Juice Processing

Juice Processing

Photo by Shutterstock / Pierre-Yves Babelon

Juice Processing

Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
20% - 25% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< USD 50 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 500,000 - USD 1 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Decent Work and Economic Growth (SDG 8) Responsible Consumption and Production (SDG 12)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Gender Equality (SDG 5)

Business Model Description

Build and operate facilities for the processing and packaging of fruits and vegetables - such as mango, coconut, and pineapple - into juice for local and export markets. A mix ix of in- and out-grower schemes can be used to ensure consistent quality supply.

Expected Impact

Improved income for smallholder farmers through guaranteed markets and better pricing, while also resulting in better nutrition for the general population via access to more juice.

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

Explore the country and target locations of the investment opportunity.
Region
  • Sierra Leone: Northern Province
  • Sierra Leone: Southern Province
  • Sierra Leone: Eastern Province
  • Sierra Leone: North-West Province
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
Food security is a significant challenge in the country with 25-50% of the population facing some level of food insecurity (1). Despite the availability of fertile arable land, 75% remains uncultivated, and the country relies heavily (80% of foodstuffs consumed) on import (2). Farmers suffer from low yield and high cost of transport, as well as lack of access to financing. At the same time, agriculture is a critical part of the economy - providing many jobs and the largest portion of GDP (3). The fishery industry also suffers from overfishing, and illegal, unreported, and unregulated (“IUU”) fishing particularly by foreign fleets leading to sustainability challenges (4).

Policy priority
Food security and agriculture are a major focus for the government. Improvements have been made by development partners, national policies, and Apex Bank. The stated objective in the Mid Term National Development Plan includes policy interventions for improving financial access, better inputs, improved mechanization, promotion of research, and others (3). Environmental protection and sustainability are also considered. The Ministry of Agriculture and Forestry is focused on rice self-sufficiency, livestock development, crop diversification, and forestry management from a policy level.

Gender inequalities and marginalization issues
While women are proportionally more employed in agriculture, and there was a recent positive development with land reform so that women can now own land (5), there are significant inequalities in the value chain of higher value agricultural activities and women overall benefit less economically from this sector while also facing more challenges, such as lack of access to information and resources (6). Women are also more affected by malnutrition compared to men (6). In addition, agriculture is a major focus for all regions of Sierra Leone apart from the urban Freetown - which is far more developed than other regions. Rural areas are more marginalised overall with respect to food security, employment and health outcomes, despite being the main places where agricultural activities take place.

Investment opportunities introduction
Improving productivity and commercialization of the agricultural sector is a priority. The Agricultural Transformation Strategy plans to double production of rice, forestry, and livestock, as well as to increase the budgetary allocation to 10% to align with the Maputo Accord and attract external investment. Furthermore, in 2021 several policy shifts were announced by the Ministry of Agriculture and Forestry, aimed at increasing land under cultivation and improving yields through measures such as establishing a US$10 million agriculture credit fund to expand access to finance; e-wallet input delivery; mechanization promotion including through establishment of machine ring centers; and addition of e-extension services. The main opportunities seem to be in value added activities in processing, as well as various technological and mechanisation support activities to improve efficiency, yields, transport, market access and so forth (3).

Key bottlenecks introduction
Farmers suffer from low yield and high cost of transport, as well as lack of access to financing and insurance services. There is a low level of mechanisation and access to tools and equipment, such as irrigation (3). There have also been challenges with land ownership, especially for women (6). The fisheries industry also has a lack of infrastructure and value chain development (4). In terms of agro-processing, the level is low in the country, and there are only a few successful examples (3).

Sub Sector

Food and Agriculture

Development need
Agriculture faces many challenges, including lack of mechanization and a high cost of production, lack of access to finance and insurance services, and lack of adequate storage facilities and processing, leading to more post-harvest losses. There is also a lack of access to improved seed, and the linkages between the manufacturing sector and primary sectors, such as agriculture, have been weak (3).

Policy priority
Agriculture is clearly stated as a major priority for the government in the Mid Term National Development Plan (3). In addition, the National Agricultural Transformation Strategy 2019-2023 includes more detailed plans, such as to double production of key crops (7). The Ministry plans for capacity building as well as a USD 10 million agriculture fund (3). There is also significant development agency support, such as from the FAO (8). The Government of Sierra Leone, through the Ministry of Trade and Industry (MTI), is implementing the Sierra Leone Agro-Processing Competitiveness Project with financing from the International Development Association (IDA) of the World Bank Group.

