Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
July 2013 Timor-Leste Country Team Version 1 Working Document
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Table of Contents PART ONE: SECTOR ASSESSMENT ...................................................................................................................................... 0 CHAPTER 1: PRO-POOR GROWTH POTENTIAL .................................................................................................................. 1 1.1
AGRICULTURE AND AGRICULTURAL MARKETS IN TIMOR-LESTE ....................................................................... 1
1.2
MDF’S AIMS .................................................................................................................................................................... 4
1.3
AGRICULTURAL PRODUCTION .................................................................................................................................. 5
1.4
MARKETS, TRENDS AND GROWTH POTENTIAL ...................................................................................................... 6 Exports ............................................................................................................................................................................ 6 Dili ................................................................................................................................................................................... 9 Public-Sector Markets ................................................................................................................................................... 12 The Districts .................................................................................................................................................................. 13 District-Level Agricultural Input Markets ....................................................................................................................... 15 Growth Potential of Products and Markets ................................................................................................................... 16
1.5
RELEVANCE FOR PRO-POOR GROWTH ................................................................................................................. 18
1.6
RELEVANCE FOR CROSS-CUTTING THEMES ........................................................................................................ 19 Gender Equality ............................................................................................................................................................ 19 Environmental Sustainability ......................................................................................................................................... 20 Social Responsibility ..................................................................................................................................................... 20
CHAPTER 2: THE MARKET SYSTEM ................................................................................................................................... 21 2.1
SYSTEM ACTORS ........................................................................................................................................................ 22 Growers ........................................................................................................................................................................ 22 Traders.......................................................................................................................................................................... 23 Processors .................................................................................................................................................................... 24 Retailers ........................................................................................................................................................................ 25 Input Suppliers .............................................................................................................................................................. 26
2.2
PUBLIC-SECTOR PRESENCE IN THE SYSTEM ........................................................................................................ 27
2.3
DONOR PRESENCE IN THE SYSTEM ....................................................................................................................... 28
PART TWO: SECTOR GROWTH STRATEGY ....................................................................................................................... 30 1
MAIN FINDINGS .............................................................................................................................................................. 31
2
MDF’S APPROACH ......................................................................................................................................................... 32 2.1
Constraints.......................................................................................................................................................... 33
2.2
Opportunities ...................................................................................................................................................... 35
2.3
Sector Growth Strategy ...................................................................................................................................... 36
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3
RELEVANCE FOR PRO-POOR GROWTH AND CROSS-CUTTING THEMES .............................................................. 38 3.1
Pro-Poor Growth ................................................................................................................................................. 38
3.2
Cross-Cutting Themes ........................................................................................................................................ 38
ANNEX 1: MAJOR CROPS IN TIMOR-LESTE ....................................................................................................................... 40 ANNEX 2: DILI MARKET DEMAND ........................................................................................................................................ 58 ANNEX 3: DISTRICT MARKET DEMAND .............................................................................................................................. 60
List of Tables Table 1: Major exports, 2005–2012 (kg) ................................................................................................. 6 Table 2: Minor exports, 2005–2010 (kg) ................................................................................................ 7 Table 4: Major markets in Timor-Leste ................................................................................................ 17 Table 9: Key cultivation and marketing aspects of maize ..................................................................... 41 Table 10: Key cultivation and marketing aspects of rice ...................................................................... 43 Table 11: Key cultivation and marketing aspects of cassava ................................................................ 46 Table 12: Key cultivation and marketing aspects of sweet potatoes ..................................................... 47 Table 13: Key cultivation and marketing aspects of soybeans .............................................................. 49 Table 14: Key cultivation and marketing aspects of mung beans ......................................................... 50 Table 15: Key cultivation and marketing aspects of peanuts ................................................................ 51 Table 16: Key cultivation and marketing aspects of vegetables ........................................................... 53 Table 17: Key cultivation and marketing aspects of potatoes ............................................................... 54 Table 18: Key cultivation and marketing aspects of coffee .................................................................. 55 Table 19: Population growth in Dili ...................................................................................................... 59 Table 20: Recommended and current food consumption per person in Dili (kg/year) ......................... 59 Table 22: Food consumption levels and deficits in Dili (MT/year) ...................................................... 59 Table 23: Population growth in the districts.......................................................................................... 61 Table 24: Recommended and current food consumption per person in the districts (kg/year) ............. 61 Table 26: Food consumption levels and deficits in the districts (MT/year) .......................................... 61
List of Figures Figure 1: Constraints and opportunities in agribusiness development .................................................... 4 Figure 2: Gap between recommended and actual food consumption in Dili ........................................ 10 Figure 3: Gap between recommended and actual food consumption in rural areas .............................. 14 Figure 4: The market system ................................................................................................................. 22
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Abbreviations and Acronyms AusAID
Australian Agency for International Development
BOSS
Business Opportunities and Support Services (ILO-funded program)
CCT
Cooperativa Café Timor
DAC
Developing Agriculture Communities (USAID-funded program)
FAO
Food and Agriculture Organization
GDP
gross domestic product
GoTL
Government of Timor-Leste
ha
hectare
ILO
International Labour Organization
MAF
Ministry of Agriculture and Fisheries
MDF
Market Development Facility
MT
metric ton
NGO
non-governmental organisation
NPK
nitrogen, phosphorus and potassium
SIPI
Suco Ida Produto Ida / One Suco One Product
SoL
Seeds of Life (Australian Government Department of Foreign Affairs and Tradefunded program)
TSP
triple super phosphate
UNICEF
United Nations Children’s Fund
USAID
United States Agency for International Development
WFP
World Food Programme
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Part One: Sector Assessment
Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Chapter 1: Pro-Poor Growth Potential Timor-Leste has about 1.2 million inhabitants. The number of households is 184,652, with an average household size of 5.8 people.1 Of these households, at least 63% are dependent on agriculture, with some estimates putting the percentage as high as 75%.2 Poverty is concentrated in the rural areas, with an estimated 77% of rural households living below the national poverty line of $0.88 per person per day. Nationwide the percentage of people living below the poverty line is 41%.3 The average farm size is small at 0.9 hectare (ha) per person.4 Income-earning opportunities are scarce, both within and outside agriculture, especially in the districts. Agriculture is the largest contributor (30%) to the non-oil gross domestic product (GDP). It is also the largest employer in the country (followed by retail/wholesale and construction).5 However, access to end markets for agricultural produce is limited, and agricultural productivity is low. Unemployment is also a significant problem. The unemployment rate in rural areas is 81%, twice as high as in urban areas.6 Food insecurity is another major issue; compounded by rapid population growth and low productivity and market access, which in turn acts as a disincentive for surplus production. Of children under the age of five, 58% are stunted and 19% wasted; 29% of their mothers are malnourished.7 Most farmers have limited access to extension workers, agricultural inputs and markets. This results in low productivity and very little surplus to sell. Poor access to markets is mainly due to the drastic deterioration of trade structures in the country since independence. Traders either moved away or ceased trading, and roads and other infrastructure have crumbled. As a result, domestic trade primarily occurs between the districts and the capital, Dili, with very little inter-district trade. Most intra-district trade is confined within sucos (villages) or sub-districts and consists of farmers selling surplus produce to their neighbours. Addressing poverty in Timor-Leste requires that farmers have access to markets, inputs and farming knowledge to increase yields, sell surplus produce, and in this manner secure their livelihoods and food intake. The starting point for this is connecting farmers to markets so that they can earn money to purchase yield-increasing inputs or buy household essentials and improve their livelihoods.
1.1
Agriculture and Agricultural Markets in Timor-Leste
Timor-Leste’s total land mass is about 1,450,000 ha, of which 600,000 ha are suitable for crops or livestock production. Of this, only 174,000 ha are arable, with 124,000 ha characterised as bush cover.8 The soil is alkaline and generally poor, with low water-retention capacity and a propensity for erosion. There are small areas of alluvial soils in the river valleys and flat lands along the coasts that are suitable for orthodox agricultural practices. Farming, however, is not restricted to flat land only; crops such as coffee, vegetables, upland maize and terraced rice are cultivated in small pockets of levelled mountain land as well as on mountain slopes.9 1
Ministry of Finance for Timor-Leste, Population and housing census, 2010.
2
World Bank, Boosting agriculture exports in Timor-Leste to reduce poverty, 2010.
3
United Nations Development Programme, Human development report, 2013; United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012. Nesbitt, Harry et al., “Household food insecurity in Timor-Leste,” Food Security: The Science, Sociology and Economics of Food Production and Access to Food, vol. 5, no. 1, 2013. 4
5
Government of Timor-Leste, Economic context and macro-economic direction—an update to the Timor-Leste 2011–2030 strategic development plan, 2012.
6
International Labour Organization and Timor-Leste National Statistics Directorate, Timor-Leste labour force survey, 2010.
7
World Bank and Ministry of Finance, Timor-Leste demographic and health survey, 2009–2010. Here, stunting is referred to as the condition leading to low height for age and malnourished is referred to as low weight for age. 8
Bush cover is characterised as land suitable for agriculture upon clearing.
9
Seeds of Life, Climate change and population growth in Timor-Leste: implications on food security, 2012.
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Most agriculture in Timor-Leste is rain-fed, with a small proportion of arable land under irrigation, almost exclusively for rice.10 The interior of the island is mountainous; the main mountain range is aligned east to west, which creates a drier northern coast and hinterland and a wetter southern coast. The northern part of the island is generally hot and dry, with a wet season lasting four to six months, from November till April. The southern part of the island has a longer wet season, seven to nine months, with two rainfall peaks, due to the influence of the southeast monsoon.11 As agriculture is mostly rain dependent, the major agricultural season is during the wet season, with planting around November and harvest around April or May. The south, due to its wetter climate, has two distinct growing seasons. The most important crops in Timor-Leste are maize, rice, cassava, sweet potatoes, beans (mung beans, red beans, kidney beans and soybeans), vegetables and coffee. Maize and cassava are grown by most households across the country; rice is mostly concentrated in flat lands or irrigated plots. Sweet potatoes are grown in the eastern part of the country. Vegetables are mostly grown in the central districts of Aileu and Ainaro, where the climate is better suited for horticulture. Coffee, the most important commercial crop in Timor-Leste, is localised in the western part of the country in Ermera, Liquica, Aileu, Ainaro and Bobonaro districts. The small size of farming plots (averaging 0.9 ha) is mainly due to the terrain, which contains patches of arable land surrounded by mountains or rocky soil. Even on arable land, weeding and land clearing pose problems. Thus farmers are able to utilise only a fraction of the land that is potentially available for cultivation. Additionally, due to the terrain and difficulties of land clearing, a farmer’s available land may not be contiguous. It is common for land belonging to one farming household to be broken up into multiple smaller plots to mitigate the risk of crop failure and help ensure sufficient food production to meet household needs. Low-input subsistence farming characterises the bulk of Timorese agriculture. A survey conducted by Care International in five districts in 2004 revealed that only 29% of the farms used chemical fertilisers and less than 35% used pesticides, mainly due to lack of availability and high prices.12 The majority of Timorese farmers involved in upland agriculture use shifting cultivation and slash-andburn techniques for land clearing. They cultivate a piece of cleared land for around three years and then move on. They typically come back to the same plot after a few years, but resume cultivation without proper soil conservation techniques such as fertilisation, boundary rehabilitation and weeding. As a result, soil fertility declines, weeds become entrenched and yields decline.13 Farmers typically use their own seeds (if they haven’t been consumed during the hungry season) and few or no fertiliser or crop protection products. There is very limited land tillage and weed control. Intercropping is frequent to mitigate risk and increase self-sufficiency. The result is low-yielding, semi-self-sufficient farming primarily for home consumption. The little that is left over is sold in the market. There are few real cash crops, few opportunities to sell crops locally (because most nearby farmers grow mostly the same things), and many difficulties in selling in more distant markets because roads are bad and transportation costs are high. Farmers are largely dependent on what they can grow themselves; they have little surplus produce or cash reserves to help them absorb a shock such as bad weather or crop failure. There are four major end markets for Timor-Leste’s agricultural products: Dili, the districts, the public sector and exports. The emerging oil and gas sector could become another major market; however, current uncertainties prevent it from being a target for agribusiness marketing at present. Markets in general are fragmented and poorly connected, due to poor infrastructure, lack of market specialists 10
Food and Agriculture Organization and World Food Programme, Crop and food supply assessment mission report, p. 10, 2007.
11
Oxfam Australia, Timor-Leste food security baseline report, 2007.
12
Care International, Timor-Leste rice marketing survey report, p. 19, 2004.
13
Center for Advanced Studies in Management and Economics, Universidade de Evora, The impact of shifting cultivation in the forestry ecosystem of TimorLeste, p. 16, 2012.
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(such as aggregators, wholesalers and logistics experts) and lack of awareness among most other market actors (such as farmers and local businesses) of what can be bought and sold where. The largest market for domestic produce is Dili; this is also the largest market for imported products, including rice, noodles, cooking oil, flour and processed foods. Inter-district trade is the most fragmented, with very poor connections due to lack of transportation, poor road conditions and limited demand and purchasing power in the districts. This fragmentation is manifested by the existence of surplus and deficit areas for the same products within single districts.14 In the public sector, the Ministry of Commerce, Industry and the Environment (formerly the Ministry of Tourism, Commerce and Industry) is the single largest buyer of commodities such as local rice, maize, peanuts, soybeans and mung beans. Most of these products are redistributed for humanitarian purposes or stored as buffer stocks. However, this purchasing program is based on a fixed budget, which limits its area of operation to a few districts. Purchase volumes per year are erratic; the prices offered vary but are generally high, amounting to a cash transfer to rural areas and resulting in considerable market distortion as farmers develop unrealistic price expectations. This in turn makes imports more attractive, as traders find it easier to import bulk volumes at competitive prices instead of having to negotiate hard to purchase often much smaller volumes at above world market prices. The government is also a major buyer of imported goods, especially rice. Imported rice is subsidised with a view to stabilising the prices of staples in Timor-Leste markets, but such steps also make local rice unattractive to local traders.15 The relatively high price of local labour also increases the price of local products. Labour rates average $4 per person per day and as high as $7–8 per person per day in some remote locations. As most crops require upwards of 20 person-days of external labour, labour costs can reach unsustainably high levels for poor farmers. Labour shortages are partly due to low population densities in production centres as well as negative influences from social solidarity programs such as veterans’ pensions, senior pensions and cash payments for road construction. Benefits of these cash transfer programs have been documented to compete with stable income earning opportunities such as intensive farming. 16
Although the balance of trade in Timor-Leste is overwhelmingly in favour of imports, the country has a few agricultural commodities that were regularly exported, at least until 2010, to a few destinations worldwide. The main export commodity is coffee; other export commodities have included mung beans, peanuts, tamarind, cashews, coconuts, candlenuts, candlenut oil and teak. Between 2005 and 2010, Timor-Leste exported 14,000 MT of agricultural products including teak to Germany, Hong Kong, Indonesia, Malaysia, Portugal, Taiwan and the United States.17 Since 2010, however, export volumes have dwindled due to a combination of factors: rigorous sanitary and phyto-sanitary export requirements, mismanagement of plantations and production centres, uncompetitive local production due to high costs, and degradation of export supply chains. Overall, the market system is one of shallow value chains with few actors and fewer specialists engaged in any individual crop. End markets—in particular Dili, which represents about 16% of the country’s population and a much larger percentage of its total purchasing power—are undersupplied. Collecting produce from distant rural areas is costly: the roads are bad, the volumes small, the quality variable, transaction costs high, and farmers’ price expectations at times unrealistic. All this makes imports attractive and exports difficult. A small economy such as Timor-Leste’s can only grow by first meeting local staple needs, then supplying its cities and then capturing export markets. The current agricultural economy features all of this, but in every segment more competitive, cheaper production is needed to make the wheels of trade turn faster. Without market transactions, there is no cash for inputs. Without inputs, combined with better information, better roads and better infrastructure (such 14
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, 2011. 15
Food and Agriculture Organization, Timor-Leste and FAO achievements and success stories, 2011.
16
Market Development Facility interviews with farmers in Manufahi, Viqueque, Ainaro and Cova-Lima, May 2013.
17
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics 2011, 2011.
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as storage and quality control), there is limited scope for surplus sales. This creates a vicious cycle in which producers cannot produce more because they use low levels of inputs, which results in low income, which hinders production even further because of the inability to invest in farming or household well-being.
1.2
MDF’s Aims
Given this scenario, the Market Development Facility (MDF) aims to work across multiple crops through interventions aimed at cross-cutting opportunities such as improving rural distribution channels and stimulating businesses to source more products locally. Initially, MDF expects to be able to work with companies that can integrate various business functions such as logistics, trading, warehousing and processing as needed, in order to help companies become able to invest in concrete opportunities that help connect farmers to markets. At the same time, MDF may need to get involved in stimulating smaller businesses to grow in order to (re-)create a more dense trading system. As the market for any one crop is often too small, efforts that work with multiple crops would seem more profitable and hence more attractive for businesses to invest in. This approach involves the development not only of backward linkages between markets and farmers (sourcing) but also of forward linkages (distribution and retailing of agricultural inputs and machinery), access to information and services and, where feasible, regulatory reform. Special attention will be given to interventions that help increase food security and create market opportunities in the most remote districts. Ultimately, the goal of intervening in this sector is to connect farmers to markets in such a way that yields, sales and cash reserves increase and diets and general well-being improve. As a by-product of this pro-poor growth, it is expected that local markets will be better supplied, Timor-Leste’s reliance on imports will be reduced, and exports will increase. Such a change would also stem the outflow of foreign exchange from the country, redirect the cash spent on imports to cash-strapped districts within Timor-Leste and stimulate the economic engine of a hitherto stagnant local economy. Figure 1 captures the areas that need to be addressed to make this happen. Figure 1: Constraints and opportunities in agribusiness development
Agribusiness, Processing and Rural Distribution
Business enabling environment
Stronger backward linkages
Farmers
Infrastructure: transport, storage, testing
Information on cultivation and input use
Access to cost reducing inputs
Food security
Opportunities for remote districts
End Market
Aggregators, lab services
Access to yield increasing inputs
Agribusiness, processors, traders
More reliable, less costly market access
ICT/ embedded services
Distribu on, input retailing
End Market
Public – private dialogue, policy research
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1.3
Agricultural Production
Most farmers are primarily focused on cultivating staple crops such as maize, cassava and rice to feed their families. Cassava is raised purely for home consumption; maize and rice are raised primarily for home consumption but also traded. The other important crops are sweet potatoes, peanuts, potatoes and vegetables. These are grown for both home consumption and sale. Maize and cassava are grown by 70% to 76% of farming households. The other crops are more location-specific: rice is cultivated mostly in low lands with ready access to water; sweet potatoes and peanuts are concentrated in the southern and eastern parts of the country; and potatoes and high-value vegetables are concentrated in the districts of Aileu and Ainaro.18 Crops in Timor-Leste fall into four categories: (1) basic staples (rice, maize, cassava and sweet potatoes), (2) supplementary foods (soybeans, mung beans and peanuts), (3) fresh foods (fruits, vegetables and potatoes) and (4) export commodities (coffee, candlenuts, teak and sandalwood). Different market scenarios exist for these different categories. 1. The demand for basic staples is seen in the chronic negative food balance in Timor-Leste, which reflects a local production shortfall and a demand-supply gap. The question is how to close this gap. The easy way is to import in bulk, paid for by petroleum dollars. The way that would help farmers improve their livelihoods, however, involves improved access to inputs and information on good cultivation practices, and the start of a “virtuous investment cycle” in which a better connection to markets results in more sales and income. In order to increase local food security by local means, local produce needs to be competitive with imports; price distortion (currently caused by import subsidies and buy-back programs) should be minimal; productivity should increase (which would cause the cost per unit of output to decrease); information, inputs and machinery should become more readily available; and infrastructure should be improved and expanded. 2. The main driver of demand for supplementary foods is their use in nutritional programs and in food processing and agribusiness. Tofu, tempeh, soy milk, fortified biscuits and animal feed production all represent a potential demand for these crops. For peanuts, exports could be an additional source of increased demand. Maize is both a staple crop and an ingredient in supplementary foods. Increased demand for supplementary foods could be driven by the emergence of more enterprises able to process these goods and local products’ increased competitiveness with imports in terms of price, quality and availability. 3. The demand for fresh foods is clear from the large gap between recommended and existing levels of intake, and from the large amounts of fresh foods that are imported annually, which could be replaced with local products. Increasing the ability of local agriculture to meet local demand will require the emergence of local industries (for example, for poultry) and the strengthening of local value chains (including warehousing and cold chains) to connect farmers to markets, as well as access to specialised knowledge, inputs and infrastructure. Competitiveness with imports is less of an issue in this case. 4. The demand for export commodities such as coffee and candlenuts is strongly influenced by world market trends (demand and price) and local production conditions (supply, quality and production costs). The main driver of increased exports will be the emergence or expansion of local exporters who can either find a niche in the world market or make local production sufficiently competitive to be exported to Indonesia. To make this happen, all the factors mentioned above may need to be addressed. Annex 1 presents an overview of major crops along with typical production characteristics, current markets and recent developments. 18
International Fund for Agricultural Development, Timor-Leste maize storage project design report, 2011; Government of Timor-Leste, Strategic development plan 2011–2030, pp. 4–21, 2011.
