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COPYRIGHT 2004 - ALTAI CONSULTING, KABUL - AFGHANISTAN1
MAY
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Flower Power Project Summary
Develop the oil roses clusterin Afghanistan to produce roseessence for the fragrance industry worldwide
Objectives
Production
Local
Development
/
Beneficiaries
240 ha. of cultivation
Excellent conditions for organic cultivation of Damascena rose
Value adding processing and distillation done locally
Oil roses yield US$ 3,000 per ha. (US$ 1,650 farm-gate price), agood economic alternative to poppy
500 to 1,000 farmers involved
Harvest: temporary employment for 3,000/5,000 workersincluding many women
10 to 30 local processing units will employ 50 to 150 workers opportunity for women entrepreneurship
25 qualified workers in the central distillation unit
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Phase 1
Market research
Identification of opportunities for Flavorand Fragrance crops in Afghanistan
Phase 3 Implementation and Business plans
Phase 2
Field feasibility study
Selection of crops
Technical scheme for project implementation
Phase 4 Sourcing of stakeholders
IMPLEMENTATION
Approach & Methodology
Work plan
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GENEVAGENEVA
GENEVAGENEVA
GIVAUDAN-Rmi Pulvrail, International Buyers Naturals-Francis Chabagno, New molecules development Director
FIRMENICH
Jean-Pierre Rozat, Director Global Purchasing PerfumeryNatural Raw Material
Gordon Sanders, Buyer Perfumery Natural Raw Material
GIVAUDAN-Rmi Pulvrail, International Buyers Naturals-Francis Chabagno, New molecules development Director
FIRMENICH
Jean-Pierre Rozat, Director Global Purchasing PerfumeryNatural Raw Material
Gordon Sanders, Buyer Perfumery Natural Raw Material
Approach & Methodology
People interviewed
PARISPARIS
PARISPARIS
OTHEROTHER
OTHEROTHER
MT ROMANCE /AUSTRALIAN SANDAL
WOOD Co.Stephane Picquart
DESMARET SAM. Desmaret, GeneralManager
BIOLANDES SADominique Roques, GeneralManager
MT ROMANCE /AUSTRALIAN SANDAL
WOOD Co.Stephane Picquart
DESMARET SAM. Desmaret, GeneralManager
BIOLANDES SADominique Roques, GeneralManager
GRASSEGRASSE
GRASSEGRASSE
ROBERTET
Jean Daniel Dor, Development Director
Robert Sinigaglia, Production Director
Anne Sophie Boulet, Account Manager
IFF
Bernard Toulemonde, GeneralManager Laboratoire Monique Rmy
ROBERTET
Jean Daniel Dor, Development Director
Robert Sinigaglia, Production Director
Anne Sophie Boulet, Account Manager
IFF
Bernard Toulemonde, GeneralManager Laboratoire Monique Rmy
Key industry leaders across all levels have been consulted through one to one interviews.
GIVAUDANNatalie Garcia-Cetto, Perfumer fine Fragrance
Anna Estevane, European Marketing DirectorFIRMENICHOdile Pelissier, Account ManagerTAKASAGOJean Gatignol, Senior Vice PresidentDUCROS
Alain CarronnierLOREAL
Mathias Houpillart, Naturals RM buyer
Marie Claude Fonade, Perfumer
KABUL / JALALABADKABUL / JALALABAD
KABUL / JALALABADKABUL / JALALABAD
MADERA
Alain de Bures, Founder
Anne Lancelot, Country DirectorGERMAN AGRO ACTIONDr. Julius Obermaier, Expert in rose cultivationAlexandra Rueth, Field ManagerURDFrancois Grunewald, FounderOTHER
Zalmai Chawali, Teacher and Farmer
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The Flavor & Fragrance Market
Market Mapping
0
5
10
15
20
2000 2002 2003 (est.)
