Cashing in on chips
Consumption of potato chips (French fries) in East Africa is booming. Urbanisation, the proliferation of fast-food restaurants, growing tourism, and a significant change in eating habits among both high- and low-income groups in urban areas is raising demand on average by 10-17 per cent a year in six countries in eastern and central Africa. But in-country commercial processing of potatoes into chips is lacking and the market is currently dominated by European and South African companies.
Dr Berga Lemaga of the International Potato Center (CIP) believes that there is great potential for an East African chip-making industry. A marketing survey conducted during 2004-2006 found that over 50 per cent of low-income urban households in Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda make their own chips. Corresponding figures for wealthier households in these countries average almost 80 per cent, with the highest (100%) in Rwanda and the lowest (54%) in Tanzania.
Yet processing of potato into pre-cut chips for the urban market in East Africa is virtually non-existent. Only Kenya has any significant output, with five chip-makers, and only one of these making frozen chips. As a result, 80 per cent of restaurants and hotels make their own, with imported chips from Belgium, The Netherlands and South Africa filling the gap. But Lemaga is optimistic, predicting: "Farmers have good soils and a good climate to grow more of these processing varieties. If the right things are put in place I am positive that the region will be self-sufficient, and if that happens these countries can save up to nearly $1 billion per year in importing frozen chips."
Promoting potato production
To build a potato chip industry, however, requires varieties with appropriate characteristics for processing and currently these are not widely available to farmers. "A major constraint in disseminating these varieties is scarcity of seed," admits Lemaga. Yet CIP trials of high-yielding, disease-resistant potato with good processing qualities have been underway in all six countries for over 10 years, and the results appear impressive. While traditional varieties yield on average eight tons/hectare, improved varieties are yielding three times as much in Ethiopian farm-based trials and 35 tons/ha on research stations; similar results have been obtained in Uganda and Kenya.
Although these trials are a first step to producing good yields of the right varieties, producing sufficient quantities of disease-free, improved seed potatoes remains a challenge. CIP's aim is to scale up production through community-based seed multiplication and farm level seed production using new multiplication techniques that are fast and user-friendly.
Finding farmers to grow the new varieties should not prove difficult. Although rapid population growth has seen farm sizes shrink in recent years, potato has the potential to produce more food and generate more cash per area than any other major crops grown in the region. As a result, since 1994, the area of potato cultivation in East Africa has more than doubled. By growing potatoes for processing, post-harvest losses can also be reduced.
Consequently, as a food security crop and a source of income, potato is an increasingly popular choice with farmers, including those displaced by conflict. And, while improved varieties require double the investment in inputs and time, farmers can expect to earn up to US$400/ha from their crop, compared to US$130/ha from traditional varieties. Once these processing varieties are more widely available, Lemaga believes that many more entrepreneurs would be willing to start factories to process potatoes into chips.
Policy changes are another priority if East Africa is to develop and promote a regional chip trade. In theory the Common Market for Eastern and Southern Africa (COMESA) free trade area should be an ideal arena for this to develop, but current hindrances to cross-border trade need to be overcome. In particular, Lemaga points to the need for harmonised transit charges and a single COMESA customs document.
Other measures to feed an infant chip industry include forging links between farmers and food processors, improving the availability of credit, and enhancing public-private partnerships. A recent study conducted across the region to estimate the potential size of the market for fresh and processed potato in selected cities in Burundi, Ethiopia, Kenya, Rwanda, Tanzania and Uganda also revealed that there is need for quality standards, improved packaging and premium prices for quality produce if a viable industry for processed potato is to be established.
But, for would-be manufacturers, chip making is a mouth-watering possibility, earning profits of about US$120 for every 100kg produced. Potato processing also increases employment opportunities in city areas. And, with half of East Africans expected to live in urban areas by 2015, the boom in demand for potato chips looks set to continue.
Date published: September 2008
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