Production of Deciduous Fruits
Production of Deciduous Fruits
Business Model Description
Acquire farming land, install security fence and equipment, put up a packing store room, irrigation system and plant trees to produce apples and peaches for supply to the local market, retailers and hawkers, as well as to export regionally.
Expected Impact
Improve food security and access to food, reduce poverty, create jobs and contribute to economic growth.
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
- Lesotho: Leribe District
- Lesotho: Thaba-Tseka District
- Lesotho: Mokhotlong District
Sector Classification
Food and Beverage
Development need
Lesotho is a food-deficient country with over 70 percent of its food needs addressed through imports from neighbouring countries. National poverty is at 49.7% and smallholder farmers are predominantly resource-poor and their participation in commercialized production is generally limited by various institutional, technical and investment constraints (1, 18, 19).
Policy priority
Budget 2023/24 sets a key priority of securing inclusive and sustainable growth by focusing on food self-sufficiency through improved productivity in agriculture, aggressive industrialization and building of value chains, rehabilitation and building of key infrastructure that supports the private sector to thrive (4).
Gender inequalities and marginalization issues
Key challenge in agriculture sector, for women, is access to land for agricultural production as it is constrained by unequal gender and generational exclusion due to cultural constraints (2).
Investment opportunities introduction
Low food production and high food imports provide an investment opportunity for local food production. NSDP II has also identified investment opportunities and measures are being taken to create an enabling investment climate (3, 5)
Key bottlenecks introduction
Investment opportunities in agriculture are undermined by, among others, soil erosion, fragmented and under-developed value chains, lack of harvesting and post-harvest technology and infrastructure, limited access to agriculture finance and insurance for risk-sharing (2).
Food and Agriculture
Development need
Lesotho imports over M37 million (USD 2 million) worth of fruits, annually, in spite of having a comparative advantage of high-altitude and climatic conditions that favour its fruits to ripen two weeks before its competitors (1, 2, 3).
Policy priority
Budget Speech 2023/24 has announced that government in partnership with the World Bank are launching an initiative to boost the availability of financial products and business support services targeting priority value chains in horticulture and the textiles and clothing industry (4).
Gender inequalities and marginalization issues
Lesotho Millennium Challenge Compact II recognizes that government institutions supporting the horticulture subsector have largely gender- and inclusion blind policies and programs, which put women, youth, and the poor at risk of falling further behind (6).
Investment opportunities introduction
World Bank Private Sector Competitiveness Project has piloted and confirmed that Lesotho has a comparative advantage of high-altitude and climatic conditions, which are conducive for early ripening seasons of fruits (1).
"Key bottlenecks introduction
Lack of irrigation - even though the country has abundant water resources, the water is
not necessarily in agricultural places where it is most useful (7). "
Agricultural Products
Pipeline Opportunity
Production of Deciduous Fruits
Acquire farming land, install security fence and equipment, put up a packing store room, irrigation system and plant trees to produce apples and peaches for supply to the local market, retailers and hawkers, as well as to export regionally.
Business Case
Market Size and Environment
< USD 50 million
Department of Marketing surveys estimate annual fruit imports of over USD 2 million and local production is USD 123,700 (3, 8).
Indicative Return
5% - 10%
Likhetlane Fruit Farm realised ROI of 5% - 10% in less than 5 years of operation (8).
Investment Timeframe
Short Term (0–5 years)
Fruit trees take 3 years to mature and bear fruit, and sales of fruits happen only after 3 years, and Likhetlane realized returns within 5 years of operation (8).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Business - Supply Chain Constraints
Market - High Level of Competition
Impact Case
Sustainable Development Need
Lesotho imports over M37 million (USD 2 million) worth of fruits, annually, in spite of having a comparative advantage of favourable climatic conditions for fruit production, and there is nutrition insecurity as evidenced by stunting (32%) of children under 5 years (2, 3).
Gender & Marginalisation
Lesotho's total unemployment is 22.5% spread between male 22.6% and female 22.4%. Among youth (15-35 years) is 29.1% spread between male 27.4% and female 31.1%. Unemployment among youth is higher, with female higher than male youth (9).
Expected Development Outcome
Production of deciduous fruit production will reduce fruit imports, preserve foreign earnings, create jobs, generate household income, improve food and nutrition security, and contribute to economic growth.
Gender & Marginalisation
Production of deciduous fruits will reduce employment among youth, particularly female youth, and in the rural areas where the investment is well suited.
Primary SDGs addressed
8.5.2 Unemployment rate, by sex, age and persons with disabilities
Total unemployment is 22.5% spread between male 22.6% and female 22.4%. Among youth (15-35 years) is 29.1% spread between male 27.4% and female 31.1%. Data on PWDs not available (9).
NSDP II projects creation of 9,900 additional jobs annually (2).
2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
2.1.1 Prevalence of undernourishment
Prevalence of stunting in children under 5 years of age 31.8% in Lesotho as of 2022 (23).
Prevalence of undernourishment 34.7% at 2020 (23).
By 2030, end hunger and ensure access by all people, including infants, to safe and nutritious food (24).
By 2030, end all forms of malnutrition (24).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Public sector
Outcome Risks
Chemical pesticides in the orchards may have health hazards for the orchard workers and members of proximate communities (13).
Impact Risks
Successful orchards require sound irrigation systems anchored on water harvesting and storage, failure of which may undermine investment in the medium to long term.
Depending on the effectiveness of the climate-smart practices used in protecting and managing the trees, the impact of the IOA may be affected by compromised survival rate of the trees.
