High-Value and Drought-Tolerant Crop Production
Business Model Description
Cultivate high-value and drought-tolerant crops, including Bt cotton, bananas, citrus and macadamia, to serve the domestic market, substitute imports, and supply raw material to the textile value chain.
Expected Impact
Enhance income generating activities for smallholder farmers and support import substitution in a sustainable manner.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Eswatini: Shiselweni
- Eswatini: Lubombo
- Eswatini: Manzini
- Eswatini: Hhohho
Sector Classification
Food and Beverage
Development need
Eswatini is a food-deficit country, depending on imports for domestic demand (1). Total food imports reached 291,529 metric tons in 2020-21, declining by 20% due to interruptions in cross-border trade (26). 30% of the population is food insecure, with 70% involved in agriculture (3). Poor farming practices contribute to a 30-40% loss of annual produce (11).
Policy priority
Agriculture is identified as one of the five key growth sectors in the government's Strategic Roadmap (12). The key targets include eliminating hunger, halving poverty, strengthening value chains and develop a smallholder-led food economy (5), as well as import substitution and improved irrigation and infrastructure (3).
Gender inequalities and marginalization issues
Smallholder agriculture remains the backbone of rural livelihoods in Eswatini, with over 70% of the country’s people, 60% of whom are women, relying on subsistence and small-scale farming to support their livelihoods (6). Investments in agriculture is key to driving poverty alleviation and empower youth and women in rural areas (7).
Investment opportunities introduction
The government has proposed 21 projects worth E 5.362 billion (USD 352.7 M) for the agriculture sector in the Post Covid-19 Economic Recovery plan (3). Opportunities include improving water resource management, climate-smart agriculture, diversifying agricultural production, investing in pre- and post-harvest infrastructure and strengthening value chains.
Key bottlenecks introduction
Reoccurring droughts and flooding which is exacerbated by dependency on rainfed agriculture (3). A land tenure system that reduces security of smallholder farmers as a result of no land rights and encroachment of settlements and a lack of appropriate financing for smallholder farmers to afford basic inputs (6).
Food and Agriculture
Development need
Agricultural productivity has decreased contributing to only 9% of GDP (2) due to dependency on rainfed agriculture and restricted access to technology and financing (5,8). Majority of infrastructure is owned by large scale farmers limiting access to value chains and infrastructure for smallholder farmers (4, 6, 7).
Policy Priority
The Swaziland National Agricultural Investment Plan (SNAIP) prioritizes investments to enhance agricultural productivity and climate resilience (4). Diversifying agricultural production for advancing sustainable livelihoods is also emphasized by the Zero Hunger Strategic Review and the Strategy for Sustainable Development and Inclusive Growth (SSDIG) (7, 8).
Gender inequalities and marginalization issues
Despite women making up 70% of agriculture labor force in Eswatini, gender inequality persists with women lacking access to land ownership, financing, inputs and means of production (6, 4). Agriculture development could reduce poverty as many rural households depend on it to support their livelihoods.
Investment opportunities introduction
Projects listed in the Covid-19 recovery plan include investing in climate-smart agriculture techniques and infrastructure and diversifying agriculture to include more high value- and drought tolerant crops (11). Investing in agro-processing and strengthening the value chain can minimize waste and develop smallholder farmers (4).
Key bottlenecks introduction
Persistent and reoccurring droughts prevent rain-fed farmers from producing sufficiently. High cost of agricultural inputs and a lack of financing opportunities restrict smallholder farmers from upscaling their operations, access to markets and diversification of value chains.
Agricultural Products
Pipeline Opportunity
High-Value and Drought-Tolerant Crop Production
Cultivate high-value and drought-tolerant crops, including Bt cotton, bananas, citrus and macadamia, to serve the domestic market, substitute imports, and supply raw material to the textile value chain.
Business Case
Market Size and Environment
< USD 50 million
20% - 25%
Over 80,000 ha of land is under crop production
Eswatini's cotton output increased by 23% to 759 metric ton in 2018. Pineapple and banana production also grew over the same period (15).
In Eswatini, 1,151 ha of land was under banana production producing 6,857 tons, 1,974 ha under cotton production, 1,075 ha under pineapple production producing 30,982 tons in 2019 (15).
Eswatini produced a total revenue of E 25,952,642 (USD 1.7 million) in 2021 from the cotton industry (16).
Indicative Return
> 25%
According to the Sector Development Programme Agreement prepared by FAO on a total investment of E 202,86 million (USD 12 million), with state contributions of E 26,79 million and private sector contributions of E 176,07 million, the expected ROI for cotton in Eswatini is 78% (16).
Farmers adopting Bt cotton in Burkina Faso report 50% higher household profits compared to conventional cotton, despite the high costs associated with the Bt cotton seed (30).
