J.2 IFC DRC_agribusiness deep dive_Final report_external.pdf

PHASE 2 OF THE PRIVATE SECTOR DIAGNOSTIC IN

DEMOCRATIC REPUBLIC OF CONGO (DRC)

DEEP DIVE INTO AGRICULTURAL

VALUE CHAINS IN THE DRC

CASSAVA

MAIZE

AQUACULTURE

FINAL SUMMARY REPORT

This report is the product of an in-depth review of the agribusiness sector in the Democratic Republic of Congo (DRC), in particular on three value chains: cassava, maize, and aquaculture, as part of the DRC Country Private Sector Diagnostic (CPSD) Phase 2 Deep Dive. The report was carried out by a consultancy, ClassM, under the direction of a World Bank Group team led by Lisa Choux, Strategy Officer, IFC, and comprised of Fanja Ravoavy, Agribusiness Advisory Regional Lead, IFC, Volker Treichel, Principal Economist, IFC, Thomas Kouadio, Principal Investment Officer, IFC, David Ivanovic, Senior Operations Officer, MAS Upstream, IFC, Inoussa De Youba Ouedraogo, Operations Officer for CMA, IFC, Cheikh Amadou Tidiane Dia, Senior Agricultural Economist, IBRD, Andre Ilunga, Investment Officer, IFC, Steffie Mahoro, Country Officer for DRC, IFC, Nadege Yameogo, Senior Economist, IFC, and Dennis Ochieng, Sector Economist, IFC.

The team acknowledges the valuable guidance and support of Malick Fall, Country Manager for the DRC cluster, IFC.

This powerpoint presentation is a summary of three detailed reports produced by ClassM, which are attached as annexes to the presentation. For more details regarding the information in this presentation, please refer to the detailed reports.

TABLE OF ACRONYMS

ACF: Action Contre la Faim

AfDB: African Development Bank

AGRA: Alliance for a Green Revolution in Africa

BAB : Bio Agro Business

CDF: Franc Congolais

CIAT : Centro International de Agricultura Tropical

CIRAD : Centre de Coopération Internationale de Recherche Agronomique pour le Développement

CMD: Cassava Mosaïc Disease

CPSD : Country Private Sector Diagnosis

DD: Deep Dive sectoral analysis

DRC/RDC : Democratic Republic of Congo/République Démocratique du Congo

FPI : Fond de Promotion des Investissements

HQCF: High Quality Cassava Flour

ICRC : International Committee of the Red Cross

IFAD: International Fund for Agriculture Development

IFC: International Finance Corporation

IITA : International Institute for Tropical Agriculture

INERA : Institut National pour l’Etude et la Recherche Agronomiques

NGO: Non-Governmental Organization

SAH: Semi Autotrophic Hydroponic

SENADEPA (former SENAQUA): Service national de développement de la pêche et de l’aquaculture) and received the same mandate

SENAPEFIC : Service national de promotion de l’élevage familiale et des intrants connexes

SENASEM : Service National de Semences

SNV : Netherlands Development Organization

UPOV : Union pour la Protection des Obtentions Végétales

USAID: United States Agency for International Development

USD: United States Dollar

WB: Word Bank

AGRICULTURE IN DRC: AT A GLANCE

Overview

• With 80 million hectares of arable land, 4 million hectares of irrigated land, and many rivers with important fishery resources, the DRC has the potential to become a global agricultural power. Nearly 51 millions hectares are unexploited.

• Although the agricultural sector employs around 55 percent of Congolese and comprises

17.4 percent of GDP in 2022, it fails to ensure food security and generate sufficient revenues and sustainable employment.

• Agriculture is a crucial source of employment, especially in rural areas. It provides livelihoods for a substantial portion of the population, with the majority of Congolese engaged in subsistence farming.

Agricultural production

• The main cash crops include coffee, palm oil, rubber, cotton, sugar, tea, and cocoa. Food crops also include cassava, plantains, maize, groundnuts, and rice.

• Main exports of agricultural products include coffee, cocoa, palm oil, and rubber.

• Commercial agricultural production remains limited, with most producers engaged in subsistence food agriculture.

Opportunities to unlock the agricultural sector

• Investing in infrastructure—Improving transportation networks and storage facilities (cold storage) would reduce post-harvest losses and boost access to markets. Electricity costs and access is also an important constraint that, if addressed, could support significant investments in the agribusiness sector.

• Modernization—Promoting the adoption of modern farming techniques and technology could enhance productivity and yields. Improved seeds and fertilizer availability domestically.

• Land reform—Establishing clear and secure land rights could encourage more long-term investments in agriculture.

• Climate resilience—Implementing climate-smart agricultural practices could help farmers adapt to changing weather patterns.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Agriculture in DRC, 2010-2022

Employment in agriculture (% of total employment) (modeled ILO estimate)

Agriculture, value added (% of GDP)

Agriculture, value added (annual % growth)

Source: World Bank, World Development Indicators.

EXECUTIVE SUMMARY

Objectives of the deep dive The value chains selected for this study were determined by IFC and WB experts based on previous analyses and understanding of DRC. These value chains are also directly aligned with the government’s priorities.

