Processing of High Value Added Agricultural Goods such as Olive Oil and Dates
Processing of High Value Added Agricultural Goods such as Olive Oil and Dates
Business Model Description
Invest in the processed agrifood facilities and value chains with a focus on high value added products such as olive oil and dates for export-led growth
Expected Impact
Agroprocessing investments can increase value added in food chains, bolster economic development, attract foreign direct investment.
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
- Tunisia: North-East
- Tunisia: Centre-East
- Tunisia: South-West
- Tunisia: South East
Sector Classification
Food and Beverage
Development needs
Tunisia has limited natural resources of water, soil, and fisheries and is also highly exposed to climate change, hindering food security. Degradation of land and water resources, desertification and loss of biodiversity, inappropriate use of pesticides and fertilizers, and lack of modernization prevent increased added value with significant consequences on livelihoods. (1,2)
Policy priority
The 5-Year Development Plan (2016-2020) and National Climate Change Adaptation Plan intended to boost agriculture's contribution to Tunisia's growth by increasing agricultural activity's adaptability and bolstering food security. (3,4) Stimulus programs are also suggested for agriculture since they employ 14.4% of the workforce and provide up to 10.1% of GDP (5).
Gender inequalities and marginalization issues
Rural women and youth constitute the most vulnerable segment of farmers (6). Rural women contribute in various ways to their families' income, in addition to underpaid household chores. Rural women encounter difficulties due to societal norms and gender-based prejudice, complicating their access to money, markets, and services (3).
Investment opportunities introduction
In the first 11 months of 2021, 475.1 million TND (USD 164 million) of private agricultural investments were made, which shows a 26.5% increase compared to the same period of the previous year (7). Moreover, recent investment-related legislation places a premium on investor rights and provides incentives to attract investment.
Key bottlenecks introduction
COVID-19 had severe consequences on agriculture, including input supply disruptions, challenges in vital sectors, marketing and supply disruptions, logistical issues, and border closures (8). Structural restrictions affect agriculture, including poorly organized value chains, restricted access to funding, and severe water scarcity paired with low soil fertility (3).
Food and Agriculture
Development need
Food security in Tunisia is under threat by the effects of climate change and the degradation of natural resources, which mainly put rural populations, especially women and youth, at risk. Sustainable agriculture and natural resource management can become significant economic growth and job-generation drivers, especially for rural youth. (8)
Policy priority
Tunisia is among the world's largest exporter of olive oil and dates. Foreign Investment Promotion Agency has identified agribusiness among 4 key areas for Tunisia's economic development (9). Tunisia's goal between 2016- 2021 is to grow the added value of exporting industries from 15% to 20% (10). One of the main focuses is boosting bottled olive oil exports (11).
Gender inequalities and marginalization issues
This sector needs the inclusion of poor rural people in more organized agricultural value chains, which can be mainly achieved through the development of storage and processing facilities, funding economic activities, and coordination of value chain platforms (12).
Investment opportunities introduction
The industry's development potential is in bottled olive oil and packaged dates for export markets(9). Olive accounted for 43% of total food exports, and 80% of national output is exported. Dates are the second most significant export product after olive oil, accounting for 15% of export value and 20% of the global market (13).
Key bottlenecks introduction
The COVID-19 crisis had indirect effects on the agri-food business. With restaurants and hotels significantly lowering their food consumption, both food producers and food processors suffer a significant decline in demand for their products, hurting their economic performance (3).
Processed Foods
Pipeline Opportunity
Processing of High Value Added Agricultural Goods such as Olive Oil and Dates
Invest in the processed agrifood facilities and value chains with a focus on high value added products such as olive oil and dates for export-led growth
Business Case
Market Size and Environment
> USD 1 billion
As of 2020, the food processing sector hosted an estimated 1,240 businesses with a minimum of ten employees. Around 20% of these businesses manufacture only for export. This sector generates around USD 12 billion in production value and is constantly expanding as consumer preferences shift toward processed foods over fresh (15).