Investment Timeframe
Medium Term (5–10 years)
FAO's Sector Development Plan Agreement signed with the Ministries of Agriculture, Finance, Economic Planning and Commerce, Trade and Industries calculates return on investment for crop production over a 5-year period (16).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Capital - Requires Subsidy
Business - Business Model Unproven
Business - Supply Chain Constraints
Market - High Level of Competition
Impact Case
Sustainable Development Need
Agricultural production is largely split between large-scale commercial farms (predominantly sugar-cane) and rainfed smallholder subsistence farmers. Most subsistence farmers are classified as poor and do not generate sufficient income from their farming activities (18).
Eswatini imports the majority of high value agricultural commodities sold in the retail market as regional prices for commodities such as cotton and bananas still outcompete domestic prices (15, 17).
Extensive and recurring droughts highlight the need for increased production of drought tolerant, high-value crops such as Bt cotton (15).
Gender & Marginalisation
70% of Eswatini's population, most substantial among rural poor women, rely on subsistence farming to support their livelihoods, but do not generate any significant income from agriculture (6).
Expected Development Outcome
The farming system in Eswatini is largely subsistence-based. Smallholder farmers that practice subsistence farming have an opportunity to generate more income by converting to high-value crops (3).
High value crops are currently largely being imported to Eswatini. Investing in high-impact and high-value value chains increase Eswatini's capacity for import substitution and inclusive economic growth (17).
Production of drought tolerant high-value crops increase the country's food security, addressing the needs of 25% of the population who are food insecure and dependent on assistance (25).
Gender & Marginalisation
Women, youth and disadvantaged people living in rural areas that practice agriculture could be empowered through the adaptation of high-value crops that can strengthen agriculture's contribution to poverty reduction (14).
Investments to support the uptake of high-value crops among rural smallholder farmers could increase the productivity and socio-economic status of rural poor engaged in farming, 60% of which are women (6).
Primary SDGs addressed
1.1.1 Proportion of the population living below the international poverty line by sex, age, employment status and geographic location (urban/rural)
58.9% of population live below the international poverty line (19).
Reduce percentage of people living in poverty from 58.9% to at least 54% by 2021 (14).
2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
N/A
N/A
The Government aims to double agricultural productivity and the income of small-scale farmers by 2030 (19).
N/A
12.1.1 Number of countries developing, adopting or implementing policy instruments aimed at supporting the shift to sustainable consumption and production
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Outcome Risks
If the adoption of high-value and drought-tolerant crops is not managed carefully, especially among subsistence farmers, they may lead to crop failure which could endanger household food security levels.
Smallholder farmers may be outcompeted by large-scale commercial farmers that produce at higher and cheaper levels (16), which may lead to the reinforcement of existing inequalities.
Impact Risks
Smallholder farmers may not have access to adequate extension services and support nor enjoy sufficient access to credit, which may limit the uptake of the high-value crops and hence hinder the expected impact (15).
If high-value crops are produced for export instead of meeting domestic market needs, Eswatini's levels of food insecurity and dependency on food imports may remain unchanged.
If the production of high-value and drought-tolerant crops is hindered by climatic factors or poor farming practices (16), profitability levels may be too low to achieve the expected impact.
If supply chains are inefficient, farmers may not be able to fully benefit from the gains of high-value crops (12), lowering the expected impact.
Impact Classification
What
High-value and drought-tolerant crop production and processing leads to strengthening of agricultural value chains and enhanced international trade by producing agricultural products that are in high demand domestically and internationally.
Who
Smallholder farmers, rural populations and the planet enjoy greater and more sustainable production opportunities and market access from high-value and drought-tolerant crop production and processing.
Risk
While the model of high-value and drought-tolerant crop production and processing is proven, smallholder farmer support systems, target markets, climatic factors and farming practices, and supply chain inefficiencies require consideration.
How Much
High-value and drought-tolerant crop production and processing contributes to doubling small-scale farmers' income and productivity by 2030 (19), and increasing output of high-value crops including cotton, which rose by 23% in 2018 (15).
Impact Thesis
Enhance income generating activities for smallholder farmers and support import substitution in a sustainable manner.
Enabling Environment
Policy Environment
Ministry Of Agriculture Strategic Plan, 2018- 2023: Outlines the intention of Ministry of Agriculture to increase area under cotton production and to support smallholder producers to meet demand of local ginneries (20).
Swaziland National Agricultural Investment Plan (SNAIP), 2015: Investments in high-value crops, including conventional vegetables, baby vegetables, fruits, cotton and yellow maize, are highlighted as a key strategy for commercializing smallholder agriculture and boosting economic growth (4).