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1.4
Markets, trends and growth potential
Economic growth is a prerequisite for poverty reduction; it involves “increasing the size of the pie” so that the poor can have a bigger slice of it, and promoting a dynamic and effectively interconnected private sector that is willing to invest in its own growth. Where development efforts are able to unlock or reinforce these dynamics, they will achieve the most sustainable results at scale. The following discussion reviews key markets in Timor-Leste. End markets are the markets that small businesses and farmers supply (most often indirectly, as part of a value chain). End market demand (in terms of volume, price expectations and quality) determines the competiveness of the product they supply. Input markets or service markets are those that small businesses and farmers access in order to complete production (such as markets for seeds, fertiliser, herbicides, pesticides and cultivation knowledge). In many cases, small businesses and farmers only have limited access to such markets. Given the shallow nature of markets in Timor-Leste, input markets and end markets often go hand in hand, as one retailer may sell both inputs and consumer goods.
Exports A small island economy such as Timor-Leste’s cannot thrive without exports. Domestic markets are simply too small to sustain a diversified economy. To create more employment outside of agriculture, and to create more demand for agricultural produce and thus increase incomes from farming, creating export opportunities is a necessity. In the short run it may be more feasible to increase overall food security and supply the Dili market and various government schemes, given the state of Timorese businesses and infrastructure, but in parallel to this, specific initiatives that would stimulate exports should be supported. Moreover, Timor-Leste’s trade balance is currently overwhelmingly on the side of imports, with 34.2% of the 2011 GDP spent on imports and exports accounting for a mere 2.3%.19 In the long run, this is not sustainable and could lead to atrophy of domestic industries. The major exports (apart from oil and gas) are coffee, peanuts and mung beans. On a much smaller scale, a handful of domestic agribusiness companies export black pepper, cloves, cashews, coconuts, candlenuts and candlenut oil, tamarind, turmeric and teak. Timor-Leste’s major export partners are Australia, Germany, Indonesia, Japan, Portugal, Singapore and the United States.20 From 2005 to 2010, Timor-Leste exported around 14,049 MT of agricultural products, including teak. Tables 1–3 summarize recent exports. Table 1: Major exports, 2005–2012 (kg) 2005
2006
2007
2008
2009
2010
2011
2012
not available
7,999,000
not available
12,632,000
8,291,000
15,987,000
11,923,000
8,666
Mung beans
21,504
85,500
203,700
77,423
40,000
36,800
not available
not available
Peanuts
65,274
12,500
20,640
25,201
not available
35,374
not available
not available
Coffee
Sources: Ministry of Trade, Commerce and Industries, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
19
United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012.
20
World Bank, Expanding Timor-Leste’s near term non-oil exports, 2010.
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Table 2: Minor exports, 2005–2010 (kg) 2005
2006
2007
2008
2009
2010
not available
not available
21,546
86,086
12,000
not available
1,009,470
1,070,410
344,270
1,093,885
459,425
501,957
Cashews
3,000
1,650
2,000
5,678
500
not available
Coconuts
2,044,550
745,000
806,500
2,302,683
517,100
998,140
Tamarind
142,000
148,500
45,200
4,024
not available
not available
Teak
202,070
not available
75,598
216,247
485,827
69,324
Candlenut oil Candlenuts
Sources: Ministry of Trade, Commerce and Industries, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
Table 3: Live animal exports, 2005–2010
Buffalos Cows
2005
2006
2007
2008
2009
2010
792
80
502
195
43
12
2,310
2,335
1,761
1,425
393
350
Sources: Ministry of Trade, Commerce and Industries, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
From the available data, as well as from interviews with market players, it is clear that exports of both major and minor items have been on the decline. There are several reasons for this:
21
Deterioration of trade structures. Before 1999, the trade structures supporting exports, including of livestock, were fairly well organised with sub-district- and district-level aggregators connecting production centres to exporters. However, most of the market actors were Indonesians who withdrew from the country after the referendum. This exodus, along with the deterioration of trade-related infrastructure, broke the links between producers and export markets and caused a severe decline in exports of several commodities including livestock, candlenuts, peanuts, coffee and mung beans.
Decline in area under cultivation and quality of production. Coffee, coconuts, candlenuts, cashews and spices have particularly suffered from the absence of exporters, which has created a disconnect between producers and export markets. Low exports and poor plantation management have degraded once-thriving production centres. Amongst the still active crops, coffee has been hit especially hard. aging of trees and lack of pruning have caused productivity to plummet to one-fifth of potential levels.21 Some commodities—such as sandalwood, cashews and spices—have almost completely disappeared.
High production costs and low productivity. Like other agricultural products, export commodities suffer from high production costs, which lead to high prices, making them uncompetitive on the export market with products from other regional sources such as Indonesia and the Philippines. The major cost driver is labour, which is more expensive in Timor-Leste than in surrounding countries. This discourages labour-intensive plantation management techniques such as pruning and rehabilitation. Many farmers feel unable to carry out time-consuming activities such as rehabilitation, which may temporarily restrict harvests and thus incomes. This leads to overall low productivity. The cost of inputs into plantation
Market Development Facility interviews with Timor Global and Allison Brown (CCT consultant), January and February 2013.
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
management is relatively high, compared to the low outputs, which makes for high costs per unit. This is true for coffee, candlenuts and coconuts. For bulk export items such as peanuts and mung beans, the constraints are slightly different. (Annex 1 goes into more detail on crop-bycrop considerations.)
Difficulty aggregating sufficient volumes for export. The difficulty of efficiently aggregating trading volumes is a constraint across markets. The current state of roads, transport and storage infrastructure makes collection of products for export a daunting task. Per farm/plantation surplus for sale is low, so traders have to visit a relatively large number of farms or plantations to collect enough produce for export. The costs and difficulties of collection may deter more enterprises from engaging in exports, despite the promise of higher margins.
High local price expectations. Unreasonably high price expectations from producers in TimorLeste can form a major obstacle to trade, including exports. These expectations can result from the relatively high prices offered by public-sector buyback programs as well as the relatively high production cost per unit.22 As the prices of agricultural commodities in Timor-Leste are often higher than world prices, most products are essentially uncompetitive in the world market. Commodities that are still competitive are niche products such as (organic) coffee and candlenuts, where demand is driven by characteristics such as novelty rather than competitive pricing. Some products for the Indonesian market (for example, peanuts and mung beans) also remain competitive.
More stringent export conditions. In terms of livestock exports, especially to Indonesia, more stringent conditions imposed by importing companies, especially regarding sanitary and phytosanitary precautions and quarantine, have caused a complete halt to exports. Similar issues are likely to arise in time in relation to the export of agricultural produce.
Cumbersome export processes. Establishing a business is difficult in Timor-Leste, and export processes are particularly problematic. Completing the paperwork for an export shipment may take up to 27 days.23 Such delays make exports less competitive.
Lack of exposure to export markets, prices and quality standards. Lack of exposure to export markets results in low price and quality consciousness amongst producers and potential exporters. Competitiveness and quality are integral to a thriving export market; lack of consciousness about either can result in stagnant or declining exports.
Despite such constraints, however, there is potential to grow exports. Demand for coffee and teak are on the rise globally. Candlenut oil is in demand by the global cosmetics industry.24 Peanuts, mung beans and livestock continue to be attractive to the huge market in Indonesia. Recent surveys have estimated that the annual deficit for peanuts in Indonesia was 250,000 MT in 2012. The import demand for beans in Indonesia was 54,000 MT in 2012 (of which mung beans accounted for 44%) and is expected to continue to grow.25 Indonesia is traditionally a substantial market for cattle, given its large Muslim population. In addition, the government of Timor-Leste (GoTL) and development agencies have recently taken steps to remove existing export barriers in infrastructure and regulations, thus making exporting a smoother process and more attractive proposition. GoTL is currently building new international seaports in Tibar and Suai as well as regional ports in Com, Atauro, Caravela, Oecusse and Manatuto. The Tibar port, the largest of these, is expected to be operational by 2020.26 There are also plans to expand the airport in Dili and establish another airport in Suai, thus significantly improving external 22
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013; Ministry of Trade, Commerce and Industries, “Price comparisons of commodities in buy-back programmes with world market prices,” MTCI statistics, 2011. 23
World Bank and International Finance Corporation, Doing business index, 2007.
24
Market Development Facility interviews with Acelda Li company, Baucau, February 2013.
Agriculture and Agri-Food Canada, Competitive industry report on Indonesia’s market for imported dry peas and chickpeas: a guide for Canadian exporters, 2010, www.ats-sea.agr.gc.ca/ase/5687-eng.htm 25
26
Government of Timor-Leste, Strategic development plan, 2011.
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connections into Timor-Leste. Also, GoTL, together with the International Finance Corporation and the Australian Agency for International Development (AusAID), has unveiled a business one-stop shop, Services for Registration and Verification of Entrepreneurs. This institution will work to streamline business registration, making it easier for local enterprises to become formal entities. Finally, GoTL has shown its commitment to the private sector by establishing a Secretary of State for the Private Sector. Based on the positive developments mentioned above, the following key opportunities for TimorLeste’s export markets can be identified:
Recapturing some of the market share in Indonesia. Where trading businesses can be rebuilt and domestic costs are not prohibitive, Indonesia represents a great opportunity for export of peanuts, mung beans and candlenuts as well as live animals.
Capturing more market share in countries with a high purchasing power such as Singapore and Australia. Exports could consist of novel or high-quality niche products such as candlenut oil, boutique coffee, virgin coconut oil and cashew nuts.
Revitalising coffee, candlenut, coconut and cashew plantations. This is a demand-driven opportunity. Given the consistency of demand and prices for these products, interest in investing in these crops is likely to increase in the short to medium term.
Easing sanitary and phytosanitary and quarantine barriers, mostly through complying or being able to comply with export requirements by importing countries, to re-engage in live animal and agriculture exports.
Investing in trade infrastructure. Investments in bonded warehouses, quality testing facilities, and transportation—to cater to growing demand for cash crops such as peanuts and mung beans in export destinations—would increase the efficiency and reduce the cost of exporting.
Making transport to export destinations less expensive. Currently, containers carrying import goods to Dili are often returned empty, with the return trip written off as a loss. It should be possible to negotiate discount rates for using these otherwise-empty containers to ship Timorese export goods.
Dili Dili is the capital of Timor-Leste and the most populous city, with a population estimated at 207,822.27 Since 1999, its population has grown an average of 14% a year, and growth is expected to continue due to high birth rates and high rates of migration from other parts of the country.28 Dili’s position as the primary market for agricultural products is cemented by the presence of most of the country’s urban population, the bulk of its purchasing power, a significant expatriate population and more varied demand due to consumers’ exposure to a greater variety of agricultural products. Dili represents the first growth market in Timor-Leste—the first place where the country’s newfound independence and wealth are likely to translate into more jobs, higher salaries and hence more demand for food items, both staples and foods associated with increasing incomes such as meat, eggs, dairy products and vegetables. This is further reinforced by its rapid population growth. Dili is also Timor-Leste’s centre of trade: nearly all trade is between the districts and the capital. However, produce from the districts must compete with easy imports. Sourcing in bulk from abroad takes a phone call and the willingness to deal with delays in the harbour—which, although unpleasant, may be less of a problem than trying to source small volumes from the districts, which, especially given the bad roads, is time consuming and costly and may not yield the volume and quality desired. 27
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
28
Comparison of population growth since 1999, 2007 and 2010 (United Nations Population Fund, Country population assessment, 2007; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
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The post-independence collapse of the trading system in Timor-Leste has meant that there are almost no intermediary accumulators or wholesalers. The domestic market for agricultural products falls into the three non-export categories mentioned earlier: basic staples (rice, maize, cassava, and sweet potatoes), supplementary foods (animal proteins, peanuts, mung beans and soybeans) and fresh foods. Using current national population growth rates and household expenditure levels, it can be estimated that the market in Dili will reach $42 million by the end of 2016, a sizeable 4% of total non-oil GDP.29 The demand–supply gap in the Dili market can be assessed in two ways: comparing what should be consumed as part of a healthy diet and what is currently consumed (Figure 2, Table 22), and using import data as a proxy for the gap. Research suggests that an annual deficit exists for each food group of 37%, 46% and 60% per capita, respectively.30 These deficits are likely to continue to increase based on Dili’s annual growth rate of 14%.31 The extent to which this potential demand turns into a real demand depends largely on an increase in purchasing power. Currently, the average household in Dili only spends about $78 per month on food.32 Figure 2: Gap between recommended and actual food consumption in Dili
-
Annual Deficit (MTs)
-5,000 -10,000 -15,000 -20,000 -25,000 -30,000 -35,000 -40,000
2004 2010 2011 2012 2013 2014 2015 2016 Staples -12,653 -14,963 -16,872 -17,226 -17,588 -17,957 -18,334 -18,719 Supplementary foods -1,320.7 -1,561.9 -1,761.2 -1,798.2 -1,835.9 -1,874.5 -1,913.9 -1,954.0 Fresh foods -23,585 -27,892 -31,450 -32,110 -32,784 -33,473 -34,176 -34,894 Source: MDF analysis based on data on Dili population growth and current and recommended per-person consumption.33
A more concrete sign of the local supply shortfall is the increase in imports of food, especially rice and vegetables. In 2010 over 5,000 MT of fresh vegetables and 30,000 MT of rice were imported into 29
Government of Timor-Leste, Economic context and macro-economic direction—an update to the Timor-Leste 2011–2030 strategic development plan, 2012; national population growth rate is held at 2.1% in United Nations Economic and Social Commission for Asia and the Pacific, Asia and Pacific statistics, 2012; Ministry of Finance of Timor-Leste, Population and housing census, 2010; United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012; Ministry of Finance of Timor-Leste, National Statistics Directorate, General Directorate of Analysis and Research, Household income and expenditure survey, 2011. World Bank, Timor-Leste survey of living standards, 2007; Seeds of Life, Seeds of Life 3 baseline report, 2011; Harvard School of Public Health, “Vegetables and fruits: get plenty every day,” The nutrition source, www.hsph.harvard.edu/nutritionsource/vegetables-full-story. 30
31
Deficit calculations were done on a national population growth rate of 2.1% and a Dili growth rate of 14%. The rationale behind using a more conservative growth rate is that although Dili’s population will continue to grow, it is unlikely to do so at past high rates, as the pressures driving those rates, such as the transition to independence and high levels of social unrest, are no longer present. 32
Ministry of Finance of Timor-Leste, National Statistics Directorate, General Directorate of Analysis and Research, Household income and expenditure survey, 2011; Asian Development Bank, Pacific economic monitor, June 2013; Market Development Facility interviews with market traders in Hari Laran, Comoro and Bairo Pite and with USAID/DAC officials, February and March 2013. DAC (Developing Agriculture Communities) is a program funded by USAID (United States Agency for International Development). 33
Requirement–consumption gaps were calculated based on current consumption patterns (World Bank, Timor-Leste survey of living standards, 2007) and recommended intakes (Seeds of Life, Seeds of Life 3 baseline report, 2011; Harvard School of Public Health, “Vegetables and fruits: get plenty every day,” The nutrition source, www.hsph.harvard.edu/nutritionsource/vegetables-full-story). They are summarized in annex 2. Deficits were calculated using a national population growth rate of 2.1% (United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012).
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Timor-Leste, mostly destined for Dili and other urban centres. Since then, import levels for both vegetables and staples have steadily increased.34 This increase can be attributed to factors including local products’ lack of competitiveness in terms of quality and price (rice and certain vegetables) and insufficient local production (poultry and eggs). The struggle of the domestic trading system to keep up with the growing demand in Dili is not surprising, given the city’s rapid population growth, but it also reveals certain constraints in domestic trading and lost opportunities for farmers:
Inconsistent supply of produce to Dili makes Dili-based businesses rely on imports.
Dili-based (agri-)businesses may not be aware of domestic production centres.
Poor storage and processing infrastructure limits choices and shortens shelf lives.
Poor roads mean that Dili is predominantly supplied by nearby districts.
Producers’ lack of knowledge about and connections to the Dili market lead to a disconnect in terms of demand forecasting and product marketing.
In short, the districts and Dili are, to an extent, disconnected as a result of a general breakdown of the trading system after 1999. In addition to this disconnect (which prevents existing production from reaching Dili markets efficiently), the overall supply is also low, which necessitates imports. This does not mean that no trade takes place, but while some opportunities are utilised, others are lost. Opportunities for agribusiness growth in Dili include the following:
34
Improving agricultural trade structures. This involves building capacity for sourcing, storing, processing and distributing produce from the districts. These tasks can be carried out by companies in Dili and in the districts (the latter could either supply the Dili market or aggregate supplies for Dili-based companies). These companies may need to get involved in supplying farmers with inputs and private-sector extension services to guarantee sufficient surplus production.
Promoting local food processing industries. This involves establishing or expanding local foodprocessing capacity, which will increase demand for local produce. Such companies could produce fortified food products, chips and crackers, and tofu products. Increasing production capacity may need to be accompanied or even preceded by a strong capacity to source.
Promoting use of local products in place of imported goods. This involves establishing suppliers, or strengthening existing suppliers, of products in strong demand that are currently being imported, such as eggs, poultry, pork and perhaps beef. Import substitution can only work for products that can truly compete with imported products on price, quality or a unique local taste.
Improving capacities of specialist traders in agricultural products. This involves establishing specialised suppliers able to cater to large state institutions such as the police, army and hospitals, as well as large private-sector entities such as hotels and restaurants, in the supply of consistently large amounts of agricultural products.
Facilitating effective and timely exchange of market information through strategic privatesector partners. These include traders as well as media outlets and telecom providers.
Increasing the availability of information, extension services and inputs in the districts, and improving transport links between the districts and Dili. All of the options mentioned above may depend on the willingness of businesses to develop backward linkages with supplying communities (which then often would need to include supplying inputs and information). In addition, there may be scope to improve the distribution to, and the servicing of, rural communities, by working with smaller companies based in the districts or in in Dili.
Ministry of Trade, Commerce and Industries, MTCI statistics, 2011; Government of Timor-Leste, Strategic development plan, 2011.
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Exploring potential synergies between agribusiness stakeholders. Synergies with other development programs should be explored to better connect surplus areas with markets and reduce transportation costs and bottlenecks (which may entail improving roads).
Dili market demand projections are summarized in Annex 2.
Public-Sector Markets Timor-Leste is a new nation with significant involvement of the public sector and development agencies in food and nutrition security.35 This is another growth market in which the country’s newfound wealth can swiftly translate into a demand for agricultural produce. This manifests itself in GoTL and development partners intervening in various ways to increase food and nutrition security and stabilise food prices. Key areas of involvement include the following:
Nutrition for lactating mothers and children age 6 to 59 months. This program targets up to 50,000 mothers and children each month.
School feeding programs. These programs currently target up to 220,000 students through to the sixth grade. They may be expanded to the ninth grade, targeting up to 300,000 students.36
Contracts with large state institutions filled through tenders. These include the National Police of Timor-Leste (Policia Nacional de Timor-Leste), Timor-Leste Defence Force (Falintil-Forças de Defesa de Timor-Leste), and Timor-Leste National Hospital.
GoTL food imports target market stabilisation and food buffer stock replenishment.
The nutritional security programs distribute food products, such as fortified corn and soy blends and regular staples such as rice and maize, to beneficiaries for free. Imports take place to stabilise food prices and are mainly focused on rice. All these initiatives together constitute a considerable volume of food and could represent a considerable demand for Timorese produce if sourced locally. Since 2007 the public sector has imported about 305,000 MT of rice. Over the last two years, it has also imported 660 MT of mung beans and 2,904 MT of soybeans.37 The government also purchases, through importers, about 3,500 MT of maize annually.38 Thus, in the short to medium term, the public sector could be a lucrative market for agribusiness in Timor-Leste. The main way to capitalise on this demand and reduce reliance on imports would be to connect local supply chains (farming communities and traders) to these programs. Some of the constraints on supplying government programs are the same as those on supplying the Dili market: large volumes are difficult to source in Timor-Leste, and it is much easier to buy on the world market. Timor-Leste also lacks the capacity to test, store, process and package produce. GoTL also operates a buyback program for five commodities (rice, maize, soybeans, mung beans and peanuts). The program, intended to support market opportunities for farmers, offers higher prices than those prevalent on the world market—which creates a distorted market and inflates farmers’ price expectations, as a result of which private traders resort to more competitively priced imports. The buyback program, which fluctuates considerably, also disrupts the development of long-term relations between farmers and traders, as traders who have been left empty-handed by farmers once may not be inclined to buy from them again. Opportunities to make this market work more effectively are largely the same as those discussed for the Dili market, plus the following:
35
Food Security is referred to here as having enough food to eat for most of the week. Nutrition security refers to not just sufficient food but also of sufficient quality which promotes better health and well being. 36
Market Development Facility interviews with Antonio Avella of the World Food Programme, April 2013.
37
Ministry of Trade, Commerce and Industries, MTCI statistics, 2011.
38
Market Development Facility interviews with Timor Global, March 2013.
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Establishing or improving quality-testing and storage infrastructure. This would ensure safe and smooth local sourcing by private enterprises supplying government programs.
Promoting public–private dialogue about agribusiness, especially local sourcing. An effective dialogue about government contracting and buy-back programs could enable the creation of an operating framework that is more supportive of local traders and farmers.
The Districts The most challenging market is that in the districts, where the potential for growth exists, but where growth cannot come from GoTL spending, middle-class incomes, or demand from abroad. Here the money to trigger growth first needs to be earned. The other growth markets should help start this process, connecting farmers to markets based on existing demand. When farmers have experienced the benefits of this, and have more money to spend, then it will be easier to unlock the growth potential of rural markets. The total rural population of Timor-Leste was estimated at 881,625 in 2010 and was expected to grow to one million people by 2016, based on a growth rate of 2.1% per year.39 This market has more consumers than Dili’s, but low purchasing power, a dearth of cash and a high degree of selfsufficiency mean that actual demand and purchasing power are lower. This is reflected in spending on food, which is estimated at a mere $39 per month per household.40 At current levels of spending and consumption, demand in the districts is expected to expand to $79 million per annum in 2016 (about 9% of 2010 non-oil GDP).41 District markets show deficits of 26%, 58% and 48% for basic staples, supplementary foods and fresh foods, respectively, measured as gaps between current and recommended consumption (Figure 3, Table 26).42 Due to poor inter-district trade, agricultural products are not uniformly distributed, and surplus production areas exist side by side with deficit areas. As in Dili, this consumption gap indicates a large potential market. However, rural people’s purchasing power is lower than that of their urban counterparts, and before they can participate in food markets, they will need to participate in income-generating activities. Thus, this shortfall will need to be addressed over the long term.