Industry

Processed Foods

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Juice Processing

Business Model

Build and operate facilities for the processing and packaging of fruits and vegetables - such as mango, coconut, and pineapple - into juice for local and export markets. A mix ix of in- and out-grower schemes can be used to ensure consistent quality supply.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

< USD 50 million

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

< 5%

The current market size of the pure juice market (not including soft drinks, syrups, etc. but only 100% fruits) is estimated at 25 million USD in Sierra Leone with an expected CAGR of 4.4% from 2023-2028 (12).

However, since fruit production could also be processed in other ways as well as consumed directly, the market could be over 200 million USD, when considering fruit production and processing as a whole. In addition, this does not consider the export market at this time, which could increase the value as well. Indications are that the markets are growing (9).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

20% - 25%

ROI
Describes an expected return from the IOA investment over its lifetime.

20% - 25%

Similar markets indicate that a 20-25% IRR is possible for juice processing, once developed (21). In addition, information from Sierra Agra, an organic and fairtrade juice processing, whole fruit sales and exporting company in Sierra Leone, indicates as much as 40% return on its investments (9) and nearby West African case studies have shown above 45% IRR in some case (22).

Global standards suggest that the 20-25% range of profit margin is reasonable for juice processing (13).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Fruit production in the country exists and new plantations do not take long to generate yields, which can be used as inputs into juice production (21). At the same time, the overall nascent nature of the Sierra Leone agricultural ecosystem presents several challenges to be overcome, thus pushing the timeline back by a few years over what would be expected in a more developed context.

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

USD 500,000 - USD 1 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

Although several successful juice companies exist, many have struggled at times to ensure sufficient and consistent (quality) supply. This was indicated by experts as well as in the Sierra Agra case study (9) (21). One way that Sierra Agra has mitigated this risk has been to secure their own farms and use a mix of in- and out-grower schemes.

Market - High Level of Competition

From investors and experts, there are not only several juice companies already operating, but these also compete with a crowded drinks market such as soda / carbonated beverages, and other sweet drinks. The local market is price sensitive and may prefer the lower priced alternatives (21).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

70% of households in Sierra Leone are farming households, with 40% of households getting at least 30% of their total income from farming (15). Farmer income figures are limited but the median household income in Sierra Leone is USD 765 (16), and farmers have the lowest incomes on average.

For many fruits, such as mango, the production is higher than the demand with up to 75% of harvest wasted due to a host of challenges with market access (9).

The wastage of unconsumed crop leads to prevalence of flies in the farming communities, leading to various diseases (9).

Gender & Marginalisation

Women are more often the farmers in Sierra Leone, yet see less financial gain, and also suffer disproportionally from malnutrition (6). There is not detailed data available for all fruit production, but in mango production, 30% of farmers are women (9).

Expected Development Outcome

Juice processing can help improve and stabilize fruit farmer income through providing for more predictable demand and market access. The processors can also help the fruit farmers develop and access needed inputs and tools as it will benefit them as well in the long run, thus helping farmers improve productivity and income (9).

Juice processing creates predictable demand and links with established supply chains, so less fruit is wasted.

Juice processing reduces fruit waste resulting in less flies, and thus less fly borne diseases.

Gender & Marginalisation

Despite the national average of women farming mangoes being 30%, Sierra Agra has successfully incorporated 70% female farmers in their own supply chains, and their farmers have had a 7% annual increase in growth of income (9).

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

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

Current Value

National average income is USD 1,004 while median income is USD 765 in 2023 (16).

Target Value

Proxy of agricultural sector growth of 6% (17).

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

8.1.1 Annual growth rate of real GDP per capita

Current Value

The annual growth rate of GDP per capita for Sierra Leone was 1.3% at the last measured date in 2022 (23)

Target Value

N/A

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.3.1 (a) Food loss index and (b) food waste index

Current Value

Post harvest food loss in Sierra Leone is estimated to be as high as 40% (24).

Target Value

N/A

Secondary SDGs addressed

3 - Good Health and Well-Being
5 - Gender Equality

Directly impacted stakeholders

People

Smallholder farmers benefit from improved income.

Gender inequality and/or marginalization

Female farmers benefit from improved income. Rural areas, where most agriculture happens, benefit from economic development.

Planet

Less food waste through processing of fruit into juice has a positive environmental impact.

Corporates

Companies benefit from better supply chain, if they are in agri-processing, and more generally from a healthier workforce.

Public sector

Government benefits from improved nutrition and health outcomes as well as reductions in poverty.

Indirectly impacted stakeholders

People

Consumers of juice and fruit benefit from improved nutritional outcomes, farming communities benefit from better economic and health outcomes.

Outcome Risks

Selling fruit directly to one or a few suppliers may lead to increased dependence on one market for the smallholder farmers, which can be a problem if that fruit processor fails, or even for price negotiation.