It proposes concrete and actionable recommendations that will contribute to private sector development

It aims to analyze the current constraints hindering private sector growth in the selected value chains.

Based on the analysis of the gaps, the study identifies investment needs and the best potential opportunities for the private sector along these value chains.

It outlines a plan for both public-sector reforms and private-sector participation that will lead to increased private-sector investment.

The work focuses on the country's three main economic basins: Kinshasa (Bas Congo), Lubumbashi (Katanga), and the Kivus (Goma and Bukavu). Each region presents different economic characteristics and trade dynamics

Main Recommendations along the Maize Value Chain

Prioritize investments in established integrated farms in the former Katanga region or milling companies based in Matadi or Kwilu

Develop a hybrid framework incorporating privately owned maize farms and networks of contracted producers receiving technical assistance to supply large-scale facilities producing flour or animal feed.

Diffuse Good Agricultural Practices (GAPs) among contracted producers to enhance their productivity.

Prioritize efficient logistical management through collection centers close to production areas, equipped with appropriate storage infrastructure, limiting the development of aflatoxins

Support ongoing efforts to implement reforms for regulations in the seed sector to enhance productivity by developing access to improved seeds for producers.

Main Recommendations along the Cassava Value Chain

Focus on investments in the Kinshasa basin to target the market of high-quality cassava flour for urban consumers. These should be done alongside established cassava processing actors or specialized flour producers.

Develop a hybrid framework incorporating privately owned cassava farms and networks of contracted producers to diffuse GAPs to enhance productivity.

Prioritize efficient logistical management during the post-harvest stages of the value chain.

Endorse the new standard for the bakery industry to enhance the market for cassava flour.

Focus R&D towards optimizing the energy-intensive drying process for large-scale production.

Main Recommendations along the Aquaculture Value Chain

Prioritize investments in integrated commercial farms in the Kinshasa province that will catalyze the sector’s development by formalizing a fish farmer network to share good practices and contribute to capacity building.

The structure could provide locally-produced fingerlings and imported aquafeed (local aquafeed in a second phase) to improve fish farmers’ yields. The commercial farms could operate as purchase units by purchasing and selling fish farmers’ production thanks to refrigerated trucks and cold rooms

The government could reinforce the infrastructure and staff of SENAQUA to develop an extensive training program for small-scale fish farmers.

The government could adopt new measures to reduce import duties on aquafeed and fish farm equipment to foster sector development.

Cassava

Main conclusions of the value chain analysis

Chapter 1

MAPPING OF THE CASSAVA VALUE CHAIN AND KEY FIGURES

DRC ranks as the 2nd largest cassava producer globally, trailing only Nigeria, with an annual output of 40 million tons in 2021.

90% of cassava cultivation is carried out by smallholder farmers who employ simplified technical approaches, with minimal utilization of inputs.

The country maintains self-sufficiency in cassava production, with minimal international trade recorded.

The country produces enough to supply the local food demand.

~70% of the production is processed into dried chips and milled into flour.

Cassava is a staple food and mainly self-consumed by producers (roots and leaves). 70% of the population rely on cassava as their main source of income.

Cassava is sold primarily in flour, dried cassava chips, or the traditional fermented paste, chikwangue.

The sector is made up of small to medium-sized players; there are no large-scale industrial units in the country.

The opportunity in the cassava value chain is to create value added by targeting formal markets and by processing cassava, such as into flour.

Mapping of the cassava value chain in the DRC

COMPETITIVENESS FACTORS FOR CASSAVA

Regional or international comparatorsDRC Competitiveness indicator

Yields can reach up to 90 T/ha in intensive production systems.

When applying good agricultural practices and correct technical approaches (improved variety, seedling density, fertilizers…), yields reach between 30 and 50 t/ha.

In SSA, yields in family farm production systems remain around 10 to 12 t/ha.

The national average in DRC is 10 to 12 T/ha under normal production conditions, which typically involves no fertilizer use or mechanization.

Better yields (15 to 25 T/ha) are observed in North Kivu and Kongo Central, while Katanga registers lower yields.

Yields

Like other SSA cassava-producing nations, such as Nigeria, Ghana or Côte d’Ivoire, there is a need to establish a national body or interprofessional organization to organize and regulate the sector.

No national network related to the cassava sector.

Structure of the value chain

Ghana and Nigeria invested in the diffusion of improved varieties through grants and national programs.

In Nigeria, 60% of the farmers use improved varieties.

In Ghana, 25 new varieties were developed and distributed to smallholders.

INERA is only able to supply around 10% of the national demand in certified cuttings.

Access to improved varieties of cuttings

Cassava requires minimal field labor and maintenance compared to other food crops. Field production costs represent a small part of the final product’s cost.

Large-scale cassava starch or bioethanol processing units in Asia or Brazil typically have an annual capacity of several tens of thousands of tons.

At field scale, labor costs remain low in DRC compared to other West African countries.

The low density and poor quality of the road network, along with expensive inter-regional transportation, significantly elevates logistics costs.