39
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
40
Ministry of Finance of Timor-Leste, National Statistics Directorate, General Directorate of Analysis and Research, Household income and expenditure survey, 2011. 41
United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012; Ministry of Finance of TimorLeste, National Statistics Directorate, General Directorate of Analysis and Research, Household income and expenditure survey, 2011; Government of TimorLeste, Economic context and macro-economic direction—an update to the Timor-Leste 2011–2030 strategic development plan, 2012. 42
World Bank, Timor-Leste survey of living standards, 2007; Seeds of Life, Seeds of Life 3 baseline study, 2011; Ministry of Agriculture and Fisheries, Fish and animal protein consumption and availability in Timor-Leste, 2011.
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Figure 3: Gap between recommended and actual food consumption in rural areas
-
Annual Deficits (MTs)
-20,000 -40,000 -60,000 -80,000 -100,000 -120,000 -140,000
2010 2011 2012 2013 2014 2015 2016 Basic Staples -44,963 -45,907 -46,871 -47,855 -48,860 -49,886 -50,934 Supplementary Foods -8,293 -8,467 -8,645 -8,826 -9,011 -9,201 -9,394 Fresh Foods Deficit -101,654 -103,789 -105,969 -108,194 -110,466 -112,786 -115,155 Source: MDF analysis based on data on national average population growth and current and recommended per-person consumption.43
District markets can be categorised along geographical lines:
close to Dili: Manatuto, Baucau, Aileu, Ermera, Liquica and parts of Ainaro;
farther from Dili: Lautem, Viqueque, Manufahi, Bobonaro, Cova Lima and Oecusse.
The closer people are to a major market, the easier it is for them to connect to it and the better positioned they are to engage in commercial agriculture and thus earn additional income. Hence, growth in demand is likely to occur sooner in the districts close to Dili than in more remote districts, especially in the south and east. In recent years, GoTL has invested significantly in improving market access for agricultural products in the districts. Since 2007, the government has installed eight main markets in the districts as well as 32 mini-markets in sub-districts around the country.44 Despite such steps, the district markets are weak and fragmented. Major constraints to growth include the following:
Under-supply of local products in district markets. Farmers first ensure they can support their own families. Recurrent hungry seasons are a sign that farmers struggle to produce a large surplus (and/or that some surplus is lost due to poor storage).
Lack of infrastructure such as roads and transport. Road quality is poor and consequently traffic volumes within the districts are very low, especially in the rainy season. Up to 80% of farmers have to walk their food to the nearest market, which can be as far as two hours away.45
Lack of storage in the markets and at farms. This causes widespread spoilage of marketable produce.
Low purchasing power, due to lack of cash, among district consumers.
43
Requirement–consumption gaps were calculated based on current consumption patterns (World Bank, Timor-Leste survey of living standards, 2007) and recommended intakes (Seeds of Life, Seeds of Life 3 baseline report, 2011; Harvard School of Public Health, “Vegetables and fruits: get plenty every day,” The nutrition source, www.hsph.harvard.edu/nutritionsource/vegetables-full-story, 2012). They are summarized in annex 3. Deficits were calculated using a national population growth rate of 2.1% (United Nations Economic and Social Commission for Asia and the Pacific, Statistical yearbook for Asia and the Pacific, 2012). 44
Government of Timor-Leste, Strategic development plan, p. 120, 2011.
45
World Bank, Transport in Timor-Leste, 2013.
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Competition from imported products, especially rice, cooking oil, salt and sugar.
Lack of information for producers on what can be sold where and for what price.
The principal potential for growth in the district markets, which will drive the growth of agribusiness, is the tremendous gap between the recommended and current food consumption levels. Surplus production needs to be stimulated so that farmers can earn cash, which then can be used to buy food not produced in sufficient quantities on their own farms (and hence stabilising and enriching diets) and invest in inputs to boost yields and in other items that increase well-being. To capitalise on this underserved (potential) demand, the following opportunities could be pursued:
Improving farm-level productivity to increase supply to markets. Increased agricultural productivity and sales (perhaps initially driven by demand from Dili or the export or institutional market) could trigger an increase in rural ability to purchase agricultural inputs, food and other necessities. Initially this would predominantly involve districts that are relatively well connected to the major markets. For the more remote districts, very specific opportunities will need to be found.
Improving farm-level productivity to influence prices. Increased agricultural productivity could result in more stable surplus production, which would mean fewer distress purchases and more money left for other products. Increased productivity may be driven by increased access to inputs (and information on cultivation techniques), backward linkages between producers and bigger companies, and/or other forms of access to better information on cultivation. This is a possibility in all district markets, as trade in agricultural produce can be district-to-Dili, interdistrict or intra-district.
Improving inter- and intra-district market linkages. This would involve connecting surplus areas to deficit areas to redistribute local produce; improving market participation of producers by informing them about pricing, locations and demand; and supporting traders and aggregators to grow their businesses.
Promoting import substitution by introducing locally manufactured products as a substitute for imported products in district markets.
Bringing better food within the reach of poorer consumers. This would involve introducing affordable and nutritious consumer goods—such as tofu, tempeh and fortified staples—to improve the quality of daily food intake.
Projections of market demand in the districts are summarized in Annex 3.
District-Level Agricultural Input Markets Growing district-level agricultural input markets will be instrumental in increasing productivity and promoting surplus production and trade within and between the districts and the key growth markets. One challenge is that farmers need to earn the cash to invest in the inputs that will give them higher yields. Also, access to inputs needs to be accompanied by access to information on how to use them effectively and safely so as to ensure that relatively expensive investments do not produce grave disappointments. The major constraints to the district input markets are as follows:
low levels of knowledge amongst farmers regarding modern cultivation practices;
lack of financial resources;
unclear government policies on inputs, leading to confusion amongst entrepreneurs as to what inputs to market;
frequent and unpredictable government interference in the input market, especially for seeds and fertiliser, also causing uncertainty amongst entrepreneurs;
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low availability of inputs such as animal feed, herbicides and pesticides in the markets.
Despite such constraints, the opportunities in input marketing are significant, especially for inputs such as seeds, herbicides and animal feed. Potential annual seed markets for the five major crops are as follows:46
maize: 2,854 MT seeds;
rice: 1,950 MT seeds;
cassava: 132,311,100 cuttings;
sweet potatoes: 2,404 MT seeds;
peanuts: 651 MT seeds.
Even if only 20% of farmers used quality seeds, the market for seeds would be significant.47 There is also significant potential for a vibrant market for herbicides, as farmers are more familiar with these products and they can help counteract the high costs of labour for manual weeding. For other inputs such as fertiliser and pesticides, the market conditions are slightly more complex, as the government promotes the use of such products for some crops and not others. Key opportunities for district-level input market growth include the following:
Marketing seeds, as discussed above.
Marketing pesticides and herbicides. The annual requirements for pesticides and herbicides are 167,000 and 154,000 litres, respectively. Involvement by government or development agencies in the supply of these products is low. Labour-saving inputs are likely to be especially in demand.
Marketing chemical fertilisers for rice. Currently GoTL is promoting this and has distributed some fertilisers to districts across the country. However, this amount is small compared to the estimated demand for fertiliser of 3,500 MT per year.
Marketing organic inputs such as composts, pesticides and herbicides. This could make these inputs more acceptable to farmers who are inclined towards organic production.
Introducing affordable agricultural mechanisation services. This would include offering hand tractors, tractors, threshers and mills for hire to reduce dependency on expensive manual labour.
Promoting embedded services (primarily information as an accompaniment to actual product sales) for cultivation practices. This could include cultivation information and tips on troubleshooting.
Promoting new inputs. This could include animal feed for household pig and chicken farming.
Growth Potential of Products and Markets In conclusion, the principal avenues for growth of agribusiness in Timor-Leste are catering to the unmet demand in a range of markets by closing the gap between required and current food consumption levels, replacing imported food products with local goods, and tapping into niche export opportunities. Table 4 summarises the main constraints and opportunities in different markets.
46
Food and Agriculture Organization and World Food Programme, Food and crop supply assessment mission report, 2007; United States Agency for International Development, Growing cassava in Nigeria, 2008; Government of Western Australia, Growing sweet potatoes, 2009. 47
See Seeds of Life, Seeds of Life baseline study, 2011, which found that 23% of the farmers sampled buy seeds from the market.
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Table 4: Major markets in Timor-Leste Market
High-demand products
Points of supply
Constraints
Export
Candlenuts, coconut oil, coffee, mung beans, peanuts
Traditional production centres within TimorLeste
Poor current state of coconut, coffee and candlenut plantations as well as supporting infrastructure Decline in production areas for crops such as mung beans and peanuts High production costs and subsequent high price expectations Dearth of export-oriented traders Onerous export processes
Dili
Local rice, proteins (livestock and poultry), vegetables
Districts closest to Dili such as Manatuto, Baucau, Aileu, Liquica and Ermera
Degraded trade structure connecting Dili markets to production centres Low productivity resulting in little available surplus Inconsistent supply chains for agricultural products resulting from fluctuating production Poor condition of transportation and storage infrastructure limiting the amount and quality of products entering the market
Government
Districts (food)
Districts (inputs)
Local staples such as rice and maize and local supplementary foods such as soybeans, mung beans and peanuts
Major production areas for rice, maize, soybeans, mung beans and peanuts; preference should be to source from more remote districts that are less likely to see private-sector buyers, such as Cova Lima, Lautem, southern parts of Ainaro, Manufahi and Viqueque
Lack of supply chain management experience leading to inefficient local sourcing
Staples (rice and maize), supplementary foods (soy and mung beans) and proteins (livestock and poultry products as well as vegetable proteins)
Sub-districts as well as adjacent districts; districts closer to Dili can also be supplied through Dili, whereas remote districts are more likely to be supplied by their own sub-districts
Low purchasing power of rural residents
Most seeds (except for rice and maize), herbicides, pesticides, fertilizer; agricultural mechanisation and logistics (transport and storage services)
Input retailers and dealers, mechanisation service providers, transport and storage service providers, access to inputs and services through backward linkages
Low levels of knowledge amongst farmers of modern cultivation practices
Low productivity resulting in little available surplus Inconsistent supply chains for agricultural products Lack of storage and packaging infrastructure leading to high levels of wastage and problems maintaining food quality and safety Government programs’ distortion of markets
Undersupply of products to markets Poor roads and storage infrastructure limiting or preventing inter- and intradistrict trading Competition from imported products such as rice
Low investment capacity of producers Unclear government policies towards input use leading to confusion amongst entrepreneurs as to what inputs to market Frequent and unpredictable government interference in the input market, especially for seeds and fertiliser, causing uncertainty amongst entrepreneurs Low availability of inputs such as animal feed, herbicides and pesticides preventing farmers who are willing and able to invest from doing so Weak backward linkages of agribusinesses
Increasing supply to markets across Timor-Leste would involve increasing productivity, decreasing costs (production, transportation and transaction costs and costs associated with wastage and storage losses) and improving market access (volume, frequency, reliability and quality). These three challenges need to be addressed simultaneously so that improved market access encourages farmers to produce a surplus and to invest more in profitable cultivation techniques.
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Apart from increasing market supply to reduce the requirement–consumption gap, growth could also come through import substitution. Introducing local livestock and poultry products or promoting locally manufactured consumer foods could be important ways of doing this. Finally, export markets represent opportunities for businesses to grow, and this together with business expansion in other markets should help reverse the deterioration of trade structures described above. Key growth opportunities for agricultural markets include the following:
Promoting input use to boost farm-level productivity for all major crops—especially inputs such as seeds, herbicides and pesticides, which do not have high levels of public-sector interference and/or which help reduce production costs.
Establishing distribution channels to connect surplus and deficit areas—including between Timor-Leste and export markets and between the districts and Dili as well as between and within districts.
Establishing proper storage and testing facilities in private enterprises to ensure safe and smooth local sourcing as well as exports.
Promoting investment in agribusiness enterprises that provide infrastructure (e.g. storage) and processing.
Promoting the use of appropriate animal feed in household and commercial livestock and poultry operations. This would also act as an additional “pull” for surplus agricultural products such as maize and cassava.
Introducing consumer food products manufactured from locally sourced raw materials to effectively replace imported foods.
Introducing affordable soybean and other bean products to ease the pressure on high-priced proteins such as meat and fish.
Introducing high-value processed animal and vegetable products for niche expatriate markets.
Promoting effective public–private dialogue, led by private enterprises, on the creation of an agribusiness environment (infrastructure, procedures and government programs) more favourable towards local businesses, producers and products.
1.5
Relevance for Pro-Poor Growth
Producers in Timor-Leste are caught in a vicious cycle of poverty. Lack of access to markets means they are unable to sell surplus production and generate income, and low incomes mean that they cannot invest in increasing farm productivity or in attaining a higher standard of living. Agribusiness, processing and rural distribution are expected to play a crucial role in MDF’s poverty reduction strategy; working in this sector, MDF plans to offer farmers alternate ways to profit from their surplus production. MDF plans to focus on major crops such as maize, rice and cassava because of the many poor producers involved in these value chains. The key rationales behind focusing on agribusiness, processing and rural distribution as pro-poor growth drivers are as follows:
Lack of productive/ value generating involvement by a large number of poor producers in agriculture value chains. Around 116,000 or 63% of the households in Timor-Leste are dependent upon agriculture, and most of them can be assumed to be poor. Better connecting farmers to markets would ensure beneficial outreach to a large number of the poor in the country.
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Potential to increase farm-level productivity. Greater access to agribusiness markets through improved rural distribution systems would provide a key incentive to producers to invest more in their farms and thus generate more output from their land. Greater productivity would mean not only greater surplus for sale but also better nutrition for poor households.
Potential to increase agricultural job opportunities. Increase in farm productivity could lead to the creation of jobs in agriculture related fields such as in input retailing, agriculture service provision, and consumer food manufacturing. More jobs would lead to a diversification of cash-generating opportunities for the rural poor and thus contribute to a better standard of living.
Potential to increase income for a large number of poor producers. Better connecting farmers to markets will lead to additional income-earning opportunities (more sales, lower costs and higher productivity).
Potential to increase food security. Higher farm productivity, more income-earning opportunities and better-supplied local markets will strengthen rural people’s food security and make poor diets resulting from shocks and seasonality less likely.
MDF will also explore other markets important in terms of developing pro-poor access (e.g., in water and sanitation, fortified food and road construction) through its Greenfield Industries (Construction, Manufacturing and Tourism) sector.
1.6
Relevance for Cross-Cutting Themes
Gender Equality GoTL is committed to gender equity and sustainable economic development for men and women through the Constitution and through policy documents such as the National Development Plan. Additionally, it is a signatory to international treaties including the Convention on the Elimination of All Forms of Discrimination Against Women and has adopted the Millennium Development Goals as part of its national planning strategy. On the ground, women face a harsh reality. It is acceptable in Timor-Leste for women to earn incomes from agriculture and handicrafts, an extension of their roles in the family. But traditional views place constraints on the participation of women outside the immediate community. As a result, 40% of women participate in the labour force, considerably less than the 80% participation rate for men. This includes participation in the informal sector, where women are concentrated in handicrafts, tailoring and bakeries—activities that generate less income.48 When employed, women are more likely to be in lower-paying roles than men. Only 12% of women work in non-agricultural sectors, mainly in trading. They are concentrated in activities such as trading in urban areas, selling their produce and managing kiosks—activities that involve 10% of women. It is estimated that women own 43% of micro-enterprises. 49 With lower workforce participation rates, women are more dependent on agriculture for livelihoods. MDF, through its intervention in agribusiness and rural distribution, expects to create more opportunities for women, especially in downstream activities such as processing and trading of agricultural produce. MDF will also explore opportunities to work with women in agriculture specifically to improve the quality of the homestead gardens that they manage through the use of better seeds and fertiliser. This is expected to have a direct impact on household nutrition profiles.
48 49
United Nations Development Programme and International Labour Organization, Skills and gainful training in Timor-Leste, 2008. International Finance Corporation, Gender reform assessment, 2010.
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Environmental Sustainability In September 2011, the National Environment Directorate began the consultation process with stakeholders and non-governmental organizations (NGOs) on a draft version of the Basic Environmental Law, which the Council of Ministers enacted in April 2012. The law was sent to President Taur Matan Ruak’s office in June and went into effect on July 5, 2012. The law was commended by a watchdog group for inclusion or strengthening of attention for vulnerable groups, environmental services, public information, cultural rights, citizen participation and consultation, marine ecosystems and pesticides.50 GoTL also has set up Secretaries of State for Environment and for Forestry and Nature Conservation.
Social Responsibility A number of businesses and NGOs in Timor-Leste are actively involved in promoting socially responsible business. Of these, the leading enterprise is the Cooperativa Café Timor (CCT). However, due to the lack of legal frameworks for business practices and weak enforceability of existing guidelines, ensuring socially responsible business practices is not to be taken for granted. MDF will, wherever possible, promote socially responsible business practices.
50
La’o Hamutuk, 2012, www.laohamutuk.org.
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Chapter 2: The Market System The agribusiness and rural market distribution system in Timor-Leste is highly fragmented. Markets have become disconnected from producers; surplus areas often exist near deficit areas, sometimes even within the same district. A lack of specialists such as farm-gate traders and district-level aggregators means that the distance between potential markets and producers is in many cases too wide to traverse. A key characteristic of fragmented markets is the low number of market system actors and their lack of specialisation. Most traders do not know which products are becoming available where and when. They often work in an opportunistic fashion and trade in multiple products, which they justify by citing a small and unstable market. Also, most traders do not have access to financing and suffer from low investment capacity. Their ability to buy is constrained by their own limited liquidity. The consequence of such fragmentation is the above-mentioned disconnect between producers and consumers. Often farm surpluses are wasted on the farms due to the small size of end markets or lack of buyers. Uncertainty about being able to sell surplus is a powerful disincentive to investing in improvements to farm productivity. Compounding the lack of capable buyers are physical constraints on markets. The development of marketplaces by government is often done without consulting consumers or sellers. On average, producers are 22 km from their closest markets. In the districts, as producers are also consumers, this average distance holds true for buyers trying to access goods and services. Although Timor-Leste has a relatively intensive road network, the poor conditions and frequent disruption of roads lead to very low volumes of traffic in the districts, limiting both producers’ and consumers’ market access to what they can carry to and from the nearest marketplace. Most sales thus are localised at retail levels in suco or sub-district markets. Each sub-district holds a weekly market, which is the key economic event for the area; however, the above-mentioned constraints limit how many people can attend such markets. Unsold products are often either wasted or sold at distress prices, as bringing them back to the farm is deemed too expensive or too much trouble. Dili is the centre of the market system for agribusiness in Timor-Leste, with the highest concentration of both buyers and sellers in the country. However, due to poor transportation and communication infrastructure, Dili is only served by nearby districts such as Baucau, Manatuto, Aileu, Ainaro, Liquica and Ermera. The other districts are considered too far off to supply the capital effectively. Most local products are supplied by small and medium traders with limited connections to these districts. The larger traders in Dili are more interested in imports and supplying government contracts, as these are more lucrative and predictable activities. The other major market system is at the district level. Sub-district markets have farmers who sell a variety of produce, albeit in small quantities. Small and medium traders are active at this level, aggregating produce in slightly larger amounts for sale either at district capital markets or in Dili. Ultimately, the weakness and simplicity of Timor-Leste’s agricultural market system is due to factors including poor infrastructure, inexperienced or insufficient market actors and low levels of market knowledge. The following sections detail the market system and expand upon individual market actors and their constraints to growth.
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Figure 4: The market system
Export markets n≈7
Local consumers
Dili Markets n≤ 10 open air markets n= 6 (large supermarkets); n ≤ 50 smaller grocery stores
District Markets n≤ 65
Food Importers n ≤ 12
Caterers n= 5 major caterers
Public Sector Markets n= 2 (humanitarian assistance, nutrition programmes, state institutions)
Restaurants and Hotels n (restaurants) = 150 n (hotels) = 100
Supermarkets and Grocery Stores n= 6 (large supermarkets); n ≤ 50 smaller grocery
Transport companies n (microlets) ≈ 11,000 n (trucks) ≈ 460
Processors n ≤ 272 processors; Unknown number of rice processors
Fresh Vegetable Traders n= 5 (large traders) Unknown number of small traders
Exporters n ≤ 14
Market Vendors n ≤ 1,300
Wholesalers n= 75 to 100
Subsistence Farmers n= 116,000 housholds
Semi-commercial Farmers n= 22,000 farmers
Formal Input Suppliers n= 5
2.1
Commercial Farmers n= 600 farmers
Informal Input Suppliers n ≈ 25
Cooperatives n≈9
Agriculture Mechanisation Suppliers n= 5
Red
District markets
Blue
Dili Markets
Green
Public sector markets
Orange
Export markets
System Actors
There are several levels of market actors in Timor-Leste. However, individual crop value chains are shallow, with most actors maintaining a presence across several crops. The numbers of system actors across the country are also small, suggesting a fragmented market system as small numbers of actors cover multiple agricultural value chains.
