Sustainable Export Oriented Crop Production

Sustainable Export Oriented Crop Production

Photo by UNDP Mauritius & Seychelles

Sustainable Export Oriented Crop Production

Country
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).
> 25% (in GPM)
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.
Short Term (0–5 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 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9) Partnerships For the Goals (SDG 17)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Gender Equality (SDG 5) Responsible Consumption and Production (SDG 12) Life on Land (SDG 15)

Business Model Description

Set up distilleries and produce high-value-added products from Seychelles tropical cash crops, including cinnamon, vanilla, and copra, for dietary and medicinal use. Extract, distillate and distribute pure essential oils from locally available sources such as cinnamon bark and cinnamon leaf that have potential forward linkages to higher value-added products such as soaps, perfumes or pharmaceutical products.

Expected Impact

Enhance regional integration with sustainable industrial capacity and growing export volumes, amplify income-generating activities for farmers, and mitigate current account deficit.

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.
Country
Region
  • Seychelles: Greater Victoria
  • Seychelles: Praslin
  • Seychelles: La Digue
  • Seychelles: Outer Islands
  • Seychelles: Silhouette
Learn more

Sector Classification

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

Food and Beverage

Development need
Agriculture and fisheries have a low contribution to GDP, accounting for 2.2% in 2020 (9). Moreover, only 3.7% of the national labour force is engaged in primary production agriculture (2). The country is, therefore, 70% dependent on imported food (3), with food utilization characterized by nutritionally poor food choices (1).

Policy priority
Seychelles National Food Nutrition and Security Policy (2013) aims to ensure food security through efficient agricultural production, sustainable fisheries and balanced importation of food (6). Improving local food production using new and sustainable agricultural innovations forms part of the Seychelles National Agricultural Investment Plan (3).

Gender inequalities and marginalization issues
In 2016, 54% of the unemployed were women (11). High youth unemployment, amounting to 6.5% among the 15-24 years group in 2018 (7). Amongst the unemployed youth, the female unemployment rate stood higher (16.6%) compared to men (9.5%) (11).

Investment opportunities Introduction
In 2022, the government allocated SCR 123.4 million for the agricultural sector (8). As a Policy Response to COVID-19, interest rates for investment loans in agriculture and fisheries were reduced to 1%, objective of increasing the level of production for food security (20). Seychelles ranks 6th out of 220 regions in Ocean Health Index, scoring 83/100. (10).

Key bottlenecks Introduction
Agricultural sector lacks a robust data & information management infrastructure (13). The sector is declining production and productivity of major locally-grown crops and livestock due to inadequate resource allocation (3). The food & Beverage sector is competing for land resources with the tourism and infrastructure sectors (1).

Sub Sector

Food and Agriculture

Development need
Agriculture represents less than 1% or 3.75 square kilometres of the total land (3), yet 60% of agricultural land is currently under-utilized. In addition, food processing is impeded by high operational costs. In the fisheries sub-sector, high-demand species are overfished, notably yellowfin tuna, and catch rates are often unstable and in steep decline, about 50% for artisanal fishers (4, 5).

Policy priority
The Seychelles Mariculture Master Plan (MMP, revised in 2019) aims at building local capacity and improving the enabling environment to identify and promote the commercial-scale aquaculture opportunities in Seychelles (15). Seychelles National Agricultural Investment Plan supports crop product processing and marketing (3). Seychelles Fisheries Sector Policy aims to maintain annual quotas in the industrial tuna fishery to prevent overfishing (7).

Gender inequalities and marginalization issues
Women make up only two per cent of the world's official maritime workforce (12). The fisheries sector experiences a lack of youth and women (5). Women who are also central in agriculture lack access to and control over production assets (2).

Investment opportunities introduction
Seychelles' government tenders plots of land for investors to build cinnamon processing plants (14). Under the National Agricultural Investment Plan, Seychelles allocates 122.2 million SCR (USD 9.85 million) for the protection and sustainable use of agricultural land and water (3).

