Madagascar Aromatic and Medicinal Plants Value - Microlinks

example, regrouping and better coordination of logistics would allow some economy of scale and increase the
competitiveness of this segment of the value chain.
3. MAINTAINING ACCESS
As mentioned under natural resource governance, access to natural resources is currently not a barrier to participation
in the AMP value chain. Collusion and permits are also not used as a means of controlling access to resources or
creating entry barriers. Margins are not disproportionately large or extremely skewed among collectors (see Table 11).
Margins run from 10 to 20 percent for first-level collectors, from 10 to 30 percent for high-level collectors (those who
sell to processors), and from 10 to 50 percent for retailers and exporters (see Table 9). Margins depend on geography
and the nature of specific products, which vary by scarcity and demand. The number of actors decreases moving
downstream. Downstream actors deal with larger quantities per capita and earn higher margins. There may be
opportunities to increase prices to producers and low-level collectors, but it must be recognized that downstream
actors bear relatively higher levels of risk due to capital investment and fluctuating markets.
Table 11: Estimated margins for collectors (Ariary per kg)
Product
First level collectors
Location Purchase price Sale price Profit
Margin
(%)
Kotofihy Befontsy 200 500 300 6025 Talapetraka Befontsy (a) 1,200 1,400 200 14
Talapetraka Befontsy (b) 1,600 1,800 200 11
Talapetraka Ampitabe 1,200 1,400 200 14
Talapetraka Morarano 1,500 1,800 300 17
Ginger Beforona 320 400 80 20
Second level collectors
Cinnamon (organic) Niarovana 2,200 3,000 800 27
Cinnamon Niarovana 550 600 50 8
Cinnamon Ambalamanahazo 400 500 100 20
Ginger Beforona 230 320 90 28
Source: Surveys (2006)
Value chain actors maintain a competitive edge by building exclusive networks of suppliers upstream. They form these
networks by cultivating trust and loyalty over time, building reputations for dependability, and providing cash
advances (in an area where credit is rare). For example, most collectors form exclusive relationships with wildcrafters
and cultivators. These networks and the territories over which they extend are very difficult for outsiders to penetrate.
Table 12 describes vertical relationships in terms of strategies used to maintain advantage at different levels (i.e., by
gaining and controlling access to productive resources, assets and social networks).
25 The exceptionally high margin for Kotofihy is due to its scarcity.
MADAGASCAR AROMATIC AND MEDICINAL PLANT VALUE CHAIN ANALYSIS 40