The energy cost in DRC is higher than in other SSA countries. Since cassava is a moisture-sensitive product that must be processed close to production sites in rural regions with limited access to electricity, these factors pose challenges.

Production costs

SWOT ANALYSIS OF THE CASSAVA VALUE CHAIN

Strengths DRC is the 2nd largest producer in the world, providing opportunities for significant expansion.

Favorable agro-ecological and climate conditions across a major portion of the country Cassava is adapted to thrive in poor and acidic soil, which is prevalent throughout the country Cassava can be harvested throughout the year in all regions of DRC. Once the root reaches maturity, it can be left in the ground for an extended period to enable progressive harvesting.

Cassava serves a dual purpose, with both its roots and leaves being consumed

Weaknesses Challenges persist in accessing inputs due to their high costs and low quality, resulting in reduced utilization by producers and subsequent negative impacts on yields.

Difficulties to transport, marked by high costs and subpar infrastructure, lengthen the time between harvest and consumption, leading to losses. Timely consumption or drying within 48 hours is crucial for cassava.

Limited access to energy in rural production areas hampers post-harvest treatments, including drying, which could mitigate losses. The energy needs for the drying process are high, both in terms of added costs as well as energy availability.

Stakeholders along the cassava value chain, including producers, processors, offtakers, and technical staff, lack organization and cooperation in order to properly aggregate volumes at a large scale to facilitate access to inputs, adoption of GAPs, improved transport, logistics, and processing.

Opportunities New regulation on bakery products will make it mandatory to include a minimum of 5% of locally produced cassava flour in bread and a minimum of 10% in baking products. This would significantly boost the market for cassava baking flour.

Rapid urbanization in DRC presents an important opportunity to develop cassava flour ready to use for urban consumers. The market for cassava flour could represent approximately 6 million tons/year, which is around 24 million tons of fresh cassava tubers.

Development of other products: beer, starch, etc.

Threats Impact of climate change and drought on yields

Products available on the market are often contaminated with aflatoxin

Competition with imported products, such as starch or ethanol

Intense competition from other countries, such as Thailand, Brazil, Vietnam, and Nigeria, major cassava and derivative product producers.

Main opportunities and constraints to develop the cassava value chain

GAPS AND CONSTRAINTS HAMPERING THE DEVELOPMENT OF THE CASSAVA SECTOR

Input supply Production Processing Access to markets Access to services

Limited supply of improved varieties Limited material and financial resources hinder the capacity of research and certifying institutions

The current regulatory framework does not incentivize seed companies to invest in developing new varieties. There is a lack of breeder protection.

Insufficient supply of agricultural inputs Access to fertilizer is a significant challenge. There are no large domestic fertilizer suppliers. Small and medium-scale farms lack the financial means to import fertilizer.

Composting, which could be an important source of self-produced fertilizer, is not widely practiced.

Large-scale companies have the most access to imported products and rely on these for their needs.

Producers have weak technical skills Cassava is primarily grown as a subsistence crop Most producers use traditional agricultural practices Low yields No use of input Low rates of improved varieties Limited access to mechanization Smallholders lack the resources to invest in machinery or equipment

Plots are not set up for mechanized operations

Limited organization and professionalization of producers Difficulties aggregating significant volumes and coordinating collective efforts

Impact of climate change Droughts and floods

Producing poor-quality dried chips due to traditional methods Hand cutting with knives results in large pieces and increased contamination risk

Longer drying periods lead to the risk of mold

Limited access to energy near production areas causes significant losses Cassava is a moisture-sensitive product that needs to be processed close to the harvesting area

Isolated rural areas lack electricity

Weak organization of actors for volume aggregation The rate of producers organized into groups to aggregate substantial volumes is low

Insufficient access to skilled labor Processing cassava flour requires technical skills that are not widely available at the national level

Limited access to logistics creates significant losses.

Difficulty transporting cassava from rural production areas to markets or processing facilities with electricity leads to significant post-harvest losses.

Weak organization of actors for volume aggregation The rate of producers organized into groups to aggregate substantial volumes is low

Limited access to finance Only large-scale industries have access to loans from commercial banks or support from the National Fund for Industry Promotion (FPI)

Lack of guarantees No suitable offer for small-scale actors on agricultural risks

Limited technical assistance Only provided for short-term projects

MARKET TRENDS AND OPPORTUNITIES IN THE CASSAVA SECTOR

Development of cassava flour for urban consumers The urban population of DRC stands at 40 million, with Kinshasa projected to become the largest in Africa by 2030, with 24 million people

Urban lifestyles prompt a demand for time-efficient meal preparation

Market demand is projected around 6 million tons of cassava flour or 24 million tons of fresh cassava tubers per year, based on a consumption rate of 150 kg/cap/year

New regulation on bakery products There is a requirement that all bread contain 5% locally produced cassava flour and that all baked products contain a minimum of 10%.

Market demand is projected around 50-60 thousand tons of wheat products and 200-240 thousand tons of fresh cassava roots, based on a consumption rate of 5 kg/capita/year.