Key bottlenecks introduction
Lack of technological capacity, lack of fish supply due to the prevalence of foreign purse seiners, high cost of labour and agricultural inputs, ageing farming and fishing community, and limited arable land impede the sector's performance (2).

Industry

Agricultural Products

Pipeline Opportunity

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

Sustainable Export Oriented Crop Production

Business Model

Set up distilleries and produce high-value-added products from Seychelles tropical cash crops, including cinnamon, vanilla, and copra, for dietary and medicinal use. Extract, distillate and distribute pure essential oils from locally available sources such as cinnamon bark and cinnamon leaf that have potential forward linkages to higher value-added products such as soaps, perfumes or pharmaceutical products.

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

The plantation-based activities in Seychelles generate up to two per cent of the GDP, less than USD 30 million. However, the marginal contribution of the cash crops, which includes coconuts/copra, cinnamon, vanilla, and patchouli, is set to increase with the manufacturing of higher value-added products and eco-labelling (25, 38).

Cash crop production, including cinnamon and copra, averaged 10 to 20 tons between 2016-2020 (18).

Indicative Return

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

> 25%

A leading manufacturer of essential oils and a major exporter of cinnamon bark reports a 50 to 55 per cent of Gross Profit Margin in 3 to 5 years (19).

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.

Short Term (0–5 years)

A leading manufacturer of essential oils and a major exporter of cinnamon bark reports a 50 to 55 per cent of Gross Profit Margin in 3 to 5 years (19).

Ticket Size

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

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Capital - Limited Investor Interest

In Seychelles, the agricultural sector is characterised by a low level of investment (2). According to stakeholders, weak balance sheets make it difficult to attract investors (19)

Business - Supply Chain Constraints

Landing infrastructure is deficient in outer islands where cash crop plantations might be established. Access to raw materials and cultivable land, specifically for cinnamon, which is mostly found in fragile ecosystems, and coconut, are limiting factors for business development (18, 19).

Market - High Level of Competition

Seychelles is competing with several countries leading global crop production, including Sri Lanka and Madagascar, for the export of high-value crops such as cinnamon or vanilla (19).

Impact Case

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

Sustainable Development Need

Production of high-value crops like copra and cinnamon, once the main activity on the island, now generates only about 2% of the GDP (21). In 2015, arable land constituted about 0.3% of the land area, while 3% was occupied by permanent crops (2).

Due to inadequate technology and information, lack of credit, and negative perception of farming, more Seychellois youth are leaving agriculture for other sectors (35). As a result, the youth unemployment rate in 2017 was 12.7% (11), while out of the 575 farmers, 75% were more than 50 years old (22).

Due to the COVID-19 pandemic, there was a fall in demand for agricultural supplies from the tourism industry. This compelled farmers, who primarily contributed to tourism value chain by selling to the hotels, restaurants, cruise ships, and charter vessels, to shift production to the popular local crops, underscoring the need for development of the sector along the agricultural lands of which 60% remains under-utilized. (18, 22).

Gender & Marginalisation

Women actively involved in agricultural production are still disadvantaged in accessing production assets and regional markets (11).

The local farming community is ageing. Out of the 575 registered farmers, 75% are more than 50 years old (22). Moreover, youth trained in modern farming techniques prefer working in different sectors after training.

Expected Development Outcome

Improving sustainable crop production for export helps expand the export base mainly focused on canned tuna and services, sustainably exploiting the abundant natural resources to their full potential (21).

The economy into a critical sector, providing for food security, promoting agricultural production to pre-pandemic levels, allowing it to shift back to high-value crops and will invite farmers to develop the 60% of agricultural land which is currently under-utilized (22).

Gender & Marginalisation

As women are central to the fairly large informal area of agriculture, sustainable export oriented crop production improves equal gender access to crop inventories, farmland, and machinery and equipment through increased employment opportunities.

Sustainable export oriented crop production creates employment opportunities for young farmers and entrepreneurs to join the agricultural sector in crop production and gradually replace the ageing farming community (22).

Primary SDGs addressed

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

8.1.1 Annual growth rate of real GDP per capita

8.6.1 Proportion of youth (aged 15–24 years) not in education, employment or training

Current Value

4% in 2019 (24).