Market Size, in Bn US $, estimates
CAGR* = 10.1%
Note: *Figures come from the aggregated revenues from the companies dealing in the market. Actual growth should be lower according to our estimatesSource: Freedonia Inc; Givaudan; Firmenich; Robertet; Altai Consulting analysis
60%
40%
0%
50%
100%
87%
13%
1 2
3 4
Market Size
47.4 MM
0.9 Bn $
16.6 Bn $
6.3 Bn $
13.8 16.6 18.4
Flavors
Fragrance
Natural Raw
Material- Uniqueness
- Bio / Well being
- High Quality
Synthetic RawMaterial
- Non speculative
- Affordable
- Allergy free
Flavor/Fragrance Split 2002
2002Flavor and FragranceMarket Size
Of which we consideronly the RM
Of which we consideronly the Natural RM
The Flavor and Fragrance Market is a growing marketestimated at 18.4 billion US $
Fragrances account for 40% of the market
Natural Raw Materials (RM) represent 13% of the totalRM used
The market size for Natural Raw Material for the Flavorand Fragrance Market is 900 M $
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Pre-selection Criteria
for F&F crops in Afghanistan
Size and growth of the market
Differentiators in the market: Is it a value (quality) or volume (low cost) driven market?
Structure of the market: presence of oligopolies, speculation?
Non-sustainability of the current supply chain: non-socially responsible suppliers, cartels,
Willingness of the buyers to find new variants
Attractiveness of Afghanistan in this market: primary suitability (climate, soil)
A
B
C
D
E
F
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Pre-selection
Fragrance Crops
Suitability to Afghanistan HighLow
BusinessAttractiveness
Low
HighSandal (15-21 M $; 500-700 $/kg)
Fragrance Crops (Market Size in M $; Essence Price per kg), 2002, est.
Vetiver (6-14 M $; 50-120 $/kg)
Clove (4.5 M $; 3 $/kg)
Citronella (3-6 M $;3-6 $/kg)
Rose (18 M $(*); 4,400 $/kg)
Geranium (9-12 M $; 45-60 $/kg)
Sage (7.5 M $; 25 $/kg)
Patchouli (25 M $; 25 $/kg)
Jasmine (5.5 M $;550 $/kg)
Lavendin (12-13 M $; 12-13 $/kg)
(*) including rose essence and concrete
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The Damascena Rose is recognized as the best oil rose
Market price forrose essence, has been US$ 4,000 to 5,000 per Kg
It takes 3,500 Kg of rose flowers to make one Kg of essence
Rose concrete is sold for US$ 700 to 800 per Kg
It takes 450 Kg of rose flowers to extract one Kg of concrete
Value Chain:
Focus on the Damascena rose
4,400
400
800
700
400
700
1,400
0
1000
2000
3000
4000
5000
Raw Material Producer
Margin
Processing
Costs
Processing
Margin
Intermediate
Margin
Wholesaler
Margin
Final Price
Wholesale
Production: 2,100 $
Production + Processing: 3,200 $
Value Chain of 1 kg of Rose Essence (~1.3 hectare), est., in US $
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Damascena Rose: Market Research and Feasibility Study
Market size: the rose extract forfragrance market segmentrepresents US$ 18 million (*) yearlyworldwide (10,000 tons of flowers)
Main producers are Bulgaria andTurkey (~90% of the market), othersinclude Morocco, Lebanon, Iran
Market Opportunities:
buyers want to change suppliers
production costs in Bulgaria likelyto increase with entry in EU
Afghan Rose quality andconcept
(*) including essential oil and concrete
Oil roses will grow well above 1,000meters elevation in the central andeastern regions:
water quality is good
salt content is low Other fragrance crops can be
cultivated there:
geranium under 1,000 meters
lavender at all altitudes
other local specialties to beexplored
Farmers can intercrop withvegetables and clover for additionalrevenue
Market ResearchMain findings
Feasibility StudyMain findings
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Phase 1 Market research
Phase 3Implementation and Business plans
Financial scheme for project implementation
Phase 2 Field feasibility study
Sourcing of stakeholders
IMPLEMENTATION
Approach & Methodology
Work plan
Phase 4
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Production Plan
Farmers
Rose FlowersProcessing
Unit
Rose
Flowers
Distillation
/ Extraction
Unit
Farmers
Rose
Flowers
Farmers
Rose
Flowers
Rose
Water
Rose
Essence
/ Concrete
Rose FlowersProcessing
Unit
Distillation
/ Extraction
Unit
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Site selection
Spring frost free areas south of the
Hindu Kush