Indicative Return
15% - 20%
According to experts operating in this field, returns from agricultural processing investments especially for high value added goods can range between 15-20% (16).
Investment Timeframe
Medium Term (5–10 years)
The ability of agricultural processing projects to generate cash flow is very sector-dependent. Nevertheless, the majority of agro-processors produce cash flow and profit in the medium term.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Volatile
Market - Highly Regulated
Impact Case
Sustainable Development Need
The Tunisian agribusiness industry has a workforce of 309,000 people, the majority of whom are farmers, and it directly or indirectly supports a population of approximately 1 million, (22) spread across the nation (21). Agricultural workers in rural areas are exposed to high rates of poverty.
During the COVID-19 crisis, the supply chain worked effectively, since all agri-food actors were mobilized. However, 83.8% of these firms report a decline in product flow, 10.8% report normal distribution, and 6.4% report an increase; emphasizing the current need of assistance for these actors (21).
Gender & Marginalisation
Women outnumber men in agricultural professions, accounting for 70% of Tunisian agricultural labor. They earn about 50% less than men, do physically hard work, lack social protection and access to adequate healthcare with only 33% of women covered; while juggling caregiving duties (23).
The agri-food sector is characterized by a high concentration of SMEs. Only 115 industrial firms employ more than 100 individuals, 645 firms employ between 10 and 100 people, 808 firms employ between 6 and 9 people, and 3604 firms employ between 1 and 5 persons (21).
In a context of increasing health risks, women working in agriculture, fishing, and agri-food face multiple challenges to protect their homes, while being confined in unsuited conditions (high population density, modest hygiene conditions, weak financial means) (21).
Expected Development Outcome
By capitalizing on the great agribusiness potential, investments in this area can help eradicate poverty and provide increased food security.
Investments in agrifood processing can contribute to Tunisia's objective of increasing the added value of exporting sectors from 15% to 20% and the amount of foreign direct investment by 80% between 2016 and 2021 (10).
Gender & Marginalisation
Improvements in the agribusiness industry can be expected to result in an increase in the quality of living for small company owners and female agribusiness workers. However, while making investments, providing equal opportunities for men and women is critical.
Primary SDGs addressed
2.b.1 Agricultural export subsidies
N/A
N/A
8.1.1 Annual growth rate of real GDP per capita
-9.6%
n/a
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Indirectly impacted stakeholders
People
Outcome Risks
Increased agro-industrial activity may result in environmental harm due to the depletion of natural resources, decreased soil quality, and inappropriate industrial waste disposal.
Impact Risks
Small-scale agricultural producers' expectations not being considered might exclude these crucial stakeholders and thus risk the impact.
Climate extremes might negatively affect the profitability and resilience of agro-processing companies, risking the delivery of impact.
Impact Classification
What
Positive results are likely to include food security, job possibilities, increased high-value exports, enhanced household incomes.
Who
Small and medium-sized farmers, processors, marketers, and all other agricultural value chain participants.
Risk
While agri-food processing model is proven, the involvement of small scale producers and extreme climate events require consideration.
Impact Thesis
Agroprocessing investments can increase value added in food chains, bolster economic development, attract foreign direct investment.
Enabling Environment
Policy Environment
Organization and regulation of the agri-food market is a central sub-program of the Ministry of Agriculture's program for Agricultural Production Quality and Food Safety (25).
Exports by the private sector are allowed only for organic and bottled olive oil, which receive additional state support. Other vegetable oils are substituted at a cheap prices, which reduces local consumption and enables Tunisia to export most of its olive oil production (26).
Financial Environment
Financial incentives: In agriculture and fisheries, there is a 15% investment premium on medium and large projects and 30% on small projects up to 1 million TND (USD 350,000). Primary processing projects get a 7% premium on the investment's value (28).
Fiscal incentives: Profits from agricultural direct investments are tax deductible for 10 years, and taxed at 10% over the following period. Imported goods are free from customs and taxes. Imported and locally bought equipment is exempt from VAT and consumption taxes.