Unemployment rate for young women and young men 11.8% in 2017. Proportion of youth not in employment, education or training - 29.2 percent (11).

Target Value

Real GDP Growth: 4% in 2023 (21).

Youth unemployment rate is reduced to 8% by the end of 2023 (11).

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure

9.2.1 Manufacturing value added as a proportion of GDP and per capita

Current Value

15,381 in 2018 (24).

Target Value

N/A

Partnerships For the Goals (SDG 17)
17 - Partnerships For the Goals

17.11.1 Developing countries’ and least developed countries’ share of global exports

Current Value

N/A

Target Value

N/A

Secondary SDGs addressed

Gender Equality (SDG 5)
5 - Gender Equality
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Life on Land (SDG 15)
15 - Life on Land

Directly impacted stakeholders

People

People engaged in crop production, farming, and exporting benefit from upgraded access to inputs, machinery and equipment, open international markets, cost reduction for utilities and enhanced income generation.

Gender inequality and/or marginalization

Women, especially young, involved in crop production benefit from increased production capacity, income generation and employment opportunities.

Planet

Sustainable crop production benefit critical land habitats, help protect watersheds, and improve soil health and water quality.

Corporates

Enterprises, including smallholder farms operating in the agricultural sector, particularly in crop production, benefit from cost reduction incurred by nonrenewable resources.

Public sector

Government gains from export revenue and increased demand for local currency.

Indirectly impacted stakeholders

People

General population benefits from the improved trade deficit and economic recovery.

Corporates

Companies offering logistics and infrastructure services and middlemen facilitating the exchange of agricultural produce enjoy increased demand for transportation and post-harvest handling facilities like warehouses.

Outcome Risks

If sustainable crop production is not managed carefully, it may lead to crop failure, deforestation and damage to the land ecosystem (34).

If sustainable crop production for export is not managed carefully, it may hinder trade balance and economic development.

Cash crop production causes competition in natural resources with staple crops, increasing food prices and affecting lower-income households (34).

Impact Risks

Farmers may not have access to adequate extension services and enjoy insufficient access to credit, which may limit the uptake of the high-value crops and hence hinder the expected impact (19).

If most farm employees are expatriates, the IOA may not achieve the intended impact of engaging local communities in agricultural activities.

If the production of high-value and drought-tolerant crops is hindered by climatic factors or poor farming practices, profitability levels may be too low to achieve the expected impact.

The effects of external shocks such as war and the pandemic and overall global instability can cause price spikes on main agricultural assets, thus prohibiting the expected impact.

Impact Classification

B—Benefit Stakeholders

What

Sustainable crop production for export raises revenue from trade, improves trade balance, strengthens the value of the local currency, and creates employment opportunities for the population.

Who

Smallholder, large- and medium-scale farmers, and the overall population benefit from a strengthened economy and employment brought by export.

Risk

Lack of extension services, adequate financing mechanisms, increased participation of expatriates in labour, and global instability requires consideration under this business model.

Contribution

In contrast to conventional agriculture, sustainable crop production offers energy-efficient solutions, reduces greenhouse gas emissions and lowers the cost of production.

How Much

Increased volumes of sustainable crop production will contribute to farmers' income and productivity, as in 2020, Seychelles produced 10 tonnes of cash crop (25).

Impact Thesis

Enhance regional integration with sustainable industrial capacity and growing export volumes, amplify income-generating activities for farmers, and mitigate current account deficit.

Enabling Environment

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Policy Environment

Seychelles Agricultural Agency Strategy 2020: Facilitates the implementation of the Seychelles National Agricultural Investment Plan and provides a strategic framework and a roadmap of key investment areas, including developing priority crops and value chains (13).

Agriculture Comprehensive Plan, 2019: Outlines concrete and tangible actions developed to revive the sector to ensure food and nutrition security, identifies core local crops and products for local production, and aims to create a policy for assessing the sector's productivity (26).

