Wax works

Mark Rutaro, JDMN Holding Ltd, an independent commodity and market sourcing agent.

I was pleased to receive the January 2018 edition of BfD’s Technical Bee Notes and decided to share my experiences with readers of Bees for Development Journal.

In 2012 I started to explore the bee product market and producers. I discovered that there is doubt in the market from both ends. Producers did not think I was up to the task of finding them an export market and prospective buyers were doubtful about good quality honey and beeswax from Uganda, in the right amounts. Ugandan processors were not sure how much beeswax they could access. They thought they could collect ten tonnes, although they had experience of harvesting only two tonnes.

The doubt on both sides presented an opportunity for me. I requested a wax sample from Uganda’s largest bee products firm Bee Natural Uganda. They made me pay for it – although samples are normally free – because they had no faith in what I was telling them. I sent the sample by courier to my prospective buyers, and it passed the test. (Sending the sample also had hurdles including the mandatory requirement for an entomophagy certificate). The Ministry of Agriculture provides only phyto-sanitary (plant) certification, so we had to make do with the phytosanitary certification. We still use this today.

After the sample test, now the negotiation was on price and payment terms. The buyer was insisting on a Letter of Credit (LC) on sight, while the supplier requested a 50% cash down payment. LC is the safest for both parties, but the supplier had no knowledge of how the LC works and besides, they needed the down payment to boost their capital position. After many months of discussion, the supplier was convinced to risk taking on my scheme and agreed to an LC. She warned me that if anything went wrong I would be totally responsible. The initial price was US$6.0 (€4.9) per kg. Other conditions from the buyer were SGS (the international inspection, verification, testing and certification company) to certify quantity at shipment and for me to be personally present during filling of the container.

The buyer required that the wax be strapped on to fumigated wooden pallets and wrapped with thin plastic film (shrink wrapping). It was my role to find these because “I had promised the impossible”.

In April 2013 the supplier had managed to collect only 4.7 tonnes of the promised ten. They were in breach of the agreement and the terms of the LC. After some serious persuasion, the buyer accepted to take the cargo. The supplier received payment promptly after presenting the bill of lading and SGS certificate to the bank. Everyone was happy. I had pulled it off and now the supplier had experience in exporting and I had built trust between both parties.

Mark Rutaro with beautiful Ugandan beeswax

Since then cargo has grown to 30 tonnes from the first supplier. We have maintained good quality. The supplier has enjoyed the trade and increasingly perfect collection of beeswax. The price has increased to US$8.7(€7.1) per kg.

This year I attempted to start all over again with a new supplier. History repeated itself and this new supplier also managed only five out of the initially promised ten tonnes.

In 2016 I attended the African ApiExpo in Kigali, Rwanda and contacted Rwandan suppliers. If all goes well, I will restart the story in Rwanda this year. The current buyer, a Japanese Company, has an annual shortfall of 50 tonnes per year, so the potential is great.

I believe that Uganda’s current beeswax production has potential for over 600 tonnes, the bulk of which is not realised. Most beeswax is lost at harvest level because farmers do not know its value, that there is a good market for it.

Blocks of beeswax arranged on a pallet

Beeswax strapped to pallets

Wax strapped to pallets in the container ready for export

According to The Uganda National Agricultural Development Organisation (TUNADO) and other website information, Uganda has 1.2 million beekeepers.

If at least each farmer had one colonised hive per year, then we would have 1.2 million colonies per year. Half a kilogram of beeswax can be harvested from each colony, it means the total wax production potential is at least 600 tonnes.

At the current market value of US$8.0 (€6.5) per kg of wax, Uganda bee farmers are harvesting US$4.8m (€3.9m) worth of wax per year, and yet only US$300,000 (€245,050) are accounted for. I believe that this beeswax can be realised with actions and cooperation.

If I had enough support and cooperation, we can achieve this. From my experience, I could help such an effort with pre-off-taker contracts from reliable buyers who are some of the largest corporations in the world. These contracts would help processors and farmers to find trade and investment finance to grow the industry.

Last year I attempted also to export Ugandan honey. I sent samples to various buyers and the quality was good, although buyers are worried that their market is used to light coloured honey, not Uganda’s dark amber honey. A lot of effort is needed to promote dark amber honey. Another concern is also food handling and quality standards by African producers. This too can be addressed.

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