National Development Plan (NDP), 2019/2020: Identifies high value crops comprising of horticulture, vegetables, cotton variants and new fruits as opportunities for advancing agriculture and that regulatory frameworks are being developed to support export of high value agricultural commodities (18).
Financial Environment
Financial incentives: Government has implemented an input-subsidy programme for supporting smallholder farmers producing high-value crops (15). It has allocated E 42.2 million (USD 2.8 million) to cater for the subsidy programme with the goal of increasing number of beneficiaries to 15,000 (29).
Fiscal incentives: Government provides special deductions not to exceed 5% of taxpayer's taxable income and deductions of the expenditures, not exceeding 30% of the gross income derived from farming operating relating to erection of buildings used in farming operations not to exceed E 60,000 (USD 4,000) (21).
Fiscal incentives: Agribusiness is among the sectors applicable for the Developmental Approval Order (DAO), a corporate tax incentive for companies contributing to the country's development including a 10% corporate tax rate for 10 years and an exemption from withholding taxes on dividends, including for relevant crops (22).
Regulatory Environment
Commercialization of Agriculture Land Bill, 2019: Aims to increase the number of farmers with formal ownership and titles of the land for advancing commercial agriculture (15).
Biosafety Act, 2012: Regulates all genetically modified organisms (GMOs); it allowed for the first release of Bt cotton in 2018 (27).
Cotton regulation, 1967: Entails the constitution and functions of the National Cotton Board and its regulatory powers (28).
Pesticides Management Act, 2017: Seeks to regulate the importation, manufacture, exportation, distribution, sale and use of pesticides in order to enable people to obtain the benefits with minimal adverse effects on human, animals and the environment (5).
Marketplace Participants
Private Sector
Artemis foods, Crookes Brothers, Kindbridge Mdzimba avocados & Vegetables, Nisela Farms, Vunisa Cotton, Ukwazi Macadamia, United Plantations, ENAU, United Plantations.
Government
Ministry of Agriculture, National Agricultural Marketing Board (NAMBoard), Eswatini Water and Agricultural Development Enterprise (ESWADE), National Cotton Board
Multilaterals
Food and Agriculture Organization (FAO), World Food Programme (WFP), International Fund for Agricultural Development (IFAD), European Union (EU).
Non-Profit
Taiwan Technical Mission, German Society for International Co-operation (GIZ), Eswatini National Agricultural Union, Small-Scale Farmers Associations, World Vision International, Cooperazione Per Lo Sviluppo Dei Paesi Emergenti (COSPE).
Target Locations
Eswatini: Shiselweni
Eswatini: Lubombo
Eswatini: Manzini
Eswatini: Hhohho
References
- (1) Ministry of Economic Planning and Development. 2019. The Kingdom of Eswatini Voluntary National Review. https://sustainabledevelopment.un.org/content/documents/24651Eswatini_VNR_Final_Report.pdf
- (2) Finmark Trust. 2020. Financial Inclusion Refresh. https://finmark.org.za/system/documents/files/000/000/391/original/Eswatini_Financial_Inclusion_Refresh.pdf?1614849476
- (3) Government of Eswatini. 2020. Post COVID-19 Kingdom of Eswatini Economic Recovery Plan. http://www.gov.sz/images/CORONA/FINAL-POST-COVID-19-ECONOMIC-RECOVERY-PLAN-ESWATINI-14082020_compressed.pdf
- (4) Ministry of Agriculture. 2015-2025 Swaziland National Agricultural Investment Plan (SNAIP). http://www.gov.sz/images/MOAG/SWAZILAND-NATIONAL-AGRICULTURE-INVESTMENT-PLAN-SNAIP.pdf
- (5) Ministry Of Agriculture. 2018- 2023. Ministry Of Agriculture Strategic Plan. http://www.dairyboard.co.sz/images/MOA%20STRATEGIC%20PLAN_WP_2020.pdf
- (6) World Food Programme (WFP). 2020-2024. Eswatini country strategic plan. https://docs.wfp.org/api/documents/WFP-0000108645/download/?_ga=2.10006454.280993457.1629980379-1623016762.1629980379
- (7) Ministry of Economic Planning and Development. 2020. The Eswatini Zero Hunger Strategic Review. https://docs.wfp.org/api/documents/WFP-0000111397/download/?_ga=2.179858791.2122312585.1630921482-428469450.1630921482
- (8) Ministry of Economic Planning and Development. 2017. The Strategy for Sustainable Development and Inclusive Growth (SSDIG)
- (9) EUROPEAID. 2016. Final Detailed Report: Strategic Environmental Assessment Of The 11th EDF Programme’s Focal Sector Agriculture In Swaziland.