1,000 meters elevation
Irrigation water security
Low salt content
The Central region (around Kabul)
and Eastern regions (aroundJalalabad) have been identified as
suitable
See details on map
%
##
#
#
#
Azra
Surobi
Jaji
Nuristan
Rodat
Puli Alam
Alingar
Qarghayi
arkh
Pech
Nijrab
Hisarak
Achin
Lal Pur
TagabKohi Safi
Dih Sabz
Alishing
Dawlat Shah
Khushi
Asa
Sayid Karam
Sherzad
Dih Bala
Goshta
Khogyani
Mihtarlam
Muhammad Agha
Nurgal
Bagram
Khaki Jabbar
Dur Baba
Paghman
Shinwari
Kama
Chapa DaraAlasay
Lija Mangal
Bagrami
Kabul
Surkh Rod
Kuz Kunar
Hisa-I-Duwum Panjsher
Jai Ma dan
Narang
Chawkay
Chamkani
Khas Kunar
Shakar Dara
i Barak
Sir
Dara-I-Nur
Chaharikar
Istalif
Shinwar
Bati Kot
Pachir Wa Agam
MusayiChahar Asyab
Chaparhar
Jalalabad
Koh Band
hr
Guldara
Jabalussaraj
Muhmand Dar
Nazyan
Dand Wa Patan
Mahmud Raqi
Mir Bacha Kot
Kalakan
0 50 Miles
N
EW
S
Central region:
Easier logistics, less transportationcosts and time
Rehabilitation (Chamali plain)
Bigger landholdings potential formore efficiency and quality
Eastern region:
Smaller landholdings
Remote locations
Natural flower garden
Alternative livelihood for farmers
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Site Selection: Suitable areas for Rose Damascena
cultivation in Eastern Afghanistan
%
##
#
#
#
Azra
Surobi
Jaji
Nuristan
Rodat
Puli Alam
Alingar
Qarghayi
arkh
Pech
Nijrab
Hisarak
Achin
Lal Pur
TagabKohi Safi
Dih Sabz
Alishing
Dawlat Shah
Khushi
Asa
Sayid Karam
Sherzad
Dih Bala
Goshta
Khogyani
Mihtarlam
Muhammad Agha
Nurgal
Bagram
Khaki Jabbar
Dur Baba
Paghman
Shinwari
Kama
Chapa DaraAlasay
Lija Mangal
BagramiKabul
Surkh Rod
Kuz Kunar
Hisa-I-Duwum Panjsher
Narang
Chawkay
Chamkani
Khas Kunar
Shakar Dara
i Barak
Si
Dara-I-Nur
Chaharikar
Istalif
Shinwar
Bati Kot
Pachir Wa Agam
MusayiChahar Asyab
Chaparhar
Jalalabad
Koh Band
r
Guldara
Jabalussaraj
Muhmand Dar
Nazyan
Dand Wa Patan
Mahmud Raqi
Mir Bacha Kot
Kalakan
0 50 Miles
N
EW
S
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Flower Power Presentation of
Actors and Roles
FARMERS
Cultivation HarvestDONORS
Funding
PROJECT MANAGEMENT
Research Steering Coordination Marketing
- Local Processing Units (10 to 30)Post-Harvest Processing Rose Water Distilling
- Afghan Rose Co.
Production Distribution Logistics Marketing
NGOs
Training Production Control
PRIVATE BUSINESSES
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Infrastructure
Cultivation
Actors and Roles
Rose Water
Production Units
Afghan Rose Co.Transformation
and Sales
Training
ProductionControl
Funds
Rose
Flowers
Rose
Water
International
Market
Rose
Essence
Farmers
Donors NGOs
Processing
Sales
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Action Plan
Post HarvestProcessing
Post HarvestProcessing
InvestmentMarketResearchMarket
Research
DONORS
TrainingTraining ProductionMonitoringProductionMonitoring
DistillationDistillation Sales andPromotionSales andPromotion
FUNDING
IMPLEMENTATION
DONORS (Grants for R&D and Infrastructure)
MarketResearch
FeasibilityStudy
Businessplans andpartnerrecruitment
Train thetrainers
Practicaltraining forfarmers
Demons-tration plots
PROJECT
MANAGEMENT
TEAM
Capacitybuilding
DevelopQuality Controlprocedures
10 to 30decentralizedpost-harvestprocessingunits
Potential forwomenentrepreneur-ship programs
Developrelationshipwithinternationalbuyers
Certificationof theproductionprocess
Maindistillation units
DistillationTechniquesR&D
NGOsPRIVATE
INVESTORS
PRIVATE INVESTOR
AFGHAN ROSE CO
PRIVATE INVESTORS
PROJECT MANAGEMENT TEAM
Project Management Marketing CoordinationProject Management Marketing Coordination
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Focus on Farmers
Expected average landholding: 2 jeribs (0.4 hectare)
Investment is US$ 1,050 per hectare
Revenue of rose flowers is US$ 1,650 per hectare after year 3, and reachesover US$ 2,000 per hectare including intercrops
Profit is around US$ 400 per year after year 5
The return rate for this investment is 17% a year on 10 years cash flow
Advantages for farmers: income security, training, access to international
markets
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Focus on Farmers Financing Scheme
Early farmers (50 of them) will need to import cuttings for an expensive US$1 a piece. They will nevertheless make more profit from selling manycuttings for reproduction.