Diversifying the brewery industry There are two industrial breweries—Heineken (using rice) and Castel (using maize)

The potential market for fresh cassava roots is estimated at 40,000 tons

Starch production for the domestic laundry market International starch market competitiveness may be challenging for DRC, given the current state of the cassava sector and the difficulty to secure the supply chain. Because cassava is perishable and needs to be processed no later than 48 hours after harvest, the proximity and transport from farms to processing units is critical. The limited network of farmers in DRC within a reasonable range of a large processing unit is an important barrier in the country.

The local manufacturing industry that uses starch is not well-developed

A niche exists for domestic laundry services.

The potential market for fresh cassava roots for the laundry market is estimated at 40,000 tons. Note: Most laundry enterprises are not registered, therefore this figure is an estimate (see p. 43 in the cassava annex for more details).

Note: For specifics on market trends and opportunities, please see the Annex: Cassava Deep Dive, sections 3.1,3.1.5, and section 5.2.

THE MOST FAVORABLE REGIONS TO INVEST IN THE CASSAVA SECTOR

Regions that have access to transportation and electricity networks, particularly those located on the periphery of major cities and along the Kinshasa- Matadi axis in Kongo Central

Significant cassava-producing regions near these areas, including the Batéké Plateau north of Kinshasa and the Ruzizi Plain in the Uvira territory.

Recommendations for potential private investment and public support

MARKET SEGMENTATION FOR POTENTIAL INVESTMENT

Profile of investor/sponsorTechnologyMarketProductCategory

Agri-multiplicator farm Seed company

IITA Semi Autotrophic Hydroponic (SAH) Producer cooperatives Commercial farms

Quality certified cuttings

Input Supply

Medium to large farms (10 to <100 ha) Large scale firms (> 10,000 T processing capacity) willing to integrate a part of their supply

Producer group

Optimized Technical Itinerary Good agricultural practices (GAPs)

Local industry Consumption marketCassava roots

Production

Small to medium size entrepreneurs (100 to 1,000 T/year of processed produced)

Producer groups IITA microchips technology

Local industry Consumption market Cossettes

Post-harvest treatment

Medium to large scale firms (1,000 to > 10,000 T of processing capacity)

Milling industry already processing other products (maize, wheat…)

IITA High Quality Cassava Flour (HQCF) technology Minimum capacity is around 2 T/ 24h

National market: Local baking industry and consumption market

Export market: Neighboring countries and sub-region

Cassava flour

Processing

Medium to large scale firms Existing stakeholders involved in cassava processing

Industrial line to produce cassava starch (based on international standards: 10-300 tons/24 hours)

Laundry services (independent and hotels) Paper industry Food industry

Cassava starch Processing

Medium to large scale firms Existing stakeholders involved in cassava processing

Industrial line to produce bio ethanol (international standards: 1 T of fresh cassava = 1200 L of ethanol)

Contribute to the national petrol market Substitute wood charcoal with ethanol

Sell on international markets (competitiveness may be a challenge)

EthanolProcessing

National breweries (Castel, Heineken) Classic brewing process. R&D is needed to define final product formulation that uses cassava

• Domestic marketBeerProcessing

Medium to large scale firms Existing stakeholders involved in cassava processing Cassava peels are dried before use in animal feed

Animal feed industry Breeding farms

Use peels for animal feedBy-product

Note: For more information on potential sponsors and investment projects, please see the Annex: Cassava Deep Dive, section 6.1.2.

SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (1/3)

Opportunities for the private sector*Recommendations for public supportMain challenges

VC level

Incentivize private agri-multipliers by offering tax incentives such as reductions in ISS, VAT, etc. These could be phased out over time, as the sector becomes more competitive.

Integrate cuttings production within large-scale farms, enabling them to fulfill their requirements and sell certified cuttings to smallholders. Certified cuttings are necessary to increase yields and therefore, incomes.

Promote the growth of a domestic industry for fertilizer blending units through incentives that could eventually be phased out once the market is competitive compared to imports.

Provide incentives to private agri-input distributors to expand their commercial networks and enhance outreach to rural areas through technical and commercial agents to develop the cassava sector.

Align seed market regulations with international and regional standards to attract global breeders to the country.

Organize the seed production sector to ensure the quality of certified seeds or cuttings.

Allocate additional resources to INERA to reduce losses, including providing cold storage rooms for cuttings/seed preservation.

Strategic planning for cuttings/seed production

Establish regulations for the market of free cuttings distributed by NGOs through food security programs.

Implement capacity-building programs to train producers on GAPs and the proper use of agricultural inputs

Set up a credit system allowing producers to prefinance their production campaigns

Coordinate a national procurement system for agricultural inputs on the global market to meet local demand.

Strengthen the production of certified cuttings to develop wider access to improved varieties

Develop access to good quality and affordable agricultural inputs

Strengthen technical skills of technical staff and producers to properly use agricultural inputs

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* Incentives to support the private sector along the cassava value chain depends on the competitiveness of cassava production. Most growers do not use inputs because they do not generate enough income from their crops and lack technical training to increase their yields. The competitiveness of cassava production will mainly come from increasing producers’ skills and production techniques.