Growers Growers, or primary producers, fall into three categories in Timor-Leste: subsistence-oriented, semicommercial and commercial. Subsistence-oriented farmers primarily cultivate crops for home consumption and sell the surplus, if any, in the market. While complete self-sufficiency is rare, in Timor-Leste and around the world, a primary focus on growing the crops required to feed the family is relatively strong in Timor-Leste. The general consensus is that a large majority of farmers belong to this category. Semi-commercial farmers grow food crops to feed the family, but also grow a number of cash crops for the market (of which a small portion could also be consumed at home). This group is much smaller and can be found in different areas growing maize, soybeans, mung beans or other cash crops. Some also harvest candlenuts and sell them to collectors. Most coffee farmers can also be classified as semi-commercial. Coffee plantations are suitable for fully commercial production, but many coffee farmers are more gatherers than intensive farmers, plucking the beans but not maintaining the garden. They typically sell their harvests to coffee
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processors such as CCT, Timor Global, Timorcorp., and Delta Café. Most of these farmers are also registered under CCT. There are about 22,000 semi-commercial coffee farmers in the country.51 Commercial farmers predominantly grow crops for the market and grow very little food for themselves. This is the smallest group of farmers in Timor-Leste; they are mostly vegetable farmers supplying Dili-based supermarkets such as Kmanek, Dili Mart, Leader and Lita. Most belong to one of two groups, Josephina Farms in Maubisse and DAC/USAID (the United States Agency for International Development’s program Developing Agriculture Communities) in Aileu.52 There are also a few commercial coffee and rice farmers, mostly alumni of agricultural technical schools or lead farmers, in Fuiloro, Natarbora, Loes and Maliana.53 Table 5 summarises the types of growers in Timor-Leste. Table 5: Growers in Timor-Leste Number of households Subsistence growers Semi-commercial growers Commercial growers
116,000 22,000 600
Location Nationwide Aileu, Ermera, Liquica, Bobonaro Aileu, Ainaro
Sources: Ministry of Finance for Timor-Leste, Population and housing census, 2010; interviews with Cooperativa Café Timor (coffee), International Labour Organization and Developing Agriculture Communities (vegetables).
Traders The trader category includes wholesalers, food importers, and fresh vegetable traders.
Exporters: Export markets have recently taken a downturn in Timor-Leste for reasons described earlier. Some exporters remain active in commodities such as coffee, candlenuts and candlenut oil, peanuts and tamarind. Coffee is mainly exported by four companies: CCT, Timor Global, Timor Corp., and Elsa Café. These companies also export small amounts of other products such as black and white pepper, vanilla, turmeric and cassava flour. There are about 10 candlenut exporters, who mostly engage in informal trade to West Timor. These exporters also trade in peanuts and tamarind. Of these traders, only Acelda Li Company in Baucau is engaged in value addition and export of candlenuts and candlenut oil to Hawaii.54
Wholesalers: MDF data on six districts list 56 wholesalers. Nationally, MDF estimates that there are 75 to 100 wholesalers. According to the Peace Dividend Trust Enterprise database (now housed at the Instituto de Apoio ao Desenvolvimento Emprezarial [Institute for Business Support]), 192 agribusiness enterprises are registered with the government. These companies generally employ a small permanent staff of three to four people, as well as temporary staff, bringing the average up to between seven and twelve, when a particular product is in season. They buy directly from growers, paying farm-gate prices, and often buy from smaller suco- or sub-district-level aggregators. Coffee production and wholesaling are highly organised around the CCT collective as well as other agribusinesses such as Timor Global and Timor Corp. Only a portion (10–15%) of the 192 companies listed in the database are still in business.55 Between 1999 and 2003, a system of collectors for commodities and livestock was prevalent; however, these actors have since moved into other areas within and outside agriculture.
51
Market Development Facility interview with Bency Isaac, CCT, May 2013.
52
Market Development Facility interview with Catherine Johnston, DAC/USAID, February 2013.
53
Market Development Facility interview with agricultural vocational school in Natarbora, Manatuto, February 2013.
54
Market Development Facility interviews with Acelda Li, CCT, Timor Global, Timor Corp., Elsa Café and informal candlenut traders in Bobonaro, February, March and May 2013. 55
Market Development Facility field observation of continuity of registered businesses, February–May 2013.
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Food importers: This group can be divided into two categories—importers of fresh, frozen or dry foods, and importers of staples such as rice and maize. There are four large importers of fresh and frozen foods: the supermarket chains Kmanek, Pateo, Leader and Lita. They sell retail as well as wholesale and usually employ 50 to 100 workers each. There are about 8 to 10 staples importers, mainly importing rice from Vietnam. The import of rice is subsidised and is aimed at correcting the staples markets in the country. Maize is mostly imported by Timor Global and development agencies such as the Food and Agricultural Organization (FAO) and the World Food Programme (WFP) for humanitarian purposes.56
Fresh vegetable traders: About five large businesses supply the vegetable markets in and around Dili. These are mostly individually owned businesses that have connections to the major Dili markets such as Hari Laran and Comoro.57 Most vegetable trading enterprises can be classified as retailers. District markets are attended by many small vendors. In districts close to Dili, small and medium-sized traders buy, aggregate and send goods onward to Dili markets, usually via microlet and minibus operators who transport passengers and goods between Dili and neighbouring districts. However, these vehicles are mainly for passenger transport, and the limited space limits the amount of vegetables that reach Dili from district markets.58
Processors The food processing industry is limited to semi-processing, mainly of staples, with the most advanced processing taking place in the coffee industry. A very few food processors produce small quantities of tofu and tempeh for the domestic market, and a few others manufacture small quantities of consumer foods such as cassava and banana chips, mainly under the government’s Suco Ida Produto Ida (SIPI) (One Suco One Product) program. Crop-specific summaries of processors are presented below.
Rice: This is the most common processing industry in Timor-Leste. It usually entails milling, with milling recovery being around 50% at best. The number of rice milling machines owned by rural households is about 2,000, with larger milling companies operating in the major rice production areas of Lautem, Baucau, Bobonaro and Manatuto.59 Since 2007, GoTL has also purchased 331 milling machines for distribution. The by-product of milling, rice husks, is discarded. Maintenance of the machines is also questionable; thus, milling recovery of rice is often much lower than 50%, leading to huge wastage as well as a final product of mostly broken rice grains. Milling rates are usually $1.50 to $3.00 per 50 kg sack of paddy.60
Maize: There are about 150 small maize processing enterprises across Timor-Leste, mainly providing maize kernel crushing services to neighbouring farmers for household consumption.61 There are also a handful of slightly larger operations based in technical and vocational schools around the country, set up to cater to the needs of resident students.62 The only large-scale maize processing firm is Timor Global. This company processes maize and mixes it with soy and vitamin pre-mixes to provide fortified corn- and soy-based products to government food and nutrition programs.
Soybeans: The amount of soy cultivated and produced in Timor-Leste is relatively small compared to the rest of the region. There are about five processors of soy, who mainly produce tofu, tempeh and soy milk for the domestic market. Most are small operators processing up to 5 MT of soy every quarter. One large-scale soy processor based in Dili can process up to 6,000
56
Market Development Facility interviews with Kmanek, Leader, Pateo and Timor-Global, February and March 2013.
57
Market Development Facility interviews with Nilton Anicetto, USAID/DAC, February 2013.
58
Market Development Facility interviews with market traders in Dili, February 2013.
59
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
60
Market Development Facility interviews with farmers and millers in Maliana, Baucau, Viqueque, Manufahi, Ainaro and Cova Lima, February–June 2013.
61
Market Development Facility estimate based on team observations in the field.
62
Market Development Facility interview with Padre Locatelli at Fatumaca Technical College, Baucau, April 2013.
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litres of soy milk per day.63 Smaller soy-blending operations in Fuiloro (Lautem) and Fatumaca (Baucau) crush soy and mix it with maize in very small amounts to feed to their own pigs.
Cassava: Although cassava is one of the major crops cultivated in Timor-Leste, little processing is done at either household or larger scales. Cassava is often left in the ground until used; lack of processing leads to substantial wastage. Recently, CCT has established a plant in Natarbora that converts cassava tubers sourced from CCT-registered farmers (mostly in the south) into flour for export and for domestic distribution to CCT members.64
Coffee: This is the only crop processed into an end product of sizeable proportions in TimorLeste. There are about 10 processing companies of different sizes in the country, the largest being CCT, Timor Global and Timor Corp. A small number of farm-level operators process coffee cherries (the fruit as it appears when harvested, containing beans and pulp) into parchment (a storable intermediate product), but these are mostly limited to owners of larger plantations (>5 ha). These larger farmers process the cherries to parchment and sell it in September and October, when the coffee harvest is completed and prices for beans are highest. CCT, Timor Global, Timor Corp., Elsa Café and others process the coffee all the way from cherries to green beans. Apart from these private enterprises, several development programs and NGOs are involved in small-scale coffee processing. Green beans are the preferred export format.65
Candlenuts: This is one of the traditional export crops of Timor-Leste; the major destinations are Indonesia and the United States. The planted area for candlenut trees is about 4,300 ha and produces about 1,000 MT of nuts annually. However, due to lack of knowledge of plantation maintenance, productivity has been decreasing, which affects export volumes. Only one company in Timor-Leste collects candlenuts and processes them into oil. It employs about seven workers and exports the oil to Hawaii and the nuts to Indonesia. The company buys the nuts from hundreds of growers directly or from other smaller collectors, mainly in the southern districts.66 Around the country, about 20 collectors aggregate the nuts and sell them to buyers in Atambua, West Timor.67
Coconut oil: Fewer than five cooperatives are involved in sourcing coconuts from surrounding areas of Baucau, Viqueque and Lautem. The number of growers supplying the cooperatives is not known; however, like candlenuts and coffee, the primary constraint is low yields from aging coconut trees. Virgin coconut oil is mostly sold locally, with some of it reaching supermarkets. Some donor programs are currently engaged in improving coconut oil production and addressing concerns about quality and packaging.
Artisanal processing: This category includes processing of chillies to ai manas Timor (hot sauce), fruits to marmalade, and root crops (such as taro, cassava and potatoes) into chips. This type of processing mainly occurs in small, household-level enterprises and is highly seasonal. Although actual numbers are not known, anecdotal evidence suggests that about 100 small enterprises are engaged in such processing and marketing, mostly under the SIPI umbrella.68
Retailers The retail industry is the third largest contributor to the non-oil GDP of Timor-Leste. Most retailers are small informal, sole proprietorships; there are also a few supermarkets, all based in Dili.
63
Market Development Facility interview with proprietor of Green Foods Inc., Dili, February 2013.
64
Market Development Facility interviews with Bency Isaac, CCT, May 2013, and Cooperativa Klatamura, Natarbora, Manatuto, February 2013.
65
Market Development Facility interviews with Timor Global, Timor Corp, CCT, Elsa Café, and coffee farmers in Ermera and Aileu, February–May 2013.
66
Market Development Facility interview with manager of Acelda Li company, Baucau, February and April 2013.
67
Market Development Facility interview with candlenut collector in Bobonaro, February 2013.
68
Market Development Facility interviews with SIPI members in Maliana, May 2013.
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Market vendors: There are an estimated 1,200 to 1,300 vegetable vendors in Timor-Leste, ranging from roadside stall operators to owners of mobile vegetable carts, some motorised. A large number of other vendors exist in Dili, selling everything from biscuits to cigarettes. Due to the informal nature of the business, it is difficult to assess the exact number of such vendors. In the districts, it can be estimated that 10 to 20 vegetable vendors are present in each subdistrict market. They sell small amounts of vegetables sourced from neighbouring farmers. On average, at the sub-district level, a market vendor sells $5 to $20 of product per day. Transportation and marketing are key constraints for these actors.69
Supermarkets and grocery stores: There are about 50 grocery stores and supermarkets in Dili and large cities such as Maliana and Baucau. In Dili there are six large supermarkets that also act as importers and wholesalers of dried, frozen or canned goods: Kmanek, Leader, Lita, Pateo, Dili Mart and Landmark. Most of the others are small kiosks selling both food (processed and fresh) and household consumer items such as toothpaste, soap and shampoo.70
Restaurants and hotels: There are about 150 restaurants and 100 hotels around the country, the majority (about 100 restaurants and 70 hotels) in Dili. They source vegetables locally except for high-value and specialty items, which are sourced from importers. Poor quality and inconsistent supply are restaurateurs’ two most common complaints. These problems contribute to restaurants and hotels relying on importers for certain items; they also make it difficult for restaurants and hotels to create a menu based on local produce.
Caterers: These are companies owned by hoteliers or restaurateurs who are contracted by the government to cater to large institutions such as the army, police and hospitals. There are about five major catering companies. Their inexperience in supply chain management often leads them to price their bids to win tenders, in ways that are not necessarily rooted in reality. Thus, after being awarded a contract, caterers are often unable to source local products to comply with the tender, as local products are usually more expensive. Lack of supply chain knowledge also means that they often buy the tendered items in retail markets at much higher retail prices than what would be the prices if purchases happened closer to farm gate. In order to compensate for such problems, caterers often source their required items straight from importers, thus ensuring price, quality and consistency.71
Agriculture Service Providers The market for agricultural inputs is not very well developed in Timor-Leste, and very few actors are involved in it.
Input suppliers: There are about 30 input retailers around the country, but few specialize in agricultural inputs; most deal only with seeds. There are five slightly bigger, more specialized businesses dealing in seeds and other inputs. These are concentrated in Dili, Baucau and Maliana. The other small businesses offering seeds, and to some extent other inputs, are small traders for whom seeds are a side business. The quality of the inputs themselves and the accompanying information often suffer from the fact that this is a side business. Due to low demand and low levels of sales, it is very hard to get a distributorship from input companies. According to Boa Ventura, a business in Timor-Leste needs to have $300,000 in annual revenue to qualify as a potential distributor for an input manufacturing company in Indonesia.72 Some of these retailers are also involved in government tenders, especially for fertiliser.
Agricultural mechanisation suppliers: Fewer than five companies nationwide supply tractors, hand tractors, threshers and milling machines. Most of these companies receive and fulfil
69
Market Development Facility estimate of number and daily earnings as well as field observations in suco and sub-district markets.
70
Market Development Facility team observation.
71
Market Development Facility interviews with Nilton Anicetto, USAID/DAC, February 2013.
72
Market Development Facility interview with Boa Ventura, Dili, February 2013.
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government orders as part of the agricultural machine distribution program. They are mostly based in Dili, Baucau and Maliana and have no rural presence. Since 2007, the government has imported 2,000 tractors and hand tractors and 331 rice milling machines through these companies for distribution.
Transporters: Timor-Leste has a relatively large road network, covering about 6,000 km. However, most roads are in very poor condition.73 The mountainous terrain, narrow roads and bad surface conditions, especially in the rainy season, mean that traffic volumes outside of Dili are low and transport and travel are slow. There are no dedicated agribusiness logistics or transport companies in the districts. The prevalent forms of transport are trucks (mostly owned by construction companies) and microlets. Since 2006, around 11,000 microlets, buses and taxis and 460 trucks have been registered. Transportation costs are high, and the reliability and frequency of transportation options is low.74
Cooperatives: There are about nine cooperatives in Timor-Leste in the areas of rice milling, cassava, banana, mung beans, fish, copra, and candlenut. NGOs have set up some cooperatives, with coffee the most widespread, involving some 22,000 growers. Not all enjoy the same success, and many are in various states of disarray.
2.2
Public-Sector Presence in the System
The public sector plays a significant role in agribusiness and rural distribution, as a buyer and distributor for key agricultural inputs such as seeds and fertiliser. Under current market conditions, the public sector is the single largest buyer for locally produced staples such as maize and rice—and the largest provider of seeds, fertiliser and agricultural mechanisation services. The key stakeholders in the public sector for agribusiness are as follows:
The Ministry of Agriculture and Fisheries is the primary public sector body in agriculture, responsible for extension services, distribution of inputs, maintenance of irrigation and water channels and promotion of local agricultural products to regional and global markets.
The Ministry of Commerce, Industry and the Environment (formerly the Ministry of Tourism, Commerce and Industry) is responsible for implementing the Povu Kuda Governo Sosa (Farmers Produce and Government Buys) buyback program for agricultural produce. The program started with the purchase of 12 local agricultural products. The ministry focused on five crops (maize, rice, soybeans, peanuts and mung beans) for 2013. It is also responsible for subsidising rice imports, creating new storage facilities and rehabilitating and establishing markets for agricultural products.
The Ministry of Economic Development was responsible for building mini-markets across all the districts in 2009, but it has since been dissolved; the various parastatals under it have been integrated into other ministries.
The Ministry of Education, although not a purchaser of primary crops, it is still responsible for the countrywide school feeding program, and thus requires large amounts of local agricultural products such as rice, maize, mung beans, red beans and vegetables. The ministry allows each school to decide the diets for its students and purchases accordingly. The current budget allocates 15 cents per student per meal for this. The school feeding program serves about 25,000 school children annually.75
The Ministry of Health is responsible for providing food for the Mother and Child Feeding Program, which serves about 50,000 vulnerable mothers per year. The beneficiaries are
73
World Bank, Transport in Timor-Leste, 2013
74
Market Development Facility interview with Ministry of Transport, Dili, June 2013.
75
Market Development Facility interviews with Antonio Avella of WFP, April 2013.
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children age 6–59 months and pregnant and lactating mothers. The products sought by the ministry are rice, maize, mung beans, and red beans.76
The Ministry of Social Solidarity buys agricultural products such as rice and maize for social and humanitarian donations.
The Ministry of Defence and Security is responsible for feeding the army and police force. It requires a large and consistent supply of rice, red beans and vegetables as well as meat and fish. Currently the ministry floats tenders for procurement of such goods, which are then fulfilled by private catering companies.
2.3
Donor Presence in the System
Since independence, a number of development agencies have worked and established programs in Timor-Leste. Their involvement in agriculture is summarized below:
76
AusAID and the Australian Centre for International Agricultural Research, through the Seeds of Life (SoL) program, promote the availability of seeds for high-yielding varieties of staple crops in order to improve food security in Timor-Leste. To date, they have released improved varieties for rice, maize, peanuts, cassava and sweet potatoes.
USAID supports Timor-Leste in improving the productivity and capacity of producer groups through the introduction of modern technologies and cultivation techniques, while facilitating greater access to agricultural inputs. These efforts are aimed at helping Timor-Leste’s agrarian economy transition from primarily subsistence farming towards more commercially oriented agricultural production.
Deutsche Gesellschaft für Internationale Zusammenarbeit (German Society for International Cooperation) works through the Rural Development Program and has supported improvements in agricultural production and processing. Major efforts have so far been geared towards policy support for agricultural extension services, practical farming using integrated crop management techniques, a value chain survey for major crops, capacity development, forestry management and rural road development.
Japan International Cooperation Agency, through the SIPI program, is implementing smallscale projects in agribusiness. It also implements the Project for Rehabilitation and Improvement of Maliana and Irrigation and Rice Cultivation in Manatuto.
Irish Aid, through the International Labour Organization’s (ILO’s) Business Opportunities and Support Services (BOSS) project, has provided support to the Instituto de Apoio ao Desenvolvimento Emprezarial / Institute for Business Support and Ministry of Economy and Development in boosting local economic development, enhancing government service delivery and creating quality employment in rural areas by expanding market access for micro and small enterprises and improving the provision of business development services.
WFP supports the Ministry of Health in the provision of fortified foods to malnourished mothers and children. WFP also supports the Ministry of Education in the provision of fortified food for the School Feeding Program.
FAO distributes high-quality farming inputs to increase local food production, mostly of rice and maize. In partnership with the United Nations Children’s Fund (UNICEF) and WFP, FAO implements the joint food security and nutrition program.
World Food Programme, 2012.
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ILO supports rural infrastructure development and employment generation programs that contribute to the improvement of livelihoods. ILO also supports the horticulture and livestock value chains in Timor-Leste through its BOSS program.
World Vision works with communities to explore avenues and provide training to farmers in order to improve their crop yields and increase their income.
Oxfam works with household clusters to promote planting of kitchen and market gardens.
Care International supports access to social and agricultural support services in communities across the country.
Catholic Relief Service East Timor works with farmers, introducing new varieties of maize seeds to help increase crop yields.
Caritas Australia supports a range of activities, including training in agricultural techniques, improving water and sanitation, increasing seed variety, improving seed and food storage, environmental protection, community organisation, microfinance and food processing.
The Agência Brasileira de Cooperação / Brazilian Cooperation Agency supports the increased capacity of students of agriculture schools.
China Aid, along with the Ministry of Commerce, supports a hybrid rice plantation in Manatuto.
World Neighbour, through its project From Hunger to Health: Strengthening Community Capacity and Resilience for Food Security in Oecusse, works with communities in Oecusse to provide opportunities for rural households to achieve secure and sustainable livelihoods.
The Christian Children’s Fund has a project aimed at attaining food security through improved agricultural production systems among dry upland and coastal communities.
HIVOS, through its project Building Food Security and Resilience among Rural Households, aims to reduce food insecurity in the most vulnerable households.
Mercy Corps supports communities in Timor-Leste in establishing sustainable crop production, utilisation and resource management through capacity enhancement.
