Madagascar Aromatic and Medicinal Plants Value - Microlinks

On the one hand, this move upstream in the value chain offers the opportunity for end buyers to better control the
quality of raw material, and on the other, it provides wildcrafters and cultivators a relatively more stable buyer and
allows them to become better informed of end-market demands. Talamanga developed a system to upgrade certain
collectors in the field by providing them with training and a form of accreditation. This was a way to establish loyalty
among qualified collectors, and to better assure the receipt of raw material conforming to Talamanga’s specific
standards.
In other cases, large-scale distributors have begun growing raw materials in plantations and operating their own
distilleries. This approach provides greater control over availability and quality of final product, but it also bypasses
rural producers and processors, potentially depriving them of revenue. In addition, it increases the risks for the
distributor (see Table 6 on page 24).
5. SUPPORTING MARKETS
The number of support services, specialists and suppliers is presently insufficient to provide significant firm-level
upgrading assistance. Packaging options are limited, there are too few nurseries, financing institutions are absent from
rural areas, and there is a lack of specialized service providers such as communication/information services, technical
training, events and fairs organizers.
Finance: The AMP sector suffers from a lack of access to financing. Madagascar’s formal banking system operates
mostly in regional capitals and is not present “outside the cities.” There is a micro-credit sector with local
representative agencies, and there is a national entrepreneur development scheme in place. The latter operates only in
regional capital cities. Interviews with producers, collectors and processors in the field indicate they did not have
access to informal financing systems and the micro-credit institutions were not present in AMP production areas. The
sector is perceived as too unpredictable and high risk. Only a small percentage (less than 10 percent) of buyers
provided some form of financing through advances to their suppliers; these came from large firms.
Donor projects, NGOs and private investors are the sole sources of external liquidity in the sector. With increased
activity, professionalism and competitiveness of the AMP sector, private investment could be encouraged to increase
its presence through derived businesses. With a concentration of activities in specific corridors, there could be
increased opportunities for cluster development in the Fianarantsoa, Moramanga and Fenerif Est/Toamasina regions.
Packaging/bottling: Processors and exporters in the AMP value chain have access to three levels of packing,
depending on where they situate themselves in the end market: a) imported specialized dark glass bottles and barrels
for essential oils (expensive); b) moderately priced, locally produced plastic packaging (ordinary or Poly Ethylène
Teraphalate; PET) in the form of plastic jars bottles and small receptacles for lotions, some essential oils, soaps,
creams and medicine; and c) ordinary low cost packaging, which is essentially plastic sacks filled and sealed by hand.
The two largest local producers of the intermediary level packaging are SFOI and PLASTIMA.
Information/communication: This type of supporting market remains weak in spite of important efforts made by
the private sector (extension and development of telecommunications) and the State through opening and improving
rural access roads. Other than personal contacts and the internet for those with access, there are no known sources
for market, price and technical information that exporters, wholesalers and retailers can utilize. Although present at
the local level, Water and Forests agents’ support to the AMP sector is weak and sporadic. Agents are generally not
well trained and lack access to technical information on sustainable cultivation and harvesting.
MADAGASCAR AROMATIC AND MEDICINAL PLANT VALUE CHAIN ANALYSIS 36