Opportunities for the private sectorRecommendations for public supportMain challengesVC level

Incentivize players in the cassava industry to establish model farms that use GAPs and climate-smart agricultural techniques within a network of contract farming.

The production from these model farms ensures a part of the supply for the industrial unit. The government or donors should provide technical assistance to develop these model farms.

Develop a network of national agencies and technical agents nationwide to reach remote rural areas.

Train technical staff in rural agencies on GAPs and climate-smart agriculture

Support capacity building among producers to nurture leadership and foster a cooperative entrepreneurship model.

Enhance the technical proficiency of producers to implement GAPs and adjust technical plans to address climate change.

Enhance producers' capacity-building efforts to establish producer organizations capable of initiating impactful collective actions.

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Revise the investment code to facilitate streamlined investments in the food industry, especially for targeted value chains in which the country has a competitive advantage.

Encourage milling and other related industries, such as breweries, to invest in local large-scale cassava processing through tax reductions and support to organize supply chains built around smallholders.

Set up a program to disseminate microchip technology through producer organizations.

Invest in R&D to improve the energy efficiency of drying cassava microchips

Support capacity building among producers to nurture leadership and foster a cooperative entrepreneurship model.

Reduce post-harvest losses

Increase product quality by implementing microchip technology at the national level.

Identify alternative sources of energy to dry cassava microchips.

Structure reliable supply chains for large-scale industries through strong producer organizations

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SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (2/3)

Opportunities for the private sectorRecommendations for public supportMain challengesVC level

Encourage the establishment of formal traders by providing tax incentives for transportation expenses (e.g., fuel taxes, tolls, etc.).

These could be phased out once the sector is competitive.

Collaborate with private banks and insurance companies to develop specific offerings for the agricultural sector with entities such as Equity BCDC in DRC, COFINA in West Africa, and through partnerships with DFIs

Strengthen the policy for the development and maintenance of road infrastructure

Invest in R&D to develop autonomous electric solutions that enable the processing of cassava chips in areas without access to the power grid.

Develop tools and procedures for managing agricultural crises caused by climate change.

Involve the government under the principle of national solidarity to compensate for exceptional weather-related incidents.

Enable risk sharing over time and regions with many agricultural farms, including smallholders, by creating a mutual insurance system

Improve the layout and maintenance of rural roads to open up production areas.

Perform post-harvest processing (like processing cassava chips) as close to production zones as possible.

Aggregate significant volumes (such as loading a 20-ton truck) to facilitate the marketing of products.

Improve access to financial services by mitigating project risks and adapting offerings to the sector.

Support producers in addressing climate change-related risks.

Promote access to technical training for cassava cultivation to improve farm performance.

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Establish an interprofessional organization to centralize allocating budgets and programs dedicated to the cassava sector.

Enable stakeholders at various levels of the value chain to advocate for their specific interests and collaborate on national commitments to develop the cassava sector C

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SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (3/3)

Maize

Main conclusions of the value chain

Chapter 2

DRC produces around two million tons of maize annually, representing 75% of the country’s cereal production.

The estimated domestic demand is approximately 12 million tons (calculated at 125 kg/per capita/year), resulting in a shortfall of 10 million tons.

Maize is mainly grown in the Ex-Katanga basin and the Kivus (Ruzizi plain) by smallholders (>80%).

A dozen large-scale integrated farms produce maize for the mining market in the ex-Katanga region.

The country imports maize from neighboring countries. In North Kivu, maize is imported from Rwanda and Burundi. In Ex-Katanga, about 70% of maize consumption is imported from Zambia and Angola in the Kinshasa basin).

Mapping the maize value chain in DRC

MAPPING OF THE MAIZE VALUE CHAIN AND KEY FIGURES

COMPETITIVENESS ANALYSIS: PARITY PRICE OF IMPORTS

Maize : case of Zambia and Lubumbashi

DRC (Lubumbashi)Zambia

Subsidizednon subsidized

762 USD/ha217 USD/ha484 USD/ Ha Production cost

1.4 T/ha3.3 T/ha6.3 T/haAverage yield

70% use farm seeds 60% of the maize area

Use of improved variety

60% use fertilizers Use of fertilizers

50 USD23 USD40 USD

Price of NPK

50 kg bag

Maize prices (USD/kg) in selected markets across Southern Africa in July 2022 (Source: FEWS NET)

Analyse des facteurs de compétitivité dans la production du maïs entre la RDC et la Zambie en Afrique Australe , Tshomba et al., 2022

Import Parity Analysis

The three regions in this study face unique challenges:

1. The Kinshasa market is partly supplied by Kongo Central and Kwilu for mass consumption, while industries (millers and brewers) import from the international market to meet quality standards .

2. In the former Katanga, production is seasonal, and Zambia has had more success in stabilizing its prices. This stability allows Zambian maize to be more competitive in the DRC during the lean season. Consequently, this region imports from Zambia during those times.