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Part Two: Sector Growth Strategy
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
1
Main Findings
Although Timor-Leste has a predominantly agricultural economy, it has to import large amounts of food, and its population faces a relatively high prevalence of stunted growth. Rural households struggle to provide members with sufficient, and sufficiently nutritious, food; households in the cities are partially supplied from overseas. Farm yields are low, cultivation techniques are basic at best, and the use of inputs is minimal. Farmers’ trade is often restricted to small volumes in nearby suco markets, sometimes in the form of barter. Since most farmers in a given area grow more or less the same crops, demand only increases in the hungry season, when households start running out of stock, or when a trader shows up to buy produce for the Dili or export market. Traveling to the Dili market is an option for farmers in nearby districts, but transportation costs are high, roads are often badly maintained, and it is not always possible to hire a truck, especially when the weather is bad. Truck owners simply refuse to drive to the villages. Storage facilities to prevent produce from spoiling are often inadequate if available at all. As a result, the little surplus that is produced may not reach the markets, wastage is high, sales opportunities are limited, and the means to invest in agriculture or in the well-being of the household are equally limited. Farmers do try to sell maize, vegetables, fruits and other produce, but the small volumes and high transaction costs combined with low yields and sometimes high production costs (e.g., for labour) mean that margins are low. Agricultural inputs, which could make cultivation more productive and more efficient, are often not available in local markets; and when they are, retailers often have little knowledge of the product and it may not be prominently displayed or easy to find. The government’s provision of inputs and machinery for free or at subsidised rates encourages input businesses to wait for government orders rather than developing their own retail networks. Bad experiences with chemical inputs (often due to incorrect application) and a strong local sentiment against the use of inputs also reduce demand. Traders are often truck operators who rent out their trucks for transporting produce when there is no work on construction sites. They may lack specialised supply-and-demand knowledge (who is interested in buying what, and where are farmers who can provide it) as well as specialized equipment (e.g., for storage). When traders do show up to buy at the farm gate, farmers’ attempts to make the most of the immediate opportunity (by demanding high prices or concealing quality issues) often discourage traders from returning. The sector is also impacted by government and donor programs that are intended to inject cash into the rural economy by means of social transfers or to create demand for local produce. The high prices offered, together with the high cost of labour as a result of these social transfers (day labourers have become scarce) make farming less competitive and less attractive to pursue as a business. Thus, exports drop and imports rise. These are the signs of an agricultural economy that is not working well. In Timor-Leste, the factor that underlies all others has been the near collapse of local trade structures, extension services, infrastructure and other vital aspects of the market system that makes rural trade and investment feasible. An island that once was known for its export commodities has turned into a largely subsistence-oriented rural economy, with few extension workers, crumbling roads, and very little inter-district (let alone international) trade. The loss of market access means that farmers may lack the cash and the incentive to invest in higher yields. Being able to grow a few high-value cash crops can lift a farming household out of poverty. However, when this option is not available, all that remains is to focus on low-investment, cashpreserving, risk-spreading farming practices to feed the family and sell the surplus if such an opportunity arises. Limited access to reliable agricultural inputs and information on them only reinforces this focus. With limited means to ensure a decent, reliable surplus, and with equally limited means to buy food from the market in case of crop failure, there is a fine line between good and bad
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
years. Moreover, any surplus generated by a household may be small and irregular, and this, combined with deteriorating roads and a lack of aggregators, means earnings may be small at best. Thus, farming is characterised by little investment, limited access to markets, inadequate production inputs and knowhow, low yields, relatively high production costs (low returns on investment), relatively high wastage (no opportunity to sell, limited capacity to store), low productivity and, ultimately, low earnings. The loss of entrepreneurial knowhow and capital means that local businesses often need to start from scratch. This is made more difficult by an environment where investment capital is limited. This is amplified by bad roads that often increase costs associated with local sourcing; limited knowledge of production centres and surplus areas and a lack of backward linkages with producers that increase costs further; lack of proper storage facilities, which results in wastage and limited opportunities to buy low and sell high; and public sector interventions in the market system, which subsidise imports, push up local price expectations and make local sourcing even less predictable and profitable. Thus, trading is characterised by small volumes, high transaction costs, a lack of specialisation and investment in linkages and equipment, and as a result, sporadic ad hoc trading rather than long-term planning. Even given these barriers, trade rarely comes to a complete standstill; Timor-Leste’s markets are supplied (at least to a degree), and exports do take place. But rebuilding a rural economy with depth and breadth is a gradual and opportunity-driven process. It takes time to move from a thin and fragmented market environment that lacks specialized skills and investment capacity, in which trading is increasingly costly and risky, to a market environment that is gradually increasing volumes, margins and investment in farm productivity or household well-being. In this context, it makes sense to focus on providing access to information and inputs, building roads, injecting cash into the rural economy and creating new enterprises.
2
MDF’s Approach
MDF will add value to development efforts in Timor-Leste by rebuilding the intermediaries that connect farmers to markets in order to increase farmers’ ability to earn an income from farming and to invest in their farms and in household well-being. This needs to be a demand-led, opportunity-driven process to restart and reinvigorate a cyclical process in which traders are able to source more produce, more efficiently from rural producers (whilst also supplying producers with inputs) and local producers are able to produce and sell more efficiently. This process is in turn supported by services that provide access to market information and cultivation knowledge, enabling rules and regulations, and strategic investments in equipment and infrastructure. This will involve the following steps:
Enabling producers to sell their surplus and thus generate additional income or new incomeearning opportunities. This could be by promoting specialists such as sub-district-level aggregators or having Dili-based agribusinesses go to the districts and source what they usually import.
Reducing costs by introducing technological innovations, which may replace existing expensive production steps (such as using manual labour for land preparation and weeding).
Promoting the use of high quality inputs (such as seeds, pesticides and herbicides) to farmers who are able to invest in them.
Disseminating cultivation information that will help farmers to optimise the use of available resources.
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Improving trade-related testing, storage and transportation infrastructure to promote local sourcing and reduce its cost.
Making domestic trading more attractive by improving the business environment and making local sourcing more competitive.
Ultimately, a vibrant agribusiness sector, with enough incentives for traders to source locally and producers to invest more in their farms, would enable poor producers in Timor-Leste to earn more and consume more through the increased production, consumption and trade of locally grown products. To achieve this, MDF will identify partners who have the ability and incentive to invest in innovative business practices, business expansion and/or regulatory reforms that help reduce key constraints in the functioning of the agricultural market system and turn them into opportunities. These steps are described in more detail below.
2.1
Constraints
Constraints on the development of the agribusiness sector in Timor-Leste, as discussed above, include six key factors that contribute to an undersupply of local agricultural products and thus to overreliance on imports (Table 6). Table 6: Constraints on agribusiness development Constraint
Explanation and causes
Farmers lack resources to invest in agriculture.
Since 1999, the trading system for cash crops has collapsed, which has caused a disconnect between farmers and (export) markets. Most traders were Indonesians, who withdrew in 1999 after the referendum. Some crops, such as coffee, had already been in decline since the withdrawal of the Portuguese. Since 1999, the infrastructure has crumbled, which has caused a disconnect between farmers and (local) markets. Farmers are more dependent on selling small volumes in suco or sub-district markets, where demand for products is always small. At district level, surplus and deficit areas co-exist. Transportation to markets is limited, and the high cost per volume is often prohibitive. Transport is not always available due to bad weather or bad roads, affecting the frequency and volume of products reaching markets. Specialised transportation may not be available, restricting volume of products to markets per trip and increasing cost per unit. Low frequency and unspecialised transport lead to high transport costs; these lead to low margins or prohibit trips to the market altogether. Wastage also occurs due to poor on-farm storage.
Farmers lack the knowledge to make better use of available resources to maximise productivity.
Public extension services ceased to exist after 1999; they have been restarted with limited capacity. Before 1999 thousands of Indonesian extension workers were active; they were replaced after the referendum by 376 workers. The current focus of extension services is predominantly on rice cultivation. Current extension services are characterised by low levels of knowledge on cultivation practices. Private extension services are largely absent. Private extension services are only available for coffee growers and some horticulture farmers. Guidance on organic farming and the value and use of inputs is unclear. Organic farming is simplified to mean farming without any inputs (e.g., promoting no fertiliser use rather than organic fertiliser use). Use of chemical inputs is discouraged even when it could add value by controlling pests or reducing labour costs.
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Constraint
Explanation and causes
Farmers lack access to agricultural inputs, machinery and services.
Availability of agricultural inputs, machinery and services in district markets is limited. Low purchasing power translates to selective demand (for some but not all necessary inputs). Unclear guidance on organic farming and the value of inputs hinders uptake of potentially useful inputs (herbicides, pesticides). Poor rural distribution networks lead to erratic supply of agricultural inputs. Government handouts encourage farmers to wait for free inputs, which makes for inconsistent demand for inputs, which in turn undermines the viability of more specialised commercial ventures in agricultural inputs and machinery. Established businesses (e.g. Timor Telecom) have not yet discovered rural agriculture markets as potentially profitable. Commercial channels (bank loans, lease financing options) to acquire more expensive machinery (e.g., tractors and mills) do not exist; spread of agricultural mechanisation is dependent upon government handouts or development assistance.
Traders lack the information and skills to create robust supply chains.
Since 1999, the multi-tiered aggregation system (suco to district and suco to Dili) has collapsed. Most traders were Indonesians and withdrew in 1999 after the referendum, leaving a disconnect between production areas and markets. Local sourcing is costly and problematic due to lack of market information, inconsistent product and small volumes. Traders do not know where to buy, and farmers do not know where to sell. Lack of intermediaries at the various tiers between production centres and markets leads to difficulty in sourcing. Lack of storage options in marketplaces prevents traders from capitalising on seasonal price fluctuations. For large volumes, traders often resort to imports to avoid the difficulties of local sourcing. Government buy-back programs push up local price expectations and make sourcing through private trading channels risky and erratic.
Poor commercial and communication infrastructure confines agricultural trade to sucos and diminishes growth.
Poor conditions undermine the effectiveness of the extensive road networks in Timor-Leste. Poor road conditions make for long and costly travel and low and unreliable traffic volume and frequency. Road conditions in the south are especially poor, and poor connections to markets effectively render the agricultural advantage of the southern districts (multiple growing seasons, more fertile soil) useless. Lack of water translates to a single, rain-dependent season for agriculture across most of Timor-Leste. Water-related agricultural issues (crop failures, harvest problems) are common due to erratic rainfall. Irrigation schemes are difficult to maintain due to irregular rainfall, seasonal disappearance of riverbeds and mountainous terrain. The single agricultural season aggravates vulnerability to food insecurity. Availability of storage options across sucos, sub-districts and districts is limited. Poor farm-level storage leads to large losses of harvest to insects, vermin and contaminants. Limited (sub-)district-level storage hinders aggregation of agricultural products, making sourcing of large volumes expensive for traders. Absence of quality assessment and quality assurance of agricultural products makes local sourcing problematic. Lack of testing options renders local sourcing risky as chances of purchasing contaminated agricultural products are high. Uncertainty regarding the quality of local products leads to a preference for imported products by consumers and traders. Poor quality-assurance facilities put Timor-Leste products at a disadvantage in export markets.
Rules and regulations affecting agribusiness (especially regarding inputs and trading) create an unfriendly environment for the private sector, limiting investment in local agribusinesses.
Public-sector buy-back programs distort the market for agricultural commodities. Buy-back programs create unreasonable price expectations amongst producers by offering higher than prevalent market prices. Erratic frequency and coverage of the buy-back programs create uncertainty amongst traders and producers about surplus trading. Public-sector market stabilisation initiatives, through import subsidies, create unfair advantages for imported goods. Subsidies for imports of staple commodities make imported products more attractive than locally produced goods. Cheaper imported commodities create a preference for imported food products at the expense of higher-priced local products. Free distribution of agricultural inputs by public-sector and development agencies undermines investment in agricultural input businesses. This has created a culture of dependency amongst producers and reinforced the idea that inputs are not to be invested in but to be received for free.
Special attention areas in which a number of constraints come together
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Constraint
Explanation and causes
Food and nutrition insecurity are significant topics in the economic development context of Timor-Leste
Low farm-level productivity contributes to household food insecurity and to a national negative food balance.
Problems affecting remote districts are prominent considering the remote nature of most areas in the country
Physical distance from markets makes it impossible to participate effectively without incurring huge transportation costs.
2.2
Insufficient supply of a variety of nutritious foods contributes to high levels of malnourishment and related problems across the country. Families do not have enough cash to buy more or better food.
Large distances to producers and poor communications contribute to high sourcing costs for traders. Residents are poorer than the rest of the country, with very limited cash resources.
Opportunities
MDF’s strategy will involve building a portfolio of partnerships with businesses to work on goals corresponding to identified constraints (Table 7). For instance, to address producers’ lack of cultivation knowledge, MDF will work with local wholesalers, processors, telecommunications companies and input dealers to provide information on cultivation to farmers through leaflets and demonstrations and increase services from private extension workers. Table 7: Opportunities and potential partnerships Intervention goal
Opportunities and partnerships
More reliable and less costly access to end markets (more traders buying at the farm gate, more frequent and efficient transportation, more market information and storage)
Work with associations, transport owners, collectors, wholesalers, warehouse operators and/or telecom providers to reduce the costs of selling agricultural products and increase demand. Make more information available on what is in demand and what can sourced from where, including prices and quality standards. Invest in local storage and processing to reduces wastage, transportation costs and transaction costs. Invest in cost-effective local transportation and distribution options. Create new demand for local produce by developing markets for new products, improving shelf life and providing better packaging. This intervention focuses primarily on local, often district-based trading ventures and is complementary to the next intervention, which focuses more on larger, often Dili- or Bacau-based agribusinesses (exporters, processors, wholesalers) able to invest in backward linkages.
Better backward linkages to production centres (planned sourcing and investments in personnel, inputs and infrastructure)
Work with exporters, processors and/or wholesalers to reduce the costs and increase the reliability and volume of local sourcing. Establish and manage backward linkages between agribusiness and production centres. Through these, where needed, provide farmers with access to agricultural inputs and equipment. Through these, where needed, provide farmers with access to information on cultivation practices and input use (private extension services). As part of these, invest in warehousing, storage and efficient means of transportation.
Access to cost- and wastereducing, low-cost cultivation tools, machinery and laboursaving inputs
Work with importers, distributors and/or retailers of inputs and machinery, exporters, processors, wholesalers and/or local equipment manufacturers and service providers to reduce costs and waste in agricultural production. Promote access to and use of labour-saving inputs such as herbicides and use and local manufacture of weeding machines. This may entail new distribution and retailing arrangements (e.g., last mile marketing) to keep products affordable and bring them close to farmers. Promote the local manufacture and use of waste-reducing post-harvest processing machines such as maize shellers and rice threshers. Promote the local manufacture and use of waste-reducing post-harvest storage equipment. Make agricultural machinery available for rent for ploughing, land preparation, weeding and threshing. Supply all this through backward linkages. It is likely that, initially, cost-reducing inputs and machinery may be more attractive than yield-increasing investments for poor farmers.
Access to yield-increasing inputs (seeds, fertiliser, pesticides and herbicides) and equipment
Work with associations, importers, distributors and/or retailers of inputs and machinery, exporters, processors, wholesalers and/or local service providers to increase yields. Promote access to and use of specific yield-increasing inputs. This may entail new distribution and retailing arrangements (e.g., last mile marketing) to keep products affordable and bring them close to farmers; it may be necessary to focus on products with a high adoption rate to ensure a sufficiently fast business turnover. Promote access to and use of irrigation equipment. Supply these through backward linkages.
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Intervention goal
Opportunities and partnerships
Access to information on cultivation techniques, input use and post-harvest handling
Work with importers, distributors and/or retailers of inputs and machinery, telecom providers, exporters, processors, wholesalers and local equipment manufacturers to increase overall farm-level productivity. Improve access, through backward linkages, to dedicated private-sector-funded extension workers or less intensive means of educating farmers such as leaflets and demonstrations. Improve access to information on cultivation techniques and inputs use as embedded services provided by importers, distributors and/or retailers. This may require training of these actors and/or promoting the establishment of more specialized input businesses. Improve access to information on post-harvest handling as embedded services provided by manufacturers. Improve access to information relevant for farming via mobile phone applications (e.g., agriculture help lines).
Specialised infrastructure, techniques and services for local sourcing such as quality testing, specialised transport and storage
Work with those who want to invest in infrastructure, establishing services and/or techniques that are essential to the functioning of the market system. Establish, improve or scale up specialised large-scale storage facilities. Establish product-testing facilities to ensure sourcing of safe local products. Establish or improve rural distribution networks and develop more efficient transport options. As part of this intervention, MDF will also seek collaboration with infrastructure development agencies on rehabilitating and building roads connecting production centres to markets and irrigation systems.
Improved public–private dialogue on agribusiness policies and regulations
Collaborate with representatives of the private sector, public institutions and development partners on areas such as import subsidies, buyback programs, promotion of agricultural inputs, and access to finance for agribusiness.
Special attention areas in which a number of goals come together Improve food and nutrition security by addressing problems with productivity and variety.
Household-level food balance and nutrition security could be achieved through the opportunities mentioned above. Wherever possible, additional work will be done in the following areas: Promote intensive cultivation of vegetable proteins such as soybeans, red beans and mung beans. Promote cropping patterns incorporating nitrogen-fixing legumes to improve soil fertility. Promote development and growth of household animal husbandry operations.
Improve market access for remote districts.
The opportunities described above will also benefit more remote districts. Where possible, the following additional work will be done: Connect district-specific niche products to end markets. Ensure that backward linkages, distribution networks and investment in services are not limited to the better-connected districts.
2.3
Sector Growth Strategy
Based on the constraints and opportunities described above, the following strategy was formulated for working in the agribusiness, processing and rural distribution sector (Table 8). The overall goals are to increase farm productivity and income by increasing access to inputs and services; reduce production costs, marketing costs and wastage; stimulate investment in sourcing, trade-related infrastructure and processing capacity; and create a more business-enabling environment. Table 8: Sector growth strategy for agribusiness, processing and rural distribution Intervention Areas
Markets to be influenced
Anticipated results
Potential partners
More reliable and less costly access to end markets (more traders buying at the farm gate, more frequent and efficient transportation, more market information and storage)
Farmers or farmers’ associations sell more at farm gate to local collectors and transport owners or city-based businesses with backward linkages. City-based traders buy more from the districts because they have better information on surplus areas and production centres. Local access to storage reduces waste and creates bulk volumes more attractive to buyers. More efficient transport and distribution reduce the cost of transportation between districts and markets. New products and production and preservation techniques create more demand for local produce.
Improved access to markets + less waste + less cost
Associations, transport owners, collectors, wholesalers, warehouse operators and telecom providers
» more sales, better margins » higher net incomes » more money to invest in agriculture or household needs
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Intervention Areas
Markets to be influenced
Anticipated results
Potential partners
Better backward linkages to production centres (planned sourcing and investments in personnel, inputs and infrastructure)
Farmers are directly linked to end markets through agribusiness, processors and wholesalers; through this linkage they have access to a bundle of services and investments that help bypass constraints in the market system and are better able to sell their surplus. Agribusiness, processors and wholesalers are better linked to production centres, enabling them to establish a robust supply chain to serve their customers; they are also better able to control quality.
Improved market access + less waste + less cost + access to inputs, information and other investments
Agribusinesses, processors and wholesalers
» better knowledge among farmers of what to grow and how to grow it » more sales, higher yields, better margins » higher net incomes » more money to invest in agriculture or household needs
Access to cost- and wastereducing, low-cost cultivation tools, machinery and laboursaving inputs
Farmers have better access to low-cost agricultural equipment or agricultural mechanisation services as well as inputs that help to improve farm efficiency and reduce labour costs. Local manufacturers invest in manufacturing and making available affordable equipment. Importers and distributors develop business for affordable and effective imported items.
Increased use of agricultural equipment and inputs » reduced costs + ability to cultivate more land » more surplus at lower cost
Importers, distributors, exporters, processors, wholesalers, equipment manufacturers and service providers
» more sales, better margins » higher net incomes » more money to invest in agriculture or household needs Access to yield-increasing inputs (seeds, fertiliser, pesticides and herbicides) and equipment
Farmers have better access to yield-increasing Inputs and services. Importers, distributors, associations and local service providers develop a market for these inputs and services.
Increased use of inputs » higher productivity per farm » larger amounts of farm surplus » higher incomes » greater commercial attractiveness of farming
Access to Information on cultivation techniques, input use and good post-harvest handling
Farmers have better access to information through mobile phone applications; embedded services provided by retailers, service providers and manufacturers; and private-sector extension workers hired by agribusiness, processors and wholesalers. Businesses invest in the skills and content to educate farmers.
Better access to information » higher yields » more surplus » more sales
Exporters, wholesalers, processors, importers and distributors, service providers and associations
Exporters, wholesalers, processors, telecom providers, importers, distributors, manufacturers and service providers
» higher net incomes » more money to invest in agriculture or household needs
Specialised infrastructure, techniques and services for local sourcing such as quality testing, specialised transport and storage
Agribusiness companies have access to quality testing services as well as improved storage solutions, thus enabling a smooth and relatively risk-free process of sourcing local commodities. Access to appropriate storage solutions also helps local companies preserve the quality of purchases.
Access to specialized infrastructure and services facilitates trade and reduces the cost and risk of doing business » more investment in agribusiness
Investors (can be actors mentioned above or new, specialized entrants into the sector)
» more sales and higher incomes » more money to invest in agriculture or household needs
Improved public–private dialogue on agribusiness policies and regulations
Dialogue between relevant parties, backed up by data, helps improve the quality of rules and regulations, make social support program less distortive and guide public investment.
Business-enabling environment for agribusiness reduces costs and risk of doing business + makes local products more competitive
Representatives of the private sector, public institutions and development partners
» more investment in agribusiness » more sales and higher incomes » more money to invest in agriculture or household needs Special attention areas in which a number of goals come together Improve food and nutrition security by addressing problems with productivity and variety.
Farming is better informed and more diversified; farmers have access to inputs and equipment that increase yields, reduce seasonal influences and reduce waste; more income-earning opportunities and better-stocked local markets make households more resilient to shocks.