National Food and Nutrition Security Policy (NFNSP), 2013: Developed to strengthen the county’s capacity to deliver on its food and nutrition security objectives that ensure efficiency and sustainability in resource use and resilience in the face of internal and external shocks (6).

Seychelles National Agricultural Investment Plan (SNAIP), 2015-2020: Defines agricultural priorities, goals and outcomes to provide desired volumes of food production, identifies food security and nutrition as well as productivity and diversification of crops as cross-cutting issues (3).

Financial Environment

Financial incentives: The Agricultural Development Fund (ADF) offers loans amounting between SR25,000 and SR5 million per project at a 2.5-5% interest rate to registered farmers for the construction of farm buildings, upgrading equipment, setting up agri-tech systems and others (30).

Fiscal incentives: Import tax exemption includes Value Added Tax refunds on locally purchased goods for registered farms and supporting activities, and customs duty is exempted on goods imported as capital equipment, protective and safety equipment. Accelerated depreciation rates are allowed for registered entities (31).

Other incentives: Special Deductions on Taxable Income on Marketing and Promotion is a deduction of the expenditure incurred for marketing and promotion to 5% of the taxable income or the actual expenditure incurred, whichever is lower.

Regulatory Environment

Acquisition of Land in the Public Interest Act, 1996: Provides for land acquisition in the public interest and related matters such as claims to compensation, examination of land and the taking possession of land, registration of interest in land and withdrawal from the acquisition (23, 27).

Seychelles Agricultural Agency Act, 2009: Establishes the Agency to facilitate the modernization and development of the agricultural sector. In 2021, the act was repealed by the Seychelles Agricultural Agency (SAA) Repeal Act, transferring SAA's functions to the department of agriculture (28).

Environment Protection Act, 2016: Serves to ensure that all development and activities, including agriculture, are subject to environmental controls and provides for the protection, improvement and preservation of the environment to facilitate the implementation of international commitments (29).

S.I. 76. - Seychelles Investment (Economic Activities) Regulations, 2022: lists activities a non-Seychellois may invest in and activities a non-Seychellois may invest jointly with Seychellois, requires conducting an Economic Needs Test (ENT) (37).

Marketplace Participants

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Private Sector

Chaka Brothers, Bristol Enterprises Limited, Geffroy's Farm, L'Union Estate, Island Scent.

Government

Ministry of Fisheries and Agriculture, Seychelles Investment Board, Seychells Bureau of Standards.

Multilaterals

AfDB, Common Market for Eastern and Southern Africa (COMESA), EU, FAO, IFAD, Global Environmental Facility (GEF), UNDP, International Atomic Energy Agency (IAEA).

Non-Profit

Agricultural Producers Association of Seychelles, Seychelles Farmers’ Association, Anse Boileau Farmers’ Association, Val D’Andorre Farmers’ Association and Local Food Producers Association.

State-owned Island Development Company (IDC) is planning the development of sustainable agriculture on Coetivy island, encouraging local farmers to produce specific crops, chicken and prawns.

Target Locations

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country static map
urban

Seychelles: Greater Victoria

According to the Agriculture Comprehensive Plan, the Ministry believes that Mahe, Praslin and La Digue have the potential to meet the current country's demand as most agricultural lands are not being efficiently exploited (26).
semi-urban

Seychelles: Praslin

According to the Agriculture Comprehensive Plan, the Ministry believes that Mahe, Praslin and La Digue have the potential to meet the current country's demand as most agricultural lands are not being efficiently exploited (26).
rural

Seychelles: La Digue

According to the Agriculture Comprehensive Plan, the Ministry believes that Mahe, Praslin and La Digue have the potential to meet the current country's demand as most agricultural lands are not being efficiently exploited (26).
rural

Seychelles: Outer Islands

Islands Development Company agriculture programme on the outer island of Coetivy Agriculture was once done on a large scale on several islands, including Coetivy, Silhouette, Farquhar, Desroches and (32).
rural

Seychelles: Silhouette

The heavy rainfall encourages the growth of cinnamon trees on the higher slopes and mountainsides of Silhouette. Over the years, there used to be a distillery on the island (33).

References

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