3. In the Lake District, the war-torn north imports half of its maize consumption from Rwanda and Burundi, while the south can more easily meet its needs thanks to good productions conditions in the Ruzizi Plain.

COMPETITIVENESS FACTORS FOR MAIZE

Regional or international peersDRC Competitiveness indicator

Under intensive and irrigated production systems, yields have shown to reach up to 12 T/ha

By implementing GAPs and employing accurate technical approaches such as improved varieties, optimal seedling density, and appropriate fertilizer application, yields can range from 4 to 6 T/ha

In SSA, yields within family farm production systems typically hover between 1 to 3 T/ha

Under normal production conditions, yields average 0.77 T/ha nationally, which typically does not involve fertilizer use nor mechanization.

Better yields (3 to 6 T/ha) are observed in Ruzizi plain and pm large-scale farms in Ex-Katanga

Yields

Key maize-producing nations in SSA, including Nigeria, Zambia, Kenya, Niger, Mali, have established national policies aimed at bolstering cereal production to ensure food security. These policies encompass measures such as input subsidies, national reserves, and trade regulations (export/import restrictions).

There is no national policy to regulate and support the maize sectorSector regulations

All major cereal producers in SSA are either already part of or in the process of joining the international standard on plant variety regulation (UPOV) to safeguard the advancement of new varieties. Additionally, they are establishing national seed reserves through the efforts of national agencies.

Several large cereal producers (Zambia, Nigeria, Kenya) have national policies aimed at bolstering cereal production. These policies involve providing support for fertilizer and seed pricing to aid producers.

Lack of legal framework hampers the growth of seed companies and impedes their establishment within the country..

There is no domestic fertilizer production; all fertilizers are imported, leading to limited availability in the market and cost-prohibitive for most smallholder farmers.

Access to improved varieties and fertilizers

Maize is readily mechanizable and often serves as the primary mechanized crop. Field production costs constitute a minor portion of the final product's total production expenses.

Labor cost remain low in DRC compared to other African countries.

Due to low yields and other factors impacting the maize market in DRC, production costs remain noncompetitive.

DRC's sparse and subpar road network, along with costly interregional transportation, substantially inflate logistics expenses.

Production costs

Strengths DRC has 80 million hectares of arable land, of which only 10% is presently used for food crop production.

In the center and eastern regions of the country, the climate permits two maize production cycles.

Weaknesses Challenges in accessing inputs (due to high costs and low quality) hinder producers from utilizing them, resulting in adverse effects on yields.

Inadequate storage infrastructure harms storage conditions, exacerbating the growth of aflatoxins on grains.

Limited organization and professionalization of stakeholders.

Opportunities The demand to feed a population of 92 million presents a significant market potential market for maize (including flour, semolina, bread, etc.) and, to a lesser extent, the brewing sector.

The underdeveloped animal breeding sector holds untapped market potential.

Threats Competition from neighboring countries where maize and maize flour production is subsidized and more efficiently organized.

Adaptation to climate change and drought must be considered in developing improved varieties and GAPs (no-tillage, composting, seedling period, crop rotation or association, agroforestry systems, integrated pest management…)

Aflatoxin contamination frequently hinders entry into formal markets like industrial food processing for the available products.

SWOT ANALYSIS OF THE MAIZE VALUE CHAIN

Main opportunities and constraints to develop the maize

GAPS AND CONSTRAINTS TO DEVELOP THE MAIZE SECTOR IN DRC

Input supply Production Processing Access to market Access to services

Limited supply of improved varieties Limited resources – both material and financial – for research and certification institutions.

The regulatory framework lacks incentives for seed companies to innovate new varieties due to inadequate breeder protection.

Roughly 80% of seed production is sourced from farmers.

Insufficient supply of agricultural inputs No national production of fertilizers Composting is not widely practiced Large-scale companies primarily have access to imported products only.

Low production volumes DRC experiences a maize deficit and relies on imports from neighboring countries, which compete with domestic production.

Weak technical skills of producers Most maize farmers produce maize as a subsistence crop Low yields No use of input and low rates of improved varieties Limited access to mechanization Smallholders lack the resources to invest in specialized machinery.

Land plots are not effectively organized for mechanized practices.

Limited organization and professionalization of producers Difficulties aggregating significant volumes and coordinating collective efforts

Impact of climate change Droughts an floods

Weak storage infrastructure Post-harvest losses due to poor storage conditions are estimated to be between 30% and 40%

Presence of aflatoxins Inadequate post-harvest storage conditions amplify aflatoxin growth, impeding the establishment of a supply chain meeting food industry sanitation standards.

Shortage of raw material at competitive price Industrial units encounter challenges in sourcing local raw materials.

Difficulty in aggregating volumes Smallholders predominantly cultivate maize for subsistence purposes.