Improved access to markets + less waste + less cost + higher yields + diversified farming
Same as above
» more sales, better margins » higher net incomes » more money to invest in agriculture or household needs
Improve market access for remote districts.
The same markets are extended to more remote districts.
In principle, same as above
Same as above
Cross-cutting issues
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Intervention Areas
Markets to be influenced
Anticipated results
Potential partners
Poverty
In principle, same as above
In principle, same as above
Same as above
Gender
In principle, same as above
Additional income from farming + additional off-farm employment opportunities at the disposal of women
Same as above
Disability
In principle, same as above
Opportunities on a case-by-case basis in areas where additional employment is created
Same as above
3
Relevance for Pro-Poor Growth and Cross-Cutting Themes
3.1
Pro-Poor Growth
Most Timorese households depend on agriculture for their livelihoods, and most of those households are poor. Poor connections between farmers and markets (end markets, inputs markets, and services) result in low yields, high costs, wastage, low margins, poor sales and low earnings, which diminish farmers’ ability to invest in agriculture and household needs. All the interventions and partnerships proposed above are aimed at breaking this cycle. They will be designed in such a way that they help mitigate the constraints identified above, are commercially sustainable and are able to reach poor farming households. Pro-poor results are defined, and will be measured, as follows:
additional income from farming as a result of being able to sell more and reduce costs;
additional employment opportunities, in particular in farming-related businesses (including agribusinesses, processors, wholesalers, collectors, storage facilities, distributors, retailers and service providers);77
more income and employment opportunities in remote districts;
more disposable income to invest in household well-being;
improvements in food and nutrition security as a result of having more disposable income, higher yields, a more diversified farm or better-stocked local markets.
MDF will conduct additional in-depth research on poverty in Timor-Leste to identify specific causes and potential solutions, the outcomes of which will be incorporated into the sector growth strategy described above.
3.2
Cross-Cutting Themes
Gender Equality Most, if not all, members of the household share the farm work. Thus farm work is seen as a joint obligation for both men and women in the households. In addition, jobs will be created in farmingrelated businesses such as simple trading and aggregation of commodities, processors, wholesalers and retail outlets, and in providers of services such as storage and equipment sales and rentals. Women will benefit from these new job opportunities as well as from having more disposable income in the household. MDF will conduct in-depth research on gender dynamics in Timor-Leste to identify specific blockages and opportunities to stimulate gender equality, the outcomes of which will be incorporated into the sector growth strategy described above. In particular, it will investigate control over household
77
Because farmers struggle to afford day labour, employment creation within agriculture is expected to be less.
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Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
resources, how the benefits of more disposable household income are distributed and which jobs are or can be made more accessible to women. MDF will collect gender-disaggregated data on the effectiveness of its outreach to target beneficiaries as well as the additional income and employment opportunities generated through its interventions. Social Responsibility In agribusiness, processing and rural distribution, MDF will wherever possible, promote socially responsible business practices, including inclusion of people with disabilities.
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Annex 1: Major crops in Timor-Leste
Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Basic Staples Maize Maize accounts for 36% of total food production in Timor-Leste. There are more than 116,000 rural households involved in agriculture; about 60–75% of them cultivate maize.78 Maize is a versatile crop, consumed by humans and animals and traded in the market. Although rice is the preferred staple, the versatility of maize makes it very attractive to farmers. The major uses of maize are household consumption and seeds, with smaller amounts used for household animal feed. There is a latent demand for maize in the supplementary foods market. It has other potential uses as well, such as in consumer foodstuffs, commercial feed and nutrition security products such as fortified corn and soy blends. Table 9: Key cultivation and marketing aspects of maize Maize Total production
132,919 MT/year (unshelled corn on the cob)79
Total area under cultivation
73,619 ha80
Estimated number of households involved
102,34781
Main production areas
Maize is cultivated nationwide, with the bulk of production (47%) in the eastern districts of Lautem, Baucau and Viqueque, followed by the western districts of Bobonaro, Oecusse, Liquica and Cova Lima.
Typical plot sizes
The nationwide average plot size for maize is 0.72 ha per household. The largest average plot size per household is in Lautem at 2.64 ha, and the smallest is in Liquica at 0.15 ha.82
Current yields
The nationwide average yield is 1.7 MT/ha. The highest yield (2.37 MT) is in Lautem, and the lowest is in Aileu (0.83 MT).83
Achievable yields
Best-practice yields for maize are 2.4 MT/ha without use of inputs apart from improved seeds and 3.1 MT/ha with use of improved seeds, fertiliser and pesticides.84
Crop calendar
The major season for maize is the wet season, with planting in November and December and harvesting in March and April. In some parts of the country—especially in the south, where there are two rainy seasons—there could be two seasons for maize, with the second season starting in May and ending in July.85
Crop use
Maize is used as a household staple and for feeding livestock. The best grains are usually used for home consumption or seeds, with the poorer-quality grains reserved for animals. Any surplus is sold to customers (usually neighbours) in suco or sub-district markets. Maize is sold both on the cob and shelled.86
78
Ministry of Finance of Timor-Leste, Population and housing census, 2010; International Fund for Agricultural Development, Timor-Leste maize storage project design report, 2011; Seeds of Life, Seeds of Life 3 baseline report, 2011. 79
Government of Timor-Leste, Strategic development plan, section 4, 2011.
80
Government of Timor-Leste, Strategic development plan, section 4, 2011.
81
Ministry of Finance of Timor-Leste; Population and housing census, 2010.
82
Government of Timor-Leste, Strategic development plan, section 4, 2011; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
83
Government of Timor-Leste, Strategic development plan, section 4, 2011.
84
Seeds of Life, Seeds of Life maize variety brochures, 2011.
85
Seeds of Life, Crop calendars for Manufahi and Liquica, 2011.
86
Market Development Facility interviews with farmers in Ermera, Bobonaro, Manufahi, Ainaro, Cova-Lima and Viqueque, February–May 2013; Oxfam Australia, Timor-Leste food security baseline report, 2007.
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Maize Typical farming practices
Maize farming is very basic with little use of inputs such as fertiliser, paid labour, pesticides or herbicides. Only 7% of farmers reported using pesticides or herbicides, and only 29% reported using paid labour. Farmers prefer to use their own seeds of the local variety called batar mutin (white corn); only 10% of farmers interviewed said they bought seeds from the market.87 Secondary research suggests that only 23% of farmers bought seeds from the market.88 Maize is cocultivated with other crops such as beans, cassava and sweet potatoes, which significantly lowers yields compared with intensive maize farming.
Typical cost of production and sales value
Cost of production is estimated at $439/ha.89 The price of shelled maize was reported as $0.32/kg at farm gate, but prices can vary wildly, up to $2.50/kg in districts such as Baucau. Recently reported costs of imported maize were $0.38– $0.42/kg.90
Evaluation of farming practices
Maize productivity is low, mainly due to the low use of inputs such as good seeds, fertiliser, pesticides and herbicides. Weeding is a major problem, which is exacerbated by the high cost of labour. This contributes to large areas of land being left fallow or poorly cultivated. As maize is co-cultivated with other crops, the potential yield is never reached due to competition from these other crops. Post-harvest losses of up to 30% are associated with storage problems.91 Poor storage leads to losses from rats, weevils and molds. On a commercial basis, poor storage leads to high levels of afla-toxin contamination, which renders it unfit for human consumption.92
Availability of support services
There are 376 government extension workers and six extension centres in Timor-Leste, but they are not evenly spread out across the country. Farmer associations exist, but they are not crop specific. Overall, there is poor availability of support services in the form of input sales, agricultural extension or agricultural mechanisation.93
Market access
Most sales happen in the form of farmer-to-farmer retailing in suco or sub-district markets. There is very limited interdistrict trade in maize with no observed wholesalers for maize in the country. The largest volumes of maize are handled by opportunistic traders who buy in response to a government contract. Wholesalers and retailers are rarely specialists; instead, they trade in a bundle of products or commodities to improve their chances of selling. The government has been the major buyer of maize in recent years through the Povu Kuda, Governo Sosa (The People Cultivate and the Government Buys) program. Recent amounts and prices paid are as follows: 2009, 2,576,915 kg ($0.49 per kg); 2010, 96,065 kg ($0.45 per kg); 2011, 222,690 kg ($0.19 per kg).94
Major developments in the last 10 years
Timor-Leste trade structures have deteriorated in the last 10 years. Lack of proper extension services has led to poor maize cultivation practices with little or no use of inputs. As a result, productivity is much lower than what could be achieved and only 25% of the Asian regional average. Government efforts and provision of inputs are focused on rice, not maize. Government purchasing of maize has led to unreasonable price expectations amongst farmers and demands for high farm-gate prices. Given these high prices, private-sector traders find imported maize cheaper and much more attractive. Despite this, production is growing at a rate of 17% a year without significant change in area under cultivation. This suggests that some farmers are using inputs that are increasing maize productivity per land unit. There is currently a deficit of around 8000 MT of maize, based the Food and Agriculture Organization’s recommended per capita maize consumption. This indicates the existence of a sizeable market for maize for human consumption. As there are no existing animal feed production facilities in the country, the setup of a feed mill would further increase the market for maize. The creation of such a market could prove to be the right incentive for farmers to invest more in maize production, which in turn would help them to achieve higher yields.
Growth opportunities
Opportunities for growth include the following: access to information on improved seed varieties; access to inputs to maintain soil fertility and increase productivity; access to inputs and machinery to increase area under cultivation by reducing labour requirements; access to end markets in which surplus maize can be sold.
87
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
88
Seeds of Life, Seeds of Life 3 baseline report, 2011.
89
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
90
Market Development Facility interviews with Timor Global, March 2013.
91
Food and Agriculture Organisation and World Food Programme, Crop and food supply assessment mission report, 2007.
92
Market Development Facility interviews with Timor Global, March 2013.
93
Market Development Facility interviews with Ministry of Agriculture and Fisheries, May 2013.
94
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011.
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Rice Around 24% of Timor-Leste households are involved in rice cultivation.95 Cultivation methods are mostly traditional with limited use of inputs and agricultural mechanisation. As a result, the country runs at a consistent annual deficit of around 50,000 MT.96 With the population growing at 2.1% per annum, the deficit is expected to grow even larger. Currently it is being addressed by expensive imports of rice from Vietnam.97 Rice is the preferred staple food in Timor-Leste; however, it is also the least competitive. Rice husk can also play an important role in the animal and fish feed industry. Table 10: Key cultivation and marketing aspects of rice Rice Total production
73,825 MT/year of paddy98
Total area under cultivation
38,998 ha99
Estimated number of households involved
45,673
Main production areas
Rice is mainly cultivated in low-lying areas with a steady water supply through regular rains or irrigation. The most prominent production centres are Bobonaro (13,373 MT), Viqueque (10,404 MT), Lautem (8,363 MT) and Baucau (8,058 MT). The southern districts of Cova Lima and Manufahi, as well as the enclave of Oecusse, also feature substantial rice paddy production.101
Typical plot sizes
The national average plot size for rice cultivation is 0.85 ha per rice cultivating household. The largest average plot size is in Lautem at 2.43 ha per household, and the smallest (excluding Dili) is 0.38 ha per household in Oecusse. The southern districts of Manatuto, Manufahi and Ainaro have the highest regional average plot size, 1.58 ha per rice cultivating household. Manufahi and Ainaro also have two distinct seasons for rice cultivation.102
Current yields
The national average yield is 1.79 MT/ha. The highest yields are in Bobonaro (2.81 MT/ha), Ainaro (2.04 MT/ha) and Viqueque (2.04 MT/ha), and the lowest in Dili (1.1 MT/ha), Baucau (1.41 MT/ha) and Aileu (1.43 MT/ha).103
Achievable yields
Timor-Leste test plots have achieved best-practice yields of 3.4 MT/ha.104
Crop calendar
Rice is cultivated once a year across most of the country, with some districts in the south (mainly Viqueque, Manufahi and Ainaro) having two rice seasons. The main season for rice is from January through June, and the second season is from June through September. The main season for upland rice is October to May.105
Crop use
Rice paddy is mostly used for home consumption and seeds; around a quarter of the harvest is traded in the local market. Similar to maize, the trade in milled rice mostly takes place in suco or sub-district markets at the retail level. Local rice is valued over imported rice in terms of taste and freshness. Rice is milled in 50 kg sacks or 12 kg can units. The current milling machines achieve 50% milling efficiency. Milling prices vary between $1.5 and $3 per 50 kg sack or $0.05 per kg. Surplus rice is sold to neighbours during the hungry months (during crop cultivation leading up to harvest) at very high prices (up to $1.3/kg or more).106 The government has distributed up to 133 milling machines since 2007, mainly to farmer groups; however, the current status and maintenance capacity of the groups is unclear.107
The districts of Baucau (9,300), Viqueque (5,883) and Bobonaro (5,219) have the highest numbers of households involved in rice cultivation, and Liquica (504) and Ainaro (1,026) have the smallest numbers.100
95
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
96
Government of Timor-Leste, Strategic development plan, section 4, 2011.
97
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011.
98
Government of Timor-Leste, Strategic development plan, section 4, 2011.
99
Government of Timor-Leste, Strategic development plan, section 4, 2011.
100
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
101
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
102
Ministry of Finance of Timor-Leste, Population and housing census, 2010; Government of Timor-Leste, Strategic development plan, section 4, 2011.
103
Government of Timor-Leste, Strategic development plan, section 4, 2011.
104
Seeds of Life, Seeds of Life rice variety brochures, 2011.
105
Seeds of Life, Seeds of Life crop calendars, 2011.
106
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
107
Government of Timor-Leste, Strategic development plan, section 4, 2011.
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Rice Typical farming practices
Rice is one of the major crops in Timor-Leste for which farmers use more progressive farming techniques. The Ministry of Agriculture and Fisheries (MAF) and Seeds of Life (SoL) are active in providing improved seeds to the farmers. Seed varieties available to farmers are Membramo, Nakroman, IR 64 and IR 36 (the latter are rice varieties developed by the International Rice Research Institute). In 2010, MAF and SoL distributed 50 MT of the Nakroman variety to farmers. MAF and SoL seeds are produced by formal seed groups set up by these two organizations and meet only 22% of the total demand for rice seed. The remaining demand needs to be imported if farmers are to improve yields through use of better seeds. Some rice retained for seed does get consumed during the hungry season. Also, there is loss due to weevils and other problems related to poor storage.108 In order to resolve storage issues, the government has given out up to 5,000 storage silos; however, their present condition is unknown.109 In terms of fertiliser, MAF promotes the use of urea, NPK (nitrogen, phosphorus and potassium) and TSP (triple super phosphate). In 2011, MAF distributed 76 MT of urea, NPK, potassium chloride and TSP; in 2012, they distributed 253 MT, covering all 13 districts.110 MAF is not active in the distribution of other inputs such as herbicides or pesticides, yet there is significant demand amongst farmers for these inputs. Pests and weeds are big problems in cultivation, compounded by the high cost of labour for land clearing and preparation. Only 31% and 25% of farmers reported using pesticides and herbicides, respectively, with most other farmers reporting that they would like to have such inputs.111 Farmers are still using basic techniques such as seed broadcasting and overuse of seeds to compensate for germination problems. They are not mindful of spacing and weeding times and not well versed in pest control. Irrigation schemes are not functional in many areas. The majority of the irrigated plots found in the country are used to cultivate rice. There is significant use of available agricultural mechanisation tools such as hand tractors and tractors. Between 2007 and 2009, the government imported 2,491 hand tractors and 351 tractors to aid in land preparation for rice farmers.112 Although mechanisation is available, access is restricted to farmer groups. Farmers who are not part of a farmer group either do not have access to the machines or pay high prices for their use. Rice plots are usually monocultures with no intercropping. Rice cultivation is very labour intensive, with the major steps being land preparation (including terrace building and boundary repair), transplanting, weeding and harvesting. Transplanting is usually done by village children, who are paid much less than adults for a day of work. Land preparation requires manual labour as well as mechanised inputs. During harvest times, rain and other weather conditions can wreak havoc. To make matters worse, as farmers only harvest once, the grains that become ready earlier are usually wasted.113
Estimated cost of production and sales value
The total cost of production for rice was observed by MDF to be about $544/ha with labour, processing, land preparation by tractor and transport as the major cost drivers. The average cost of labour was observed to be $303/ha for the entire season. The average sales price was $0.83 per kg, compared to the 2013 average market price of imported rice of $0.48 per kg.114 High labour costs and low yields drive the price of rice too high to be competitive with the international market. The government also has a price subsidy on imported rice and has imported significant amounts from Vietnam for market adjustment and humanitarian purposes. Since 2007, an estimated 306,000 MT of rice has been imported at an average price of $505 per MT115 and sold at subsidized rates. Thus, although local rice is preferred, its price puts it well out of reach of the average household in Timor-Leste. Poorer households often rely on imported rice during the hungry season.116
Evaluation of farming practices
Productivity in rice cultivation is low, mainly due to prevalent practices. The major constraints in cultivation are availability and use of good seeds, fertilisers and other inputs, as well as the price of labour. Rice cultivation in Timor-Leste can, in principle, only be competitive with world market imports where farmers are able to achieve high yields and at the same time invest in mechanisation to reduce costs.
Availability of support services
There are 376 government extension workers and six extension centres in Timor-Leste, but they are not evenly spread out across the country. Farmer associations exist, but they are not crop specific. Overall, there is poor availability of support services in the form of input sales, agricultural extension or agricultural mechanisation.117
108
Seeds of Life, Seeds of Life technical advisory report, 2011.
109
Government of Timor-Leste, Strategic development plan, 2011.
110
Market Development Facility interviews with Ministry of Agriculture and Fisheries, June 2013.
111
Market Development Facility interviews with farmers in Ermera, Bobonaro, Aileu, Ainaro, Manufahi, Viqueque, Cova-Lima and Baucau, February–May 2013. Nesbitt, Harry et al., “Household food insecurity in Timor-Leste,” Food Security: The Science, Sociology and Economics of Food Production and Access to Food, vol. 5, no. 1, 2013. 112
113
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
114
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
115
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
Nesbitt, Harry et al., “Household food insecurity in Timor-Leste,” Food Security: The Science, Sociology and Economics of Food Production and Access to Food, vol. 5, no. 1, 2013. 116
117
Market Development Facility interviews with Ministry of Agriculture and Fisheries, May 2013.
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Rice Market access
The trading system is the same as for maize, with virtually no specialised rice wholesalers. Only millers are specialised in rice. The government has been the major buyer of rice in recent years through the Povu Kuda Governo Sosa program. Annual purchases of local rice by the program have been as follows: 2009, 3,910 MT; 2010, 1,092 MT; 2011, 58 MT; 2013, 1,000 MT (planned and budgeted). Apart from government purchases, several companies purchase imported rice from Vietnam. Out of the total amount of imported rice, 85% is meant for the public markets, while the rest is put into government buffer stocks or humanitarian activities. Imports of rice have been as follows: 2007, 78,000 MT; 2008, 96,000 MT; 2010, 30,000 MT; 2011, 54,224 MT; 2012, 47,739 MT.118 As is true of maize, suco-to-suco and inter-district trade are minimal. Sales amongst neighbours are usually at distress prices with the buyer, who most likely has run out of the annual food stocks, having to pay very high prices. Farmers also retail milled rice to raise cash for school, hospital visits and other costs.119
Major developments in the last 10 years
The government has made significant investments in agricultural machinery such as milling machines, tractors and hand tractors and has distributed improved seeds and fertiliser. However, the amounts are insufficient and erratic and have a highly distortionary effect on the input market for rice. Exacerbating the situation further are the high price expectations amongst farmers (due partially to the artificially high prices paid by the government and partially to their high production costs and low outputs), which makes local rice an undesirable product for local traders. The production area is increasing by 7% yearly and total production by 31%, especially since 2008/2009, when the government distributed improved seed varieties.120 This suggests that farmers are increasingly exposed to modern rice cultivation techniques. However the lack of buyers other than the government could prove to be a big disincentive for farmers to keep up the high levels of investment needed to improve rice yields. Apart from the use of seeds, there is a definite demand for pesticides and herbicides. Pests account for major losses to harvests and even some crop failures. As the government does not distribute pesticides, there is a space for private enterprises to fill this gap. The demand for herbicides (commonly known as Round Up after the popular herbicide brand) is even more straightforward, as their use would help farmers counteract the high cost of labour.
Growth opportunities
Rice is the preferred staple food for most of Timor-Leste, and demand is expected to grow as the population grows and per capita consumption increases to meet recommended amounts. However, as long as import subsidies are in place and the cost of local production is high, as is expected to remain the case in the short to medium term, local rice will not be competitive with imports. Access to inputs and machinery will help farmers improve household self-sufficiency in rice, which will also boost intradistrict (and perhaps inter-district) trade, as more small amounts of surplus are traded and more highly valued indigenous rice can find its way onto the market. It may be possible for a small group of very commercially oriented farmers to become intensive, competitive, semimechanised rice farmers.
Cassava Cassava is grown by about 76% of farming households in Timor-Leste.121 It serves as a food bank, used especially when the other staples such as maize and rice are in short supply. Cassava is intercropped in the fields or around the house. Both the roots and leaves are consumed. Cassava can play a prominent role in improving food security in the country. Commercial applications are limited, but cassava could contribute to the animal feed industry, especially for households or commercial pig farms.
118
Government of Timor-Leste, Budget 2013; Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011; Customs Department of TimorLeste, Customs data, 2011/2012. 119
Market Development Facility interviews with farmers in Ermera, Bobonaro, Aileu, Ainaro, Manufahi, Viqueque, Cova-Lima and Baucau, February to May 2013. 120
Government of Timor-Leste, Strategic development plan, section 4, 2011.