Impact Risks

While juice production is expected to improve farmer income, the overall challenges of the Sierra Leone context such as poor roads, poor infrastructure, lack of education, lack of finance, and so forth all create a risks for this investment and reduce chance of success unless mitigated (9).

A lack of credible and up to date data on farmers in Sierra Leone creates difficulties with measurement of actual impact.

A lack of access to tools and education by the farmers may compromise their production and yields and in turn create supply chain difficulties for juice production.

Impact Classification

B—Benefit Stakeholders

What

Increased juice production in Sierra Leone leads to improved farmer incomes as well as improved nutrition.

Risk

The overall ecosystem of Sierra Leone, such as lack of tools and education, lack of data, and challenges with infrastructure, may compromise success of such ventures.

Contribution

Juice processing means less fruit waste as well as allows for processors to help develop primary production with a guaranteed market, where otherwise direct farmer development interventions may not result in as significant impact.

Impact Thesis

Improved income for smallholder farmers through guaranteed markets and better pricing, while also resulting in better nutrition for the general population via access to more juice.

Enabling Environment

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Policy Environment

The Mid Term National Development Plan 2019 - 2023 (3) has agriculture as a key policy area, and within this specifically mentions development of agricultural value chains as well as promotion of organic farming (which mango farming often is). The goal is to move up the value chain into more industrial activities which processing into juice is part of, although not mentioned explicitly.

National Agricultural Transformation Strategy 2019-2023 (7) plans to put agriculture at the centre of economic development and improve value chains as well as linkages between smallholder farmers and larger investments, which is relevant for juice processing.

Financial Environment

Fiscal incentive: Any business registered in Sierra Leone and having at least 20% Sierra Leonean ownership shall be entitled to corporate tax exemption including exemption from corporate income tax plus 50% exemption from withholding taxes on dividends paid by agribusiness companies and complete exemption from import duty on agricultural machinery (18).

Financial incentive: The Apex Bank and its Community Banks established in key rural areas targets smallholder farming groups, and micro and small-scale entrepreneurs, including women and youths, for financing (19).

Other incentives: The Sierra Leone Agribusiness Development Fund (managed by KPMG) was created to address financing and technical assistance challenges faced by agribusinesses that have plans to work with smallholder farmers in out-grower schemes (20).

Regulatory Environment

The Customary Land Rights Act, no. 20 of 2022 (5) provides for the protection of customary land rights, the elimination of discrimination under customary law, and the management and administration of land subject to customary law. This law now guarantees women’s equal rights and access to land and bans industrial development (mining, plantations, farming, and housing) in protected, conserved or ecologically sensitive areas (wetlands, wildlife habitats, steep slopes and old growth or virgin forests). This is important to be aware of if juice producers look to expand their farming operations.

Sierra Leone’s Income Tax and Finance Acts include income tax exemptions for 10 years from agricultural activities; exemption from import duty on farm machinery, agro-processing equipment, agro-chemicals and other key inputs; 125% tax deduction for expenses on Research and Development, training and export promotion (25).

Marketplace Participants

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Private Sector

Sierra Agra, Capitol Foods - Sierra Juice, Kings Beverages, Dole/Sierra Tropical.

Government

Ministry of Agriculture and Forestry, Ministry of Trade and Industry, Ministry of Labour and Social Security, Ministry of Lands, Country Planning and Environment, Ministry of Finance and Economic Development.

Government

International Fund for Agriculture Development (IFAD), Food and Agriculture Organisation (FAO), World Bank, World Food Programme (WFP), African Development Bank (AfDB), European Union (EU).

Non-Profit

Concern Worldwide, National Association of Farmers of Sierra Leone, ActionAid, Word en Daad, FairMatch Support, Commercial Agricultural Producers and Processors Association.

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
rural

Sierra Leone: Northern Province

While mango is grown across the country, it is mostly grown in the Northern Province with half the farming land dedicated to mangoes in that region. Most farmers are smallholder with an average of 2ha of land. Mango farming is approximately 30% of the income for farming households in this region. There is some pineapple farming in this region as well (9).
rural

Sierra Leone: Southern Province

Farmers in the Southern Province follow better agricultural practices, and more actively engage in pineapple farming. Average farm sizes are 2.2 ha in the region so a little bigger than the other regions (9).
rural

Sierra Leone: Eastern Province

The Eastern Province has more pineapple farming but smaller farms on average (1.2ha) than the Eastern Province (9).
rural

Sierra Leone: North-West Province

Coconut farming is mostly found in the coastal areas of this Province (and some in Southern) with an average farm size of approximately 2.2ha. Farmers generally use negligible amounts of farm inputs (9).

References

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