Other incentives: 30% of agricultural export turnover may be sold on the local market. Customs and duties on imported equipment are waived. Imported and locally bought equipment is exempt from VAT and consumption taxes (19).
Regulatory Environment
The Investment Law n°2016-71 on September 30, 2016 allows for two bonus and incentive programs. Article 20 of provides for a first regime for national interest projects, while Article 19 provides for projects including direct investment activities.
Government Decree 2017-389 defines projects of national interest as those contributing to a national economic priority (incl. agriculture) and satisfy one of the following criteria: investment of 50+ million TND (USD 17 million); creation of 500 new employment each year for three years.
Articles 37 to 39 of Law No. 2005-106 of December 19, 2005 established the FOPROHOC, or fund for the promotion of packaged olive oil. Decree No. 2006-2095, as amended by Decree No. 2009-1933, established its intervention and operation modalities (27).
Marketplace Participants
Private Sector
Olive oil (CHO Group, Asdrubal, Bizerta Agro Industry, GFCO, Dominium, Huilerie Loued, Olivko, ONH, Ruspina, Groupe Sheylus, Al Jazira); Dates (VACPA, Horchani Dattes, Palmier Royal, Société Bouajila de Production Agricole, Sotudex)
Government
FIPA, APIA, National Federation of Agri-food, Agri-Food Technical Center (CTAA), Technical Center for Packaging (PACKTEC), National Oil Office (ONH), National Agricultural Research Institute of Tunisia (INRAT), Regional Center for Research in Oasian Agriculture (CRRAO)
Multilaterals
Food and Agricultural Organization (FAO), International Fund for Agricultural Development (IFAD), African Development Bank (AfDB), European Bank for Reconstruction and Development (EBRD), International Finance Corporation (IFC).
Non-Profit
Tunisian Union of Agriculture and Fisheries (UTAP); Tunisian Union of Industry, Trade and Handicrafts (UTICA); Enda Inter-arabe; Mediterranean Agro-Food Association (AMIAA); Tunisian Association for Sustainable Agri-Food Development (ASSODAAD); Tunisian Association of Agricultural and Rural Development (ATUDAR)
Public-Private Partnership
Africa Agriculture and Trade Investment Fund (AATIF)
Target Locations
Tunisia: North-East
Tunisia: Centre-East
Tunisia: South-West
Tunisia: South East
References
- (1) The Republic of Tunisia, 2021. Voluntary National Review 2021. https://sustainabledevelopment.un.org/content/documents/279442021_VNR_Report_Tunisia.pdf
- (2) The Republic of Tunisia, 2019. Voluntary National Review 2019. https://sustainabledevelopment.un.org/index.php?page=view&type=111&nr=23372&menu=35
- (3) Minister of Agriculture, Water Resources and Fisheries. FAO 35th Regional Conference for the Near East. https://www.fao.org/3/cb1226en/cb1226en.pdf
- (4) Republic of Tunisia, 2018. Economic Recovery Plan 2019-2020. http://www.cae.gov.tn/wp-content/uploads/2019/08/Plan-de-relance-V-Finale-12-oct.pdf
- (5) French Development Agency, 2021. North Africa Regional Strategy 2021-2025. https://www.afd.fr/sites/afd/files/2021-03-02-49-37/strategie-regionale-afrique-nord-2021-2025.pdf
- (6) FAO, 2021. FAO supports a new startup that facilitates market access for small farmers and Tunisian artisans. https://www.fao.org/neareast/news/view/en/c/1413975/
- (7) APIA, 2021. 475.1 Millions de dinars d'investissements agricoles privés durant les onze premiers mois de l'année 2021. http://www.apia.com.tn/actualites/detail/179
- (8) IFAD, 2021. Tunisia. https://www.ifad.org/en/web/operations/w/country/tunisia
- (9) Stakeholder Consultations held in 2021.