121
Government of Timor-Leste, Strategic development plan, section 4, 2011.
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Table 11: Key cultivation and marketing aspects of cassava Cassava Total production
37,319 MT122
Total area under cultivation
10,757 ha123
Estimated number of households involved
94,833124
Main production areas
Cassava is cultivated nationwide; the major production areas are Baucau, Oecusse, Cova Lima and Bobonaro.125
Typical plot sizes
The national average plot size per farmer is approximately 0.13 ha. Oecusse has the largest average plot size (0.6 ha), and Ermera has the smallest (0.04 ha).126
Current yields
The national average yield is 3.47 MT/ha. Manufahi has the highest average yield (4 MT/ha), and Ainaro has the lowest (2.7 MT/ha).127
Achievable yields
Seeds of Life 3 test plots have achieved yields as high as 33 MT/ha128
Crop calendar
Cassava cuttings are planted between October and December and are harvested between August and October.129
Crop use
Cassava is usually planted with other food crops such as potatoes, sweet potatoes and beans, which can reduce the risk of food insecurity and ensure food availability throughout the year.130 Cassava normally is consumed as other staple food supplies, such as rice and maize, are depleted. Cassava leaves are consumed as vegetables throughout the year. Additionally, cassava tubers are fed to household animals such as pigs.131
Typical farming practices
Post-independence cultivation practices are marked by the use of inferior planting materials due to the large-scale disruption of agricultural activities in preceding years. Although large amounts of cuttings were imported from other countries in time for the 2000 planting season, many of these were of poor quality or were varieties not well adapted to local soil and climatic conditions.132 Since then, the Australian Centre for International Agricultural Research, through SoL, has introduced highyielding varieties in Timor-Leste. Cassava is often planted on inland fields and is dependent on rains. Cultivation practices are basic, but for a crop like cassava this is less of an issue than for rice or maize. Subsistence farmers grow cassava traditionally without proper land preparation. However, many farmers in lowland areas now use tractors or hand tractors to prepare their land prior to cassava cultivation.133
Typical cost of production and sales value
Cultivation costs range from $20/ha to $80/ha, mainly for labour, fuel for the tractor and a fee for the operator. Farmers often do no further work in cassava fields between cultivation and harvest. Production costs for cassava are about $0.05/kg, while the sales price is $0.52/kg.134
Evaluation of farming practices
The farming system for cassava is based on shifting cultivation, with fields of inter-cropped maize and cassava, situated on steep slopes in the northern areas of the country and in more fertile areas in the south.135 Cassava cultivation is done in conjunction with a number of other crops, which reduces the area under cultivation as well as the yield per hectare. Cultivation also suffers from the use of poor-quality cuttings and the lack of inputs. Essential functions such as weeding are neglected, which causes even greater decline in yields.136 Due to a lack of storage facilities, cassava tubers are often kept in the ground until needed.
122
Government of Timor-Leste, Strategic development plan, section 4, 2011.
123
Government of Timor-Leste, Strategic development plan, section 4, 2011.
124
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
125
Government of Timor-Leste, Strategic development plan, section 4, 2011.
126
Government of Timor-Leste, Strategic development plan, section 4, 2011.
127
Government of Timor-Leste, Strategic development plan, section 4, 2011.
128
Seeds of Life, Seeds of Life cassava variety brochures, 2011.
129
Oxfam Australia, Timor-Leste food security baseline report, 2007.
130
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, 2011. 131
Market Development Facility field observations in Ermera, Baucau, Viqueque, Manufahi and Cova-Lima, 2013.
Howeler, Reinhardt H. et al., “Evaluation of cassava and bean germplasm in East Timor, agriculture—new direction for a new nation,” ACIAR proceedings no. 113, 2003. 132
133
Market Development Facility field observations in Ermera, Baucau, Viqueque, Manufahi and Cova-Lima, 2013.
134
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013; Japan International Cooperation Agency, Dili market survey, 2012. 135
Food and Agriculture Organisation, FAO and WFP crop and food supply assessment mission in Timor-Leste, 2003.
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Cassava Availability of support services
Government extension workers focus more on rice and maize. Cassava growers, the vast majority of whom live in upland areas and engage in subsistence farming, are not reachable by these services. Recently Cooperativa Café Timor (CCT) has unveiled the country’s first cassava processing plant as part of their wider coffee farmer support operations. The cassava flour processed in the facility is meant for distribution amongst CCT farmers and for export. CCT thus provides limited levels of extension support in the form of improved cuttings and cultivation knowledge.137
Market access
Most cassava is sold at the farm gate either to neighbours or, in the southern districts, to CCT. Cassava is sold as unprocessed tubers. Since the tubers are hard to preserve, an unknown quantity of cassava is lost post-harvest.138
Major developments in the last 10 years
In the food security discourse, cassava has become the alternate staple food during food shortages. Farmers currently use their own cuttings and intercropping methods, which reduce the yield significantly from best-practice levels. Since 2005, the Australian Centre for International Agriculture Research, through SoL, has introduced new, higher-yielding varieties of cassava, which are better suited to local soil types and can increase yields significantly. CCT has also unveiled the country’s first cassava processing plant, which can process tubers into flour, which has a much higher shelf life.
Growth opportunities
Through greater adoption of higher-yielding varieties and the use of inputs such as fertiliser, it is possible to boost TimorLeste’s total cassava production by 800% without increasing the production area.139 Cassava is likely to remain for most farmers a low input–low output food bank rather than a cash crop; initiatives such as CCT point towards the industrial applications of cassava. This potential can be explored further along with avenues to distribute improved planting materials.
Sweet Potatoes Sweet potatoes have the potential to be an important staple for the population of Timor-Leste, partially replacing maize and rice. The popular tuber has many uses, particularly for feeding children, and can be processed into a number of products such as chips, crackers and mash. Table 12: Key cultivation and marketing aspects of sweet potatoes Sweet potatoes Total production
11,902 MT/year140
Total area under cultivation
4,807 ha141
Estimated number of households involved
78,468142
Main production areas
Sweet potatoes are cultivated nationwide. The major production areas are Baucau, Viqueque, Ermera and Bobonaro.143
Typical plot sizes
The nationwide average plot size for sweet potatoes is 0.06 ha per household.144
Current yields
The national average yield is 2.48 MT/ha. Sweet potatoes are also intercropped with maize, beans and cassava. The highest yield is in Baucau (3.10 MT/ha), and the lowest is in Liquica (2 MT/ha).145
Achievable yields
Best-practice yields for sweet potatoes are 12.70 MT/ha with use of improved seeds and other inputs such as fertilizer and pesticides.146
136
Market Development Facility field observations in Ermera, Baucau, Viqueque, Manufahi and Cova-Lima, 2013.
137
Market Development Facility interviews with Bency Isaacs, CCT, May 2013.
138
Market Development Facility interviews with Bency Isaacs, CCT, May 2013.
139
Seeds of Life, Seeds of Life cassava varieties brochure, 2011.
140
Government of Timor-Leste, Strategic development plan, section 4, 2011.
141
Government of Timor-Leste, Strategic development plan, section 4, 2011.
142
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
143
Government of Timor-Leste, Strategic development plan, section 4, 2011.
144
Government of Timor-Leste, Strategic development plan, section 4, 2011; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
145
Government of Timor-Leste, Strategic development plan, section 4, 2011.
146
Seeds of Life, Seeds of Life sweet potato variety brochures, 2011.
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Sweet potatoes Crop calendar
The main sweet potato season is the wet season, with planting done in November and December and harvesting in May and June. In the southern parts of the island, there could be two seasons, with the second season starting in July and ending in September.147
Crop use
Sweet potato is not only used as an alternate household staple but also as feed for household animals such as pigs. The surplus, if any, is sold in suco, sub-district or district markets. Sweet potatoes are sold in bunches as well as in cans and bags.
Typical farming practices
Cuttings are planted directly into the soil. In Timor-Leste sweet potatoes are rarely grown as a monocrop. Dominant intercropping patterns are maize and sweet potatoes or maize, cassava and sweet potatoes. None of these three crops return any nutrients to the soil, which leads to decline in soil fertility. Intensive intercropping also leads to lower than potential sweet potato yields. The local varieties, mean (red) and mutin (white), are the most popular, grown by 69% and 67% of sweet potato farmers, respectively. For both the mean and mutin varieties, 90% of the cuttings come from the farmers themselves.148 The main reason farmers select local sweet potato varieties is that they are well suited for the local climate. Chemical fertilisers are not available to most subsistence farmers, and they are not widely used in the majority of traditional cropping systems, including sweet potatoes.
Typical cost of production and sales value
The major cost for sweet potato cultivation is labour ($40–$50/ha) and tractor services ($80/ha). There are no other costs involved, as farmers do not use any other inputs. This cost structure puts the production cost at $0.05/kg, considering current average yields in Timor-Leste.
Evaluation of farming practices
Sweet potato productivity is low, mainly due to the low use of inputs such as good cuttings, fertiliser, pesticides and herbicides. Intercropping also leads to lower yields.
Availability of support services
Apart from some SoL test plots, there are no public or private extension services for sweet potato farmers. This is one of the main reasons that sweet potato productivity is far below its potential.
Market access
Most sales are at the farm gate or suco or sub-district markets. There is very limited inter-district trade in sweet potatoes, with no observed wholesalers. Sweet potatoes are not part of the government’s buy-back program.
Major developments in the last 10 years
Timor-Leste has experienced advances of sweet potato farming in the last 10 years. SoL significantly supported the Ministry of Agriculture and Fisheries with the program focusing on the production and distribution of more productive cuttings of sweet potato cultivated by farming families in Timor-Leste. The program’s objective is to improve food security by increasing the productivity of staple crops such as sweet potatoes, corn, rice, peanuts and cassava. The newly introduced sweet potato cultivars have yield advantages of 23–80% over traditional varieties.149
Growth opportunities
Similar to cassava, sweet potatoes are likely to remain for most farmers a low input–low output food bank rather than a cash crop. Commercial applications can be explored further and, through such channels, improved planting material may be distributed.
Supplementary foods Soybeans Soybeans are a much less common crop than the other crops discussed so far, but they have substantial potential to provide cheaper protein in the form of tofu and tempeh, both popular food items in TimorLeste. Soybeans also provide cheaper protein to the animal food market for commercial and household animal husbandry operations.
147
Seeds of Life, Seeds of Life crop calendars for Vemasse and Gari Uai, 2011.
148
Seeds of Life, Seeds of Life 3 baseline report, 2011.
149
Seeds of Life, Seeds of Life 3 baseline report, 2011.
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Table 13: Key cultivation and marketing aspects of soybeans Soybeans Total production
1,818 MT/year150
Total area under cultivation
1,532 ha151
Estimated number of households involved
No official figures are available as soybeans are not listed in the National Agricultural Sample Survey of 2007–2008 as a commonly cultivated crop.
Main production areas
The top areas for soybean cultivation are Viqueque (762 ha), Bobonaro (242 ha) and Aileu (115 ha), which account for 72% of the area for soybean cultivation. Soy is less prevalent than other crops, mainly due to lack of cultivation knowledge and good seeds. Soybean seeds are difficult to preserve (average life expectancy of soybean seeds is three months); improper storage can result in crop failure. Farmers are also unclear about potential markets for the crop. Difficulties with sourcing inputs and cultivation deter more widespread cultivation.
Typical plot sizes
This information is not available for soybeans.
Current yields
The national average yield is 0.9 MT/ha, ranging from 0.7 to 1.0 MT/ha.152
Achievable yields
Best-practice yields for soybeans are 2.5–3.0 MT/ha.153
Crop calendar
Normally soybeans are planted after the maize harvest, in June, and harvested in October. This is primarily a oneseason crop.154
Crop use
There are wholesalers and processors who aggregate supply for tofu production. However, due to quality problems with local soybeans, they rely increasingly on imports. Poor quality is the main complaint about local soybeans; producers have been known to harvest soybeans earlier than is appropriate, which makes processing them into tofu or tempeh difficult as the end product turns bitter. Soybeans are also used for household consumption.155
Typical farming practices
Soybean farming is very basic with no use of inputs such as fertiliser, paid labour, pesticides or herbicides, resulting in very low yields. It is not intercropped. Cultivation can be classified as organic.156
Typical cost of production and sales value
Cost for land preparation by tractor is $25/ha. Planting, weeding, harvesting and post-harvest handling are done by family members; there are no costs involved. Transportation to market costs $1 per 25 kg bag.157 The price of soybeans is $0.50/kg.158
Evaluation of farming practices
Current farming practices are basic at best with low usage of inputs and low levels of awareness about soy cultivation leads to poorly productive farms. There are also concerns around harvesting, specifically times, which leads to the harvesting and marketing of poor quality beans.
Availability of support services
The few tofu processors in Timor-Leste are mostly based in Baucau or Dili.
Market access
Most sales occur in suco or sub-district markets; there is very limited inter-district trade. Aggregators and wholesalers then sell to processors who make tofu and tempeh products. Soybeans were part of the government’s buy-back program. Imports in previous years were as follows: 2010, 845,343 kg; 2011, 1,172,008 kg ($141,080.00 value); 2012, 887,699 kg ($152,810.00 value).
150
Government of Timor-Leste, Strategic development plan, section 4, 2011.
151
Government of Timor-Leste, Strategic development plan, section 4, 2011.
152
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, 2011. 153
AGRINA, Agribiz Indonesia, 2011.
154
Seeds of Life, Climate change and population growth in Timor-Leste: implications on food security, 2012.
155
Market Development Facility interview with Haburas Tempeh, Baucau, March 2013.
156
Market Development Facility interviews with farmers in Baucau and Viqueque, March and June 2013.
157
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
158
Market Development Facility interview with Mr Tomas in Baucau, February 2013.
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Soybeans Major developments in the last 10 years
In 2003/2004, local consumption of soybeans was 840 MT and local production was 102 MT; the balance was imported. Since that time, soybean production has grown to more than 1,800 MT per year. Current imports are 888 MT. The gap indicates that there is a sizeable demand for soybeans, which could be met by greater and more efficient local production.159
Growth opportunities
Backward linkages could be developed between soybean processors (for tofu, tempeh or other products) and farming communities to resolve quality problems and ensure a consistent supply. If soybean processors are too small to handle this themselves, perhaps local wholesalers and aggregators can become involved.
Mung Beans Mung beans are traditional export items, with Indonesia the major export destination. Before independence, the trade structure involved many Indonesian traders who aggregated mung beans for export. Since independence, trade has continued but at a much smaller scale. There is a good potential for increasing exports of mung beans to Indonesia as the demand for beans, especially for the growing Indonesian infant food industry, is increasing. Apart from exports, there is significant space for replacing imported mung beans currently used in nutrition security programs by the government and development agencies with locally grown beans. Currently, the limits on inter-district trade discussed above make local sourcing of high-quality mung beans difficult. Table 14: Key cultivation and marketing aspects of mung beans Mung beans Total production
2,193 MT/year160
Total area under cultivation
2,217 ha161
Estimated number of households involved
There are no official figures available, as mung beans are not listed in the National Agricultural Sample Survey of 2007–2008 as a common crop.
Main production areas
The top areas for mung bean cultivation are Viqueque (875 ha), Cova Lima (456 ha) and Bobonaro (447 ha), which account for 61% of the area available to mung bean cultivation.
Typical plot sizes
This information is not available for mung beans.
Current yields
The national average yield is 0.8 MT/ha; yields range from 0.6 to 0.9 MT/ha. Plots are seldom dedicated solely to mung beans.162
Achievable yields
Best-practice yields for mung beans are 2 MT/ha.163
Crop calendar
Mung beans are normally planted after the maize harvest, in June, and harvested in October. This is primarily a one-season crop.
Crop use
Mung beans are mainly grown for home consumption. The other major use is by the government and development agencies for the school nutrition and other nutrition security programs.
Typical farming practices
Mung beans are often intercropped with maize, cassava, peanuts or sweet potatoes, which leads to lower yields. In some cases, mung beans are cultivated on steep slopes that are unsuitable for other crops.164 Mung bean farming is very basic, with little or no use of inputs such as fertiliser, paid labour, pesticides or herbicides. It can be classified as organic cultivation.165
159
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
160
Government of Timor-Leste, Strategic development plan, section 4, 2011.
161
Government of Timor-Leste, Strategic development plan, section 4, 2011.
162
Timor-Leste National Directorate for Agriculture, National agriculture sample survey, 2008.
163
Hughes, J. A. et al., Counting on beans—mung bean improvement in Asia, World Vegetable Centre, 2008.
164
Seeds of Life, Climate change and population growth in Timor-Leste: implications on food security, 2012.
165
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
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Mung beans Typical cost of production and sales value
The cost of land preparation by tractor is $25/ha. Planting, weeding and harvesting are done by family members at no cost. Transportation to market costs $1 per 25 kg bag. Milling and shelling cost $1 per 25 kg bag.166
Evaluation of farming practices
Intercropping and lack of inputs lead to lower than potential yields.
Availability of support services
There are 376 government extension workers and six extension centres in Timor-Leste, but they are not evenly spread out across the country. Farmer associations exist, but they are not crop specific. Overall, there is poor availability of support services in the form of input sales, agricultural extension or agricultural mechanisation.167 That being said, there is little support from these extension officers or others on mung beans.
Market access
Most sales occur in suco or sub-district markets. Currently, mung beans are imported for programs such as the school nutrition effort, whereas they used to be exported to Indonesia, amounting to 464 MT in the years between 2005 and 2010. Imports amounted to 625,736 kg ($53,704 value) in 2011 and 38,025 kg ($7,331 value) in 2012.168
Major developments in the last 10 years
Mung beans have been grown primarily for household consumption. MDF primary data indicate that growers have been dedicating less land to this crop. This could be attributed to the overall decline in the number of traders involved in mung bean exports to Indonesia. Practice remains essentially the same, with no changes in behaviours that have improved yield. Mung beans are not a big part of the local diet.
Growth opportunities
There are clear market opportunities for mung beans, as an ingredient in supplementary food programs and most likely in the Indonesian market. Farmers could be encouraged to get back into mung bean cultivation by reconnecting producers to buyers, both domestic and international.
Peanuts Peanuts are one of Timor-Leste’s major traditional agricultural exports, especially to Indonesia. They are highly nutritious and thus have nutrition security benefits for the country. Peanuts are also suited for commercial processing into products such as peanut butter, peanut crackers and peanut oil. Table 15: Key cultivation and marketing aspects of peanuts Peanuts Total production
4,364 MT/year169
Total area under cultivation
3,255 ha170
Estimated number of households involved
12,423171
Main production areas
Peanuts are grown widely across the country in small amounts; the major production areas are in Baucau and Viqueque.
Typical plot size
Nationwide average plot size for peanuts is 0.26 ha per household.172
Current yields
The national average yield is 1.34 MT/ha. The highest yield (2.60 MT/ha) is in Viqueque, and the lowest is in Liquica (0.91 MT/ha).173
166
Market Development Facility interviews with farmers in Manufahi, Ainaro, Cova-Lima and Viqueque, May 2013.
167
Market Development Facility interviews with Ministry of Agriculture and Fisheries, May 2013.
168
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
169
Government of Timor-Leste, Strategic development plan, section 4, 2011.
170
Government of Timor-Leste, Strategic development plan, section 4, 2011.
171
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
172
Government of Timor-Leste, Strategic development plan, section 4, 2011; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
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Peanuts Achievable yields
Best-practice yields for peanuts are 1.8 MT/ha, provided improved seeds and other inputs such as fertiliser and pesticides are used.174
Crop calendar
The major season for peanuts is the wet season, with planting in November and December and harvesting starting in April. In some parts of the country, there are two rainy seasons, creating two seasons for peanuts; the second season starts in May and ends in July.175
Crop use
Peanuts are a supplement to the household diet, usually roasted, boiled or fried. The surplus is sold in suco, sub-district or district markets. Nuts are sold in their husks or as kernels.
Typical farming practices
Peanut farming does not use inputs such as fertiliser, paid labour, pesticides or herbicides. Under the SoL program, new groundnut cultivars were introduced in 2000–2002. Peanuts are grown in small quantities with little investment, which results in low yields.
Typical cost of production and sales value
Information is not available.
Evaluation of farming practices
Peanut productivity is low due to lack of inputs and extension services.
Availability of support services
There are no public or private extension services for peanut cultivation.
Market access
Peanuts are aggregated and exported by a very small number of enterprises concentrated in Baucau. Low productivity has resulted in an undersupply of the export markets and dwindling export volumes. The government buy-back program has become the main buyer of peanuts in recent years. The amount and price paid for peanuts in fiscal year 2009/2010 was 19,313 kg at $18,347 ($0.95/kg, compared to $0.53/kg on the international market).176 The current government budget states that the buy-back program will include the purchase of 25 MT of peanuts.
Major developments in the last 10 years
The SoL program, in conjunction with the Ministry of Agriculture and Fisheries, has tested and introduced a new variety called Utamua, which gives a 50% higher yield than the local variety. Since 2005 Timor-Leste has exported, mainly to Indonesia, a total of 158,989 kg. The yearly breakdown is as follows: 2005, 65,274 kg; 2006, 12,500 kg; 2007, 20,640 kg; 2008, 25,201 kg; 2009, no exports; 2010, 35,374 kg.177 No peanut exports have been recorded since 2010. However, this does not necessarily mean all exports have stopped, as informal cross-border trading to West Timor does occur and often goes undocumented.
Growth opportunities
Linking exporters to production centres for peanuts is a key growth opportunity. Information on quality input use, quality control and effective post-harvest handling could be disseminated to producers through these linkages. Linking local food processors to peanut producers would also be a way to promote local peanut processing for the consumer food market.