These early farmers will produce cuttings and sell them to new farmers forUS$ 0.35
All farmers will need a credit scheme in order to make up for the investmentand lack of production in year 1
These figures do not include any grants from donors. Interest free creditschemes or grants could be built in to help farmers invest in cuttings
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Value to farmers and their communities
US$ 280
US$ 5,200
US$ 1,500
NPV(*) of
10-year cash flow
Very high labor costs (harvest) are detrimental to the farmers bottom line, but they
are a plus for the extended family / community:
(*) NPV= net present value of projected cash flow
Value to the
community
Value to theextended family
Value to thefarmer
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Business Plan Local Processing Unit
Investment is $4,000
Good return on investment
US$ 500 profit per yearWith donor grants of $3,000 per unit, each unit can bring a 35% returnon a 10-year period
Advantages for entrepreneurs: proven technology, natural investment for the
surrounding community
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Business Plan Afghan Rose Co.
Investment is US$ 400,000
The company shows 19% Internal Return Rate on a 10-year period,when taking into account:
US$ 150,000 grants to purchase equipment
Donors participation in R&D, Marketing
Other flowers, roots and herbs can be distilled for the fragranceindustry, adding to the profitability of the distillation and marketingcompany
Advantages for private investors: market segment where Afghanistan can be
very successful (and become a brand)
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Donors Involvement
Funding for agricultural infrastructure
Project Management
Import and reproduction of roses
Selection and contracting of farmers
Grants and credit scheme for farmers
Training of extension agents and farmers
Extension / field work
Funding for distillation infrastructure
Research and Development, Marketing, Project Management
Grants for test distillation units
Training of distillation staff
Early test of roses for distillation
Sourcing or cultivation of test crops for distillation
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How to get started
Cultivation of potential crops(flowers and herbs)
Training of personnel
Distillation tests/ Research andDevelopment
Market research, involvement ofkey stakeholders in the market
Support of other Essential Oilprojects (local roses, otherflowers, dried spices and wildherbs)
Phase 1 Pilot farm anddistillation unit
Phase 2 Development
Production and marketing ofsuccessful Phase 1 EssentialOils
Expansion of pilot farm byprivate investors
Final selection of crops forAfghanistan
Extension projects in several
regions
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Pilot Farm - Objectives
Market research and selection of crops, sourcing ofcuttings and seeds (potential crops are geranium, lavender, iris,sage, mint, basil, citronella)
Hiring and Training of personnel (management,horticulture, distillation)
Cultivation and harvest
Sourcing of additional distillation raw material (such asorange blossoms, vetiver, cardamom, aniseed, cumin, saffron)
Distillation
Test of distillation material
Promotion of results
Phase 1
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Pilot farm - Details
25 to 40 hectares
Cultivation
7 to 10 hectares imported Damascena roses
Remaining lands and intercrops: local roses, other flowersand herbs
Employment: 20 to 30 employees
Potential to populate 20 hectares every year with localcuttings of Damascena roses
Phase 1
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Milestones and Timeline
Phase 1 Pilot FarmPhase 1 Pilot Farm
ExtensionExtension
Jun 04Order
cuttings
Oct 04Plant
cuttings
2005 2006 2007 2008 2009004
Apr 07
First Large ScaleRose Flowers
Harvest
Contracting and training of farmers Production and Quality control
Import and cultivation of roses and other crops
Training of personnel Test distillation
Build more capacity Production of essential oils
Processing and DistillationProcessing and Distillation
Sales and PromotionSales and Promotion
2010
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Afghan Roses Executive Summary
Position Afghanistan on a promising marketsegment: flowers for the fragrance industryworldwide
Provide access to international markets for
500 to 1,000 farmers in mountainousremote areas
Create 100+ jobs and 3,000 to 5,000temporary jobs
Help private companies invest inprocessing and distillation capacity in order
to add value locally
Create a sizeable revenue stream for thecountry