Limited access to logistics Difficulty to transport maize from rural production areas to markets

Weak organization of actors for volume aggregation The rate of producers organized into groups to aggregate substantial volumes is low

Competition with imports Zambia and South Africa have production surpluses and national agencies dedicated to maize storage to help maintain stable prices

Limited access to finance Only large-scale industries have access to loans from commercial banks or support from the National Fund for Industry Promotion (FPI)

Lack of guarantees No suitable offer for small scale actors on agricultural risks Limited technical assistance Only provided for short-term projects

MARKET TRENDS AND OPPORTUNITIES IN THE MAIZE SECTOR IN DRC

Meeting the domestic cereal demand

Maize is the top cereal produced and consumed in DRC

Based on an average consumption of 125 kg per capita per year, the national maize market is estimated to be around 11.5 million tons annually.

The country only produces around 2 million tons.

The animal breeding sector holds untapped market potential

Average meat consumption in SSA countries is 9.7 kg/capita/year.

DRC has one of the lowest consumption ratios of meat in the region, with an average of 4.6 kg/capita/year.

The potential maize market for meat production amounts to 950,000 tons for poultry and 340,000 tons for beef (see Annex: Maize Deep Dive, section 5.2.2 for details on the calculation).

Note: Considerations regarding climate change impacts, deforestation, etc. would have to be closely reviewed before any investment is made.

Commercial feedlot part of the GoCongo group

MOST FAVORABLE REGIONS TO INVEST IN THE MAIZE SECTOR

i) The most favorable regions have access to transportation and electricity networks, particularly those located in the periphery of major cities and along the Kinshasa-Matadi axis in Kongo Central. However, in this region, soil acidity is notably high, potentially impacting plant growth and yields. To mitigate this challenge, adding lime to the soil is recommended.

Furthermore, providing specialized training in technical practices is essential for producers.

ii) The country’s southern region (Ex-Katanga), where numerous large-scale farms are already established, offers the opportunity to leverage local momentum and learn from sector experiences.

Map of maize-deficient region in 2018

Kinshasa

Lubumbashi

Goma

Bukavu for potential private investment and public support

MARKET SEGMENTATION FOR POTENTIAL INVESTMENT

Agri-multiplicator farm Seed company Open pollinated and hybrid seeds Producers’ cooperatives

Commercial farms Improved certified seedsInput Supply

Medium to large farms (10 to <100 ha) Large-scale industry (> 10,000 T processing capacity) willing to integrate a part of their supply

Producers’ groups

Optimized Technical Itinerary

GAPs, including integrated pest management, soil fertility management, water management, hygiene, and health management, climate-smart agriculture (crop rotation, agroforestry, cover crop, intercropping, composting, integrated crop animal farming…)

Local industry Consumption marketMaize grainProduction

Small to medium size entrepreneurs (100 to 1000 T/year of processed produced)

Producers’ groups Agri services company

Standardized storage and packaging unit allowing drying grain (<12% humidity), package it in polypropylene bags, with good aeration and sanitary practices.

Producers ‘groups Medium size farms (10 to 100 ha) Storage facilitiesPost-harvest

Medium to large scale industry (from 1.000 to > 10,000 T of processing capacity)

Classical milling process to produce maize flour (washing, sorting, debranning, degerming, milling…)

Local baking industry Consumption marketMaize flourProcessing

Large-scale mills already active in cereal milling

Medium to large-scale farms (>50ha) able to use space to produce silage.

Grain-based production of feed (especially for poultry) Silage-based production of feed (cattle)

Animal breeding sector (poultry, cattle, pork…) Animal feedProcessing

• National breweries (Castel)• Classic milling process of maize whole grain milling• National market Flaked maize for beer productionProcessing

• Large-scale mills already active in maize milling

• Classic production of corn germ oil: germ is separated from the grain endosperm, then dried and passed through a press and sometimes through a solvent extraction. Oil is then refined.

National oil market Food industryCorn germ oilBy-product

• Medium to large scale milling industries• Grain de-branning during the milling process Animal breeding sector (poultry, cattle, pork…)Maize branBy-product

Incentivize private agri-multipliers by offering tax incentives such as reductions in ISS, VAT, etc.

Integrate seed production within large-scale farms, enabling them to fulfill their requirements and sell certified seeds to smallholders.

Promote the growth of a domestic industry for fertilizer blending units through incentives.

Provide incentives to private agri-input distributors to expand their commercial networks and enhance outreach to rural areas through technical and commercial agents.

Note: due to lack of data on all private players in the maize sector in DRC, estimates on volume of incentives or fiscal impacts are undetermined. Further research would be needed to made this determination.

Align seed market regulations with international and regional standards to attract global breeders to the country.

Organize the seed production sector to ensure the quality of certified seeds.

Allocate additional resources to INERA to reduce losses, including providing cold storage rooms for seed preservation.

Strategic planning for seed production

Establish regulations for the market of free seeds distributed by NGOs through food security programs.

Implement capacity building programs to train producers on GAPs and the proper use of agricultural inputs

Set up a credit system allowing producers to prefinance their production campaigns

Coordinate a national procurement system for agricultural inputs on the global market to meet local demand.

Strengthen the production of certified seeds to develop wider access to improved varieties

Develop access to good quality and affordable agricultural inputs

Strengthen technical skills of technical staff and producers to use agricultural inputs properly

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SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (1/3)

Incentivize players in the maize industry to establish model farms that use GAPs and climate-smart agricultural techniques within a network of contract farming.