Fresh foods Vegetables The soil conditions and topography of Timor-Leste do not allow for extensive vegetable cultivation across the country. The major vegetables grown are greens (such as mustard greens, kang kong and pumpkin leaves). The most productive vegetable farms are found in the central parts of the country in the districts of Aileu and Ainaro. Increased usage of better quality seeds and other inputs could boost the total production of vegetables significantly. Vegetables are also grown in home gardens for household consumption. Improving vegetable cultivation practices could have a significant impact on the nutrition security of the entire country, especially for children and lactating mothers.
173
Government of Timor-Leste, Strategic development plan, section 4, 2011.
174
Seeds of Life, Seeds of Life peanut variety brochures, 2011.
175
Seeds of Life, Seeds of Life crop calendars for Vemasse and Gari Uai, 2011.
176
Ministry of Tourism, Commerce and Industries, MTCI statistics, 2011; United States Department of Agriculture, Peanuts price lists, 2010.
177
Ministry of Tourism, Commerce and Industries, MTCI statistics, 2011.
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Table 16: Key cultivation and marketing aspects of vegetables Vegetables Total production
15,672 MT/year178
Total area under cultivation
As of 2007, 2,121.8 ha—carrots, 89.0 ha; onions, 414.9 ha; garlic, 325.7 ha; cabbage, 354.6 ha; pumpkins, 225.2 ha; mustard, 416.2 ha; kang kung, 129.8 ha; tomatoes, 91.5 ha; chilli, 74.9 ha
Estimated number of households involved
78,605179
Main production areas
While vegetables are cultivated in variable intensities across the country, the major production areas by number of households involved are Ermera (14,686), Viqueque (10,662) and Ainaro (9,735).
Typical plot sizes
The national average size of intensive vegetable plots is 0.9 ha. Home gardens are typically between 0.25 and 0.5 ha and are found around most rural dwellings, sometimes surrounded by fruit trees.180
Current yields
Typical yields of the major vegetables are as follows: carrots, 72 kg/ha; cabbage, 81 kg/ha; pumpkins, 63 kg/ha; onions, 29 kg/ha; garlic, 23 kg/ha; mustard, 66 kg/ha; kang kong, 37 kg/ha; tomatoes, 1.8 MT/ha; chilli, 3.5 MT/ha.181
Achievable yields
Yields for vegetables could be two to three times higher than typical current yields if modern farming techniques and higher-quality inputs such as seeds, fertilisers and pesticides were used.182
Crop calendar
Vegetables can be grown throughout the year, subject to water availability. However, excessive rains can be detrimental to vegetable production, leading to lower supply to markets during the rainy season.183
Crop use
About 60% of farmers sell some vegetables to sub-district, district or Dili markets or to wholesalers. Lack of transportation and cost of transportation result in lack of access to major markets (e.g., Dili), the main reason most farmers sell in local and district markets.184
Typical farming practices
There are two main types of vegetable farming in Timor-Leste: low-input homestead farming of mixed vegetables on very small plots, and larger-scale farming by people with capital and access to better inputs. A much smaller group of farmers have been introduced to high-value crops as part of the USAID project Dezenvolve SetĂłr Privadu (Private Sector Development). The vegetable varieties, chosen for their high demand in Dili markets, include Chinese cabbage, kale, cauliflower, Japanese cucumber, purple eggplant, tomatoes, carrots and Italian parsley. Only participant farmers are able to access seeds for these vegetables.185
Typical cost of production and sales value
Most vegetable farmers employ family labour and do not use any inputs apart from seeds that they retained from prior harvests. The market prices of major vegetables are as follows: spinach, $0.75/kg; carrots, $1.50/kg; tomatoes, $1.70/kg; mustard, $0.70/kg; cabbage, $0.75/kg; paw paw flowers, $2.00/kg.186
Evaluation of farming practices
Horticulture in Timor-Leste is characterised by low input use, low productivity and poor quality. Farmers face high marketing costs, lack of access to markets and low prices. Most horticulture markets are supplied by nearby areas, as it is very difficult to transport produce over long distances. One of the main reasons for low productivity is the low use of inputs. This is due to the low purchasing power of farm households. Most farmers still rely on traditional seeds; good (certified) seeds and inorganic fertilisers are not readily available.187 Market access is further hampered by the low levels of exposure of farmers to markets. Thus traders hold an advantage over farmers in terms of sourcing at low prices at the farm gate.
Availability of support services
There are no public extension services available for vegetable farmers. Some private extension services are present through contract farming systems organised by Kmanek and other Dili-based supermarkets as well as by larger farms, such as the Vegetable Farm in Baucau, which supplies Dili and Baucau markets.
178
Ministry of Finance of Timor-Leste, Timor-Leste in figures, 2011.
179
Ministry of Finance of Timor-Leste, Population and housing census, 2010.
180
Curtin University, Vegetable study, 2011.
181
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, 2011. 182
Curtin University, Vegetable study, 2011.
183
Market Development Facility interviews with market traders in Hari Laran, Dili, February 2013.
184
Curtin University, Vegetable study, 2011.
185
Curtin University, Vegetable study, 2011.
186
Japan International Cooperation Agency, Dili market survey, 2011.
187
Curtin University, Vegetable study, 2011.
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Vegetables Market access
Several players are involved in the supply chain for horticultural products, such as sub-district- and district-level traders who aggregate products from farmers and sell them to markets in Dili and other major cities such as Baucau and Maliana. Zero Star is one of the few private businesses dealing with vegetable products that have a cool-chain system in place.188 In some cases, farmers sell directly to Dili markets where vegetables go through retailers to consumers.189
Major developments in the last 10 years
A significant aspect of the food and nutrition insecurity that plagues Timor-Leste is the gap between recommended and existing levels of vegetable consumption. Currently, the most common vegetables consumed are greens, which are less nutritious than other vegetables such as pumpkins, carrots and cabbage. Although there has not been any observable state-level push to increase vegetable production, development programs such as Dezenvolve Setór Privadu and Developing Agriculture Communities have highlighted the potential for vegetable cultivation.
Growth opportunities
Greater use of inputs could be promoted to producers with good connections to major vegetable markets. Markets with unmet demand for vegetables could provide an incentive to producers to invest more and boost production. Backward linkages could be developed between market traders and other actors, such caterers, restaurants and production centres. Working with traders and aggregators on refining preservation and storage techniques (e.g., using plastic crates) to reduce wastage during transport and allow for longer shelf lives for vegetables from distant production centres.
Potatoes Potatoes are grown exclusively as a cash crop. Table 17: Key cultivation and marketing aspects of potatoes Potatoes Total production
1,922 MT/year190
Total area under cultivation
766 ha191
Estimated number of households involved
No official figures are available, as potatoes are not listed in the National Agricultural Sample Survey of 2007–2008 as a common crop.
Main production areas
The top areas for potato cultivation are Aileu (215 ha), Manufahi (119 ha), Viqueque (115 ha) and Baucau (93 ha), which account for 71% of the area available for potato cultivation.192
Typical plot sizes
No official figures are available, as potatoes are not listed in the National Agricultural Sample Survey of 2007–2008 as a common crop.
Current yields
The national average yield is 2.49 MT/ha. Yields range from 2.2 to 3.0 MT/ha; the average yield for the four districts with the largest production area is 2.5 Mt/ha. Plots are seldom dedicated solely to potatoes, which leads to far lower yields. Production totals for the largest four areas of production are as follows: Aileu, 538 MT; Viqueque, 288 MT; Manufahi, 286 MT; Baucau, 242 MT. The highest yield (3.0 MT/ha) is in Lautem, and the lowest is in Aileu (2.20 MT/ha).193
Achievable yields
Best-practice yields for potato in Southeast Asia are 18.32 MT/ha.194
Crop calendar
Potatoes are grown in the wet season, with planting in November and December and harvesting in May and June.
Crop use
Potatoes are mainly cultivated as a cash crop intended for sale in markets.195
188
Market Development Facility interview with Zero Star proprietor, April 2013.
189
Curtin University, Vegetable study, 2011.
190
Government of Timor-Leste, Strategic development plan, section 4, 2011.
191
Government of Timor-Leste, Strategic development plan, section 4, 2011.
192
Government of Timor-Leste, Strategic development plan, 2011.
193
Government of Timor-Leste, Strategic development plan, section 4, 2011.
194
Irfansyah et al., Potato systems in West Java, Indonesia, International Potato Centre, 1999.
195
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, 2011.
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Potatoes Typical farming practices
Potato farming is very basic, with no use of inputs such as fertiliser, paid labour, pesticides or herbicides. According to MDF research, growers use their own saved seed potatoes, as there is no market source for high-quality seed potatoes.
Typical cost of production and sales value
This information is not available.
Evaluation of farming practices
Low use of inputs results in low yields.
Availability of support services
There are 376 government extension workers and six extension centres in Timor-Leste, but they are not evenly spread out across the country. Farmer associations exist, but they are not crop specific. Overall, there is poor availability of support services in the form of input sales, agricultural extension or agricultural mechanisation.196 However, there has not been significant involvement from these services on the potato crop.
Market access
Most local demand for potatoes is satisfied by imports from Indonesia, mainly through importers in Dili. Recent import figures are as follows: 2005, 135 MT; 2006, 118 MT; 2007, 165 MT; 2008, 404 MT; 2009, 773 MT; 2010, 1,149 MT; 2011, 6,595 MT; 2012, 47 MT.197
Major developments in the last 10 years
Potatoes have been supplied primarily by imports, and this trend is unlikely to change as there is little interest in the government in encouraging local production of potatoes. However, a private sector initiative targeting introduction of local potatoes to local markets could help reverse the trend.
Growth opportunities
Backward linkages could be established between potato importers and local producers in the major potato growing areas, to supplant imported potatoes with local varieties. Work with input companies to provide quality inputs to increase potato yields, especially in the major potato growing areas. As the areas of greatest potato cultivation are located in the vicinity of Dili, there is the possibility of growers in those areas supplying urban markets.
Export commodities Exported agricultural commodities include coffee, candlenuts and teak. Information on products other than coffee is difficult to aggregate, as the volumes are very low and trade is often unregulated. As opportunities to engage these other export commodities arise, MDF will collect similar data on them to aid in interventions.
Coffee Coffee is the major commercial crop in Timor-Leste as well as the leading export item. Several coffee companies are involved in the trading of coffee, which involves about 22,500 coffee farmers, located across the country but mostly concentrated in the western districts. Coffee is mostly exported as green beans, but processing (roasting and grinding) does take place in country to supply markets in Dili. Potential exists to expand the supply of local coffee to local markets, especially to supplement instant coffee imported from Indonesia. As global coffee demand rises, exports can be expanded further by improving productivity. Table 18: Key cultivation and marketing aspects of coffee Coffee
196
Market Development Facility interviews with Ministry of Agriculture and Fisheries, May 2013.
197
Ministry of Trade, Commerce and Industry of Timor-Leste, MTCI statistics, 2011; Customs Department of Timor-Leste, Customs data, 2011/2012.
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Coffee Total production
12,500 MT/year198
Total area under cultivation
52,000 ha199
Estimated number of households involved
66,700200
Main production areas
The main coffee production areas are Aileu (1,134 ha), Ainaro (5,024ha), Bobonaro (2,540 ha), Ermera (32,400 ha), Liquica (6,750 ha) and Manufahi (18,200 ha).201
Typical plot size
1–2 ha202
Current yield
800 kg/ha203
Achievable yield
Estimates by industry experts in CCT and other coffee companies suggest that production of coffee cherries could be boosted up to five times the current yield through pruning and rehabilitation. However, estimates of best-practice yields vary greatly.
Crop calendar
Coffee is harvested between March and August.
Crop use
Coffee is the most important commercial crop in the country.
Typical farming practices
Timor-Leste's coffee producers function as gatherers rather than growers, as they generally do not make a significant effort to tend to their coffee bushes, limiting that effort largely to clearing the land around the bushes to allow them access for the next harvest. Cultivation practices do not involve much pruning, rehabilitation of shade trees or replanting or use of any inputs. Plantations are old and badly maintained; most plants were planted during the Portuguese era. CCT is the major driving force behind current replanting activities, with about a million seedlings distributed for free each year to CCT farmers.204 Organic cultivation is actively promoted by CCT due to their end market (Starbucks) as well as by other players in the industry such as Timor Global and Timor Corp. Most growers harvest and sell coffee cherries directly to industry processors; others who do not have that access collect, process and sell their products in the sucos, sub-districts, districts and Dili. Farmers generally receive a low price due to poor quality, owing to the lack of knowledge of coffee production techniques.205
Typical cost of production
No official figures are available on production costs for coffee farmers. Due to the low use of inputs, labour constitutes the bulk of production costs, mainly needed for land clearing and harvesting. Most labour is provided either by the farmers themselves or by their families (immediate and extended). The average producer works only 55 days a year on the coffee plantation and another 16 days on processing the harvest.206 Production costs are paid for either in cash or in kind. In-kind payments could involve sharing of harvest or payment through other crops such as maize. Harvest sharing could be as much as 50 kg for every 150 kg of cherries collected.207
198
Government of Timor-Leste, Strategic development plan, p. 129, 2011.
199
Government of Timor-Leste, Strategic development plan, 2011.
200
Ministry of Finance of Timor-Leste, Population and housing census, 2004.
201
Japan International Cooperation Agency and National Directorate for Industrial Crops and Agribusinesses, Ministry of Finance of Timor-Leste, The study on promotion of agribusiness in Timor-Leste, p. 79, 2011. 202
Oxfam Australia, Overview of the coffee sector in Timor-Leste, 2003; Market Development Facility interviews with coffee farmers in Ermera, Gleno and Letefoho, February 2013. 203
Market Development Facility interviews with coffee farmers in Ermera, Gleno and Letefoho, February 2013.
204
Market Development Facility interviews with Bency Isaacs, CCT, May 2013.
205
Market Development Facility interviews with coffee farmers in Ermera, Gleno and Letefoho, February 2013 and with Bency Isaacs, CCT, May 2013.
206
Oxfam Australia, Overview of the coffee sector in Timor-Leste, 2003.
207
Market Development Facility interviews with coffee farmers in Ermera, Gleno and Letefoho, February 2013.
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Coffee Evaluation of farming practices
Although advanced processing (from cherries to green beans) is done in country by the leading industrial processors, farming and processing practices amongst producers are still very rudimentary. Because of the plantations’ age and lack of maintenance, productivity falls far short of its potential. Most farmers prefer to sell cherries directly to companies, and the companies also prefer this. Producers do not have access to modern pulping machines and only use rudimentary traditional pulpers. Traditional machines (costing $150 apiece) are locally manufactured and produce very low-quality parchment. The slow processing rate (200 kg per day, compared with 800–1,000 kg per day for modern machines) is exacerbated by poor access to clean water. Modern machines cost $1,500 apiece, out of reach for most poor coffee producers. Due to poor processing at the farm level, leading to poor quality parchment, companies prefer to buy cherries directly from farmers so that they can better control the quality of the end product. The inability to increase yields from plantations, coupled with the inability to add value to the primary product (cherry to parchment) means producers are caught in a low quality–low price cycle. As cherries are not storable, producers’ inability to produce parchment also means that they are not able to take advantage of seasonal fluctuations in demand and supply.208
Availability of support services
Some extension services have been offered, but there has not been much uptake by farmers. Extension efforts are spearheaded by CCT, Peace Winds, the Portuguese Cooperation Agency and a few smaller NGOs. CCT is the largest provider of private extension services including seedlings, cultivation advice and cultivation tools.
Market access
A wide variety of coffee buyers and exporters are present in Timor-Leste. These include small development projects focusing on small quantities from specific producer groups (Peace Winds, Wild Timor Coffee and the Portuguese Mission), ethnic Chinese traders buying mainly parchment and exporting through Indonesia, as well as the leading processors CCT, Timor Global and Timor Corp.209
Major developments in the last 10 years
The main focus in the last 10 years has been on improving the productivity of coffee plantations through pruning, plantation rehabilitation and replanting with new coffee seedlings and shade trees. A number of ongoing programs aim to improve yields and processing for further expansion of the coffee market. The most important private-sector player in the coffee industry is CCT, with a number of smaller NGOs providing additional support.
Growth opportunities
Local processing of coffee, especially into products such as instant coffee or other coffee derivatives, could be promoted. The use of modern machines could be promoted in post-harvest processing to allow coffee farmers to add value to the primary product. Coffee farmers could be encouraged to use appropriate storage to increase their ability to capitalise on seasonal price differentials.
208
Market Development Facility interviews with coffee farmers, Peace Winds local supervisor and vice director of ETICA in Gleno and Letefoho sub-districts of Ermera, February 2013. 209
Market Development Facility interviews with coffee processors, NGO members and farmers in Ermera and Aileu, February and March 2013.
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Annex 2: Dili market demand
Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
The tables below project market demand in Dili by summarising projected population growth, recommended intakes of different food groups (basic staples, supplementary foods and fresh foods) and current consumption levels. The calculations presented in this annex serve as the basis for the gaps between recommended and current consumption shown in the Dili end market section of the main report. All projections are based on a population growth rate of 2.1% per annum. Table 19: Population growth in Dili Year Population
2004
2010
2011
2012
2013
2014
2015
2016
175,730
207,822
234,331
239,252
244,276
249,406
254,644
259,991
Sources: United Nations Population Fund, Country population assessment, 2007; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
Table 20: Recommended and current food consumption per person in Dili (kg/year) Recommended consumption Basic staples Supplementary foods
Current consumption
195
123
16.21
8.69
219
85
Fresh foods
Source: World Bank, Timor-Leste survey of living standards, 2007; Seeds of Life, Seeds of Life 3 baseline report, 2011; Harvard School of Public Health, “Vegetables and fruits: get plenty every day,” The nutrition source, www.hsph.harvard.edu/nutritionsource/vegetables-full-story.
Table 21: Recommended total food consumption for Dili (MT/year)
Basic staples Supplementary foods Fresh foods
2004
2010
2011
2012
2013
2014
2015
2016
34,267
40,525
45,695
46,654
47,634
48,634
49,655
50,698
2,848
3,368
3,798
3,877
3,959
4,042
4,127
4,213
38,485
45,513
51,318
52,396
53,496
54,620
55,767
56,938
Table 22: Food consumption levels and deficits in Dili (MT/year)
Basic staples
Supplementary foods
Fresh foods
2004
2010
2011
2012
2013
2014
2015
2016
Demand210
21,615
25,562
28,823
29,428
30,046
30,677
31,321
31,979
Deficit
12,653
14,963
16,872
17,226
17,588
17,957
18,334
18,719
Demand
1,527.09
1,805.97
2,036.34
2,079.10
2,122.76
2,167.34
2,212.85
2,259.32
Deficit
1,320.79
1,561.99
1,761.23
1,798.22
1,835.98
1,874.54
1,913.90
1,954.09
Demand
14,900
17,621
19,869
20,286
20,712
21,147
21,591
22,045
Deficit
23,585
27,892
31,450
32,110
32,784
33,473
34,176
34,894
Note: Deficits were derived from subtracting current consumption from recommended consumption levels of each food type.
210
Demand here is refers to recommended consumption, which is being equated to potential demand.
Market Development Facility | Page 59
Annex 3: District market demand
Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
The tables below project market demand in the districts of Timor-Leste by summarising projected population growth, recommended intakes of different food groups (basic staples, supplementary foods and fresh foods) and current consumption levels. The calculations presented in this annex serve as the basis for the gaps between recommended and current consumption shown in the districts end market section of the main report. All projections are based on a population growth rate of 2.1% per annum. Table 23: Population growth in the districts Year Population
2010
2011
2012
2013
2014
2015
2016
881,625
900,139
919,042
938,342
958,047
978,166
998,708
Sources: United Nations Population Fund, Country population assessment, 2007; Ministry of Finance of Timor-Leste, Population and housing census, 2010.
Table 24: Recommended and current food consumption per person in the districts (kg/year) Recommended consumption Basic staples Supplementary foods Fresh foods
Current consumption
195
144
16.21
6.8
219
104
Source: World Bank, Timor-Leste survey of living standards, 2007; Seeds of Life, Seeds of Life 3 baseline report, 2011; Harvard School of Public Health, “Vegetables and fruits: get plenty every day,” The nutrition source, www.hsph.harvard.edu/nutritionsource/vegetables-full-story.
Table 25: Recommended total food consumption for the districts (MT/year)
Basic staples Supplementary foods Fresh foods
2010
2011
2012
2013
2014
2015
2016
171,917
175,527
179,213
182,977
186,819
190,742
194,748
14,288
14,588
14,894
15,207
15,526
15,852
16,185
193,076
197,131
201,270
205,497
209,812
214,218
218,717
Table 26: Food consumption levels and deficits in the districts (MT/year)
Basic staples
2010
2011
2012
2013
2014
2015
2016
126,954
129,620
132,342
135,121
137,959
140,856
143,814
44,963
45,907
46,871
47,855
48,860
49,886
50,934
Demand
5,995
6,121
6,249
6,381
6,515
6,652
6,791
Deficit
8,293
8,467
8,645
8,826
9,011
9,201
9,394
91,421
93,341
95,301
97,303
99,346
101,432
103,563
101,654
103,789
105,969
108,194
110,466
112,786
115,155
Demand211 Deficit
Supplementary foods
Fresh foods
Demand Deficit
Note: Deficits were derived from subtracting current consumption from recommended consumption levels of each food type.
211
Demand here refers to recommended consumption, which is being equated to potential demand.
Market Development Facility | Page 61
Sector Assessment Report and Sector Growth Strategy for Agribusiness, Processing and Rural Distribution Market Development Facility – Timor-Leste
Market Development Facility | Page 62