- (10) Industry and Innovation Promotion Agency, 2016. What industrial strategy for Tunisia by 2025? http://www.tunisieindustrie.nat.tn/fr/download/ci/130_2016.pdf
- (11) FAO, 2017. Country Fact Sheet on Food and Agriculture Policy Trends. https://www.fao.org/3/i7738e/i7738e.pdf
- (12) IFAD, 2019. Republic of Tunisia Country Strategic Opportunities Programme (COSOP) 2019-2024. https://www.ifad.org/en/-/republic-of-tunisia-country-strategic-opportunities-programme-2019-2024-1
- (13) FAO, 2020. Guidance document Impact of the Covid-19 crisis on agriculture and food security in Tunisia: Challenges and response options. https://www.fao.org/3/ca9517fr/CA9517FR.pdf
- (13) IFC, 2020. IFC Provides €10 Million in Financing to Tunisian Date Exporter VACPA. https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=16908
- (14) IFC, 2021. IFC Partners with Tunisian Olive Oil Producer CHO, Promoting Job Creation and Sustainability. https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=26479
- (15) International Trade Administration, 2021. Tunisia - Country Commercial Guide: Agricultural Sectors. https://www.trade.gov/country-commercial-guides/tunisia-agricultural-sectors
- (16) Stakeholder consultations conducted in 2021.
- (17) EBRD, 2021. DFF - IFFCO Working Capital. https://www.ebrd.com/work-with-us/projects/psd/51179.html
- (18) Oxford Business Group. Government programmes and private investment boost efficiency and equity in Tunisia's olive oil segment. https://oxfordbusinessgroup.com/overview/green-shoots-government-programmes-and-private-investment-sector-improve-irrigation-and-boost
- (19) NABC, 2018. Tunisia Business Opportunity Report: Agriculture. https://nabc.nl/wp-content/uploads/2020/08/NABC-Tunisia-Report_FINAL.pdf
- (20) French Ministry of Agriculture, 2016. Tunisia Agricultural context and international relations. https://agriculture.gouv.fr/tunisie
- (21) Tunisian Institute of Strategic Studies, 2020. Measures protecting the agricultural sector and the proper functioning of the agri-food industry in the face of the COVID pandemic. http://www.onagri.nat.tn/uploads/Etudes/ites-covid19.pdf
- (22) Oxford Business Group. Government programmes and private investment boost efficiency and equity in Tunisia's olive oil segment. https://oxfordbusinessgroup.com/overview/green-shoots-government-programmes-and-private-investment-sector-improve-irrigation-and-boost
- (23) Arab Reform Initiative, 2020. Tunisia: COVID-19 Increases Vulnerability of Rural Women. https://www.arab-reform.net/publication/tunisia-covid-19-increases-vulnerability-of-rural-women/
- (24) Sustainable Development Solutions Network (SDSN) and the Bertelsmann Stiftung, 2021. Sustainable Development Report 2021. Tunisia Profile. https://dashboards.sdgindex.org/profiles/tunisia
- (25) Ministry of Agriculture, Water Resources and Fisheries, 2021. Annual performance project of the Ministry of Agriculture, Water Resources and Fisheries. http://www.gbo.tn/sites/default/files/2021-04/PAP-2021%20Agriculture%2Cressources%20hydrauliques%20et%20p%C3%A8che%20maritime.pdf
- (26) SWP, 2020. The Effects of a DCFTA with the EU on Tunisian Agriculture. https://www.swp-berlin.org/en/publication/tunisia-a-stable-countryside-for-a-stable-country/#hd-d37388e318
- (27) Ministry of Industry. FOPROHOC. http://www.tunisia-oliveoil.com/Fr/foprohoc_11_62
- (28) Invest in Tunisia. Provided Financial Incentives. http://www.investintunisia.tn/m/En/provided-financial-incentives_11_622
- (29) Invest in Tunisia. Agribusiness. Strengths of the Sector. http://www.investintunisia.tn/En/strengths-of-the-sector_128_82
- (30) Ministry of Agriculture, Water Resources and Fisheries, 2017. The Economic Importance of Dates Production in Tunisia. https://cisr.ucr.edu/sites/g/files/rcwecm2631/files/2019-12/dorsaf-ben-ahmad-zaag-tunisia-rpw-conference-2017.pdf