Changing climatic conditions are likely to undermine normal growth of trees and prolong the yield span of the trees.
Impact Classification
What
Production of deciduous fruits increases investment, creates jobs and contributes to economic growth.
Risk
Compromised irrigation systems and lack of climate-smart practices in tree management may compromise the survival rate of the trees and undermine the investment.
Contribution
The investment contributes to the empowerment of communities and to economic growth.
Impact Thesis
Improve food security and access to food, reduce poverty, create jobs and contribute to economic growth.
Enabling Environment
Policy Environment
The extended NSDP Strategic Focus (2023/24 – 2027/28) identifies as one of its priorities, establishment of fruit production and processing centers in the mountains. It also commits to the establishment of irrigation systems to enable sustainable production (10).
Both Comprehensive National Agriculture Policy and National Agriculture Investment Plan (2022-2026) recognize that sustainable agricultural production can be optimized by the participation of the private sector and articulate measures for doing this (7, 16).
Millennium Challenge Corporation (MCC II) supports a five-year Market Driven Irrigated Horticulture Project. This project plans to make catalytic investments in irrigation in partnership with private investors (6).
NSDP Strategic Focus (2023/24 -2027/28) aims to introduce tech-driven methods to Lesotho farming, including more climate-change-resilient methods such as smart technology linked hydroponics (10).
Financial Environment
Financial incentives: Smallholder Agricultural Development Project (SADP) provides technical and startup financial support to smallholder farmers to help improve agricultural productivity, as well as transform and diversify agriculture into a market oriented sector (17).
Fiscal incentives: Agricultural sector corporate income tax rate is 10% compared to 25% standard rate. Agriculture input subsidy of up to 60% provide affordable fertilizers for the trees (21, 22).
Other incentives: World Bank's Private Sector Competitiveness & Economic Diversification Project provided startup capital for fruit production and a new Competitiveness and Financial Inclusion Project is expanding scope with grant funding for more private sector players in the production of deciduous fruits (14).
Regulatory Environment
NSDP II commits to fostering agriculture production and its commercialisation, by developing regulatory framework for range management, water sheds, environment protection and biodiversity, and reverse environmental degradation that has aggravated the food insecurity situation (2).
Marketplace Participants
Private Sector
Pick'n'Pay, Shoprite Checkers, Enrich, Fruits and Veg, Standard Lesotho Bank, First National Bank, NedBank Lesotho, Lesotho National Farmers Association, Likhetlana Fruit Farm, Likhothola and Maoa-Mafubelu Fruit Farms.
Government
Ministry of Agriculture, Food Security and Nutrition, Ministry of Trade and Industry, Ministry of Finance and Development Planning, Lesotho National Development Corporation, Basotho Enterprise Development Corporation, Post Bank.
Multilaterals
World Bank, African Development Bank, World Food Programme, Food and Agriculture Organization, United Nations Development Programme, International Fund for Agricultural Development.
Non-Profit
Lesotho Council of Non-Governmental Organization.
Target Locations
Lesotho: Leribe District
Lesotho: Thaba-Tseka District
Lesotho: Mokhotlong District
References
- (1) Lesotho National Farmers Union, 2022. https://lenafu.org.ls/horticulture/
- (2) Government of Lesotho, National Strategic Development Plan, 2018/19 - 2022/23
- (3) Department of Marketing, SDG Investor Map Consultations - 2023
- (4) Government of Lesotho, Budget Speech 2023/24
- (5) Government of Lesotho, Lesotho Poverty Assessment: Progress and Challenges in Addressing Poverty, 2019
- (6) Governments of Lesotho and United States of America, Millennium Challenge Compact, 2022
- (7) Government of Lesotho, Comprehensive National Agriculture Policy, 2022 - 2026
- (8) SDG Investor Map Likhetlane, Maoa-Mafubelu and Likhothola Stakeholder Consultations, June 2023
- (9) Labour Force Survey, 2019, Bureau of Statistics
- (10) Government of Lesotho, National Strategic Development Plan: Strategic Focus, 2023/23 - 2027/28
- (11) Commercial Lawn Care Services, Benefits of Planting Fruit Trees, 2023.
- (12) Weekl&, 2022: How Do Fruit Trees Help the Environment?. https://www.weekand.com/home-garden/article/fruit-trees-environment-18048274.php
- (13) Farshad Sheilifard, at al, Chemical footprint of pesticides used in citrus orchards based on canopy deposition and off-target losses, 2020. https://www.sciencedirect.com/science/article/abs/pii/S0048969720326358
- (14) Lesotho Competitiveness and Financial Inclusion Project 2022
- (15) SDG Investor Map Investment Opportunity Areas Shortlist 2023
- (16) Government of Lesotho, National Agriculture Investment Plan (2022 - 2026)
- (17) Smallholder Agricultural Development Project Report
- (18) World Food Programme, Lesotho Annual Country Report, 2022. https://docs.wfp.org/api/documents/WFP-0000147970/download/
- (19) Government of Lesotho, Lesotho Poverty Trends and Profile, 2019
- (20) Central Bank of Lesotho, Financial Institutions (Banks) (Pricing) Directives - April 2022. https://www.centralbank.org.ls/images/Public_Awareness/Press_Release/PRESS_STATEMENT_OF_BANK_PRICING-_AG_-_FINAL__DRAFT_16.03.22.pdf
- (21) Revenue Service Lesotho. https://www.rsl.org.ls/tax-rates
- (22) Government of Lesotho, Budget Speech, 2022/23
- (23) United Nations, Sustainable Development Report 2023
- (24) United Nations, Sustainable Development Goals Atlas 2023