111 Fax: +41-22 733 4439 E-mail: itcreg@intracen.org Internet: www.intracen.org