The production from these model farms ensures a part of the supply for the industrial unit. The government or donors should provide technical assistance to develop these model farms.

Develop the network of national agencies and technical agents across the country to reach remote rural areas.

Train technical staff in rural agencies on GAPs and climate-smart agriculture

Support capacity building among producers to nurture leadership and foster a cooperative entrepreneurship model.

Enhance the technical proficiency of producers to implement GAPs and adjust technical plans to address climate change.

Enhance producers' capacity-building efforts to establish producer organizations capable of initiating impactful collective actions.

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Revise the investment code to facilitate streamlined investments in the agricultural industry, particularly for integrated farms.

Encourage milling and other related industries, such as breweries, to invest in local maize production through tax reductions and support to organize supply chains built around smallholders.

Develop a regional network of public storage facilities to be leased to the private sector

Support capacity building among producers to nurture leadership and foster a cooperative entrepreneurship model.

Increase product quality by constructing modern storage facilities near production zones.

Establish dependable supply chains for large-scale industries by leveraging robust producer organizations.PR

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SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (2/3)

sectorRecommendations for public supportMain challengesVC level

Encourage the establishment of formal traders by providing tax incentives for transportation expenses (e.g., fuel taxes, tolls, etc.).

Collaborate with private banks and insurance companies to develop specific offerings for the agricultural sector with entities such as Equity BCDC in DRC COFINA in West Africa and through partnerships with DFIs

Strengthen the policy for the development and maintenance of road infrastructure

Implement measures to bolster local production prices and mitigate competition from imports

Establish a national food agency for food security following the Zambia model, where they established the Food Reserve Agency

Develop tools and procedures for managing agricultural crises caused by climate change.

Involve the government under the principle of national solidarity to compensate for exceptional weather-related incidents.

Enable risk sharing over time and regions with many agricultural farms, including smallholders, by creating a mutual insurance system

Improve the layout and maintenance of rural roads to open up production areas.

Perform post-harvest processing (like drying and packaging) as close to production zones as possible.

Aggregate significant volumes (such as loading a 20-ton truck) to facilitate the marketing of products.

Protect the domestic market against imports to allow the development of domestic production while ensuring food security for the country.

Improve access to financial services by mitigating project risks and adapting offerings to the sector.

Support producers in addressing climate change-related risks.

Promote access to technical training for maize cultivation to improve farm performance.

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Design a national plan to strengthen and increase cereal and maize production

Establish an interprofessional organization to centralize the allocation of budgets and programs dedicated to the maize sector.

Ensure national cereal self-sufficiency

Enable stakeholders at various levels of the value chain to advocate for their specific interests and collaborate on national commitments to develop the maize (and cereal) sector

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SUPPORT PROGRAMS AND POLICY MEASURES FOR THE PRIVATE SECTOR (3/3)

Aquaculture

Main conclusions of the value chain

Chapter 3

Mapping of the aquaculture value chain in DRC

Annual fish production in DRC is around 250,000 tons, of which 10,000 tons is from fish farming. All fish produced in the country is consumed domestically.

Domestic demand/consumption is estimated at 480,000 tons, resulting in a deficit of 230,000 tons annually.

The main production basin is in Kinshasa, while Kivu and Tanganyika provinces maintain artisanal production.

Five large-scale commercial fish farms operate in the Kinshasa province.

For fish farmers to access inputs such as fingerlings and aquafeed, DRC relies solely on imports from Europe and neighboring countries (Rwanda and Zambia).

MAPPING OF THE AQUACULTURE VALUE CHAIN AND KEY FIGURES

Case of fish market in Kinshasa (Marché de la Liberté et Central Kinshasa)

COMPETITIVENESS ANALYSIS: PARITY PRICE OF IMPORTS

Imported fresh fish

Local fresh fish from fishing

Local fresh fish from aquaculture farm

3000 Fc/k5000 Fc/kg6000 Fc/kgPrice

68%32%Market share

Source: Swana et al., Proportion de vente des poissons frais locaux et importés dans les marchés de Kinshasa en République Démocratique du Congo (2020)

Where do Congolese fisheries import their inputs?

Due to the unavailability of inputs on the local market, DRC imports what they can from international markets

Brands imported / products

Origin of imports Inputs import (% of the total)

Novatek, Olympics, Tiger

Zambia20%Upper Katanga

Feed mill (cereals, cotton cake)

Uganda and Rwanda80%North Kivu

Novatek, Olympics, Tiger

Rwanda and Burundi90%South Kivu

Note: In upper Katanga, artisanal fish farmers use poor productive farm waste, which explains the significantly lower imported inputs.

Import Parity Analysis

Domestic supply is lower than demand.

Local aquaculture products generally match the prices of imported products in concentrated markets (cities with access to imported frozen fish), while in rural areas, fish prices are lower.

The problem is rather the low level of domestic commercial production due to high start-up costs (technical skills, infrastructure, imported feed, cold chain distribution channels, etc.). However, once launched, commercial farms are profitable and their products meet market demand.