Madagascar Aromatic and Medicinal Plants Value - Microlinks

Table 17: Firm-Level Upgrading
Level Key Constraints / Opportunities
Exporters and
local market
wholesalers
Processors
(distillation)
Wildcrafters,
cultivators,
collectors
• Constraints: Adding value to AMP products is constrained by the lack of high quality
packaging material (vials, cream and lotion jars, bags, bottles and boxes). Without
adequate, affordable packaging, distributors, retailers and exporters cannot produce a
finished, retail-ready product.
• Opportunity: There are two levels of opportunities: (1) small and medium-sized firms
can make use of hand-crafted, natural product-based packaging, baskets and other
containers that appeal to niche markets; (2) with large investments, there is the
opportunity to increase a cluster of firms supporting AMP products through high
quality glass, ceramic and plastic bottling and jar manufacturing.
• Constraint: Madagascar’s comparative advantage 10 -15 years ago was exporting
quality essential oils based on traditional distillation processes. Testing, technical
practices and skill levels of processor/distillers have not evolved sufficiently over time.
“Informal” processors have the rudimentary skills and their operations require
equipment upgrading in order to regain competitiveness.
• Quality testing and certification must be done by a third party. Laboratories have
power over processors because they must certify chemical composition before
products are allowed to be exported.
• Opportunities: Opportunities exist for rural BDS technical and business training
services, field/exchange visits and financing schemes.
• There are qualified laboratories but most are in large urban centers. Opportunities lie in
decentralizing laboratories to bring them closer to processing units and lower
transaction costs.
• Constraints: Wildcrafters and small cultivators are unable to upgrade their operations
because of unpredictable orders schedules. They remain reactive rather than proactive
value chain actors.
• Learning (e.g., sustainable harvesting techniques, cultivation, quality control) is not
taking place at these levels, condemning actors to remain reactive players. Poor
information flow limits the ability of producers to better integrate into the value chain.
• Opportunities: Learning could be facilitated by encouraging wholesalers/ exporters to
strengthen backward linkages to wildcrafters and collectors through incentives,
persuasion and traceability policies. There are encouraging signs from private
companies that use the BIONEXX model, which gives small farmers opportunities for
more regular income through a commitment to purchase specific AMP products that
meet market specifications.
• Rural radios offer an opportunity to circulate AMP price and technical information
during harvest periods.
• Processors are at the center of the value chain and should be seen as a potential partner
for improving information flow. They have some knowledge of the natural resource
MADAGASCAR AROMATIC AND MEDICINAL PLANT VALUE CHAIN ANALYSIS 49