- (10) Inter Press Services Nes Agency. Climate-Smart Agriculture means More Time for Eswatini Women Farmers. http://www.ipsnews.net/2020/02/climate-smart-agriculture-means-time-eswatini-women-farmers/
- (11) World Food Programme. Eswatini country strategic plan (2020–2024). 2020 https://docs.wfp.org/api/documents/WFP-0000108645/download/?_ga=2.10006454.280993457.1629980379-1623016762.1629980379
- (12) Government of Eswatini. May 2019. The Kingdom of Eswatini Strategic Road Map: 2019-2022. http://www.gov.sz/images/CabinetMinisters/STRATEGIC-ROADMAP-2018-2023---MAY-2019.pdf
- (13) Alliance for Science. 2021. Swaziland (eSwatini) finds success with GMO cotton. https://allianceforscience.cornell.edu/blog/2019/06/swaziland-eswatini-finds-success-gmo-cotton/
- (14) ESWADE. 2021. The High Value Crop and Horticulture Project (HVCHP). https://www.eswade.co.sz/case-categories/the-high-value-crop-and-horticulture-project-hvchp/
- (15) FinMark Trust. 2021. Agricultural Finance Scoping. https://finmark.org.za/system/documents/files/000/000/511/original/FMT_SADC_FI_Agriculture_eSwatini.pdf?1629903465
- (16) Food and Agriculture Organization (FAO) of the UN. 2021. Cotton Value Chains Sector Development Plan Agreement Situational Analysis
- (17) USAID. 2020. Country Implementation Plan. https://pdf.usaid.gov/pdf_docs/PA00W6VD.pdf
- (18) Ministry of Economic Planning and Development. 2019. National Development Plan (NDP) 2019/20-2021/22. http://www.gov.sz/images/CabinetMinisters/NDP-2019-20-to-2021-22-final.pdf
- (19) Ministry of Economic Planning and Development. 2019. The Kingdom of Eswatini Voluntary National Review. https://sustainabledevelopment.un.org/content/documents/24651Eswatini_VNR_Final_Report.pdf
- (20) Ministry of Agriculture. 2018. Ministry of Agriculture Strategic Plan. 2018-2023. http://www.dairyboard.co.sz/images/MOA%20STRATEGIC%20PLAN_WP_2020.pdf
- (21) Eswatini Investment Promotion Authority (EIPA). Domestic Trade Tax Incentives in Eswatini. https://investeswatini.org.sz/domestic-trade-tax-incentives-in-eswatini/
- (22) Business Eswatini. 2019. A Practical Guide to Doing Business in Eswatini. https://www.hcimbabane.gov.in/docs/Booklet%20from%20Business%20Eswatini.pdf
- (23) L. Lewis, S. Masinjila & E. Sirinathsinghji. 2018. GM cotton push in Swaziland: Next target for failed Bt cotton. https://www.researchgate.net/publication/327744020_GM_cotton_push_in_Swaziland_Next_target_for_failed_Bt_cotton/link/5ba1e4b445851574f7d58e82/download
- (24) Ukwazi Macadamia. https://ukwazimakadamia.com/pages/about-us
- (25) African Development Bank. March, 2020. Mkondvo-Ngwavuma Water Augmentation Program (MNWAP) Study. https://www.afdb.org/sites/default/files/documents/projects-and-operations/eswatini_-_mkondvo-ngwavuma_water_augmentation_program_mnwap_-_mic_grant_report.pdf
- (26) National Agricultural Marketing Board. 2022. Imports of Scheduled Agricultural Products
- (27) Food and Agricultural Organization of the United Nations. FAO GM Foods Platform. https://www.fao.org/food/food-safety-quality/gm-foods-platform/browse-information-by/country/country-page/en/?cty=SWZ#:~:text=The%20Kingdomof%20Eswatini%20enacted%20the,the%20Cartagena%20Protocol%20on%20Biosafety.&text=My%20country%20has%20a%20regulatory,safety%20assessment%20of%20GM%20food
- (28) German Society for International Co-operation (GIZ). August 2019. Developing a Land Governance Country Assessment for the National Agricultural Investment Plan in Eswatini. https://nelga.org/wp-content/uploads/2020/06/Eswatini-Land-Governance-Assessment-NAIP-2019_Report-final.docx
- (29) Ministry of Finance. February 2022. Budget Speech 2022. https://www.gov.sz/images/CabinetMinisters/Budget-Speech-2022---FINAL.pdf
- (30) African Center for Biodiversity. July, 2017. GM cotton push in Swaziland: Next target for failed Bt cotton. https://www.researchgate.net/publication/327744020_GM_cotton_push_in_Swaziland_Next_target_for_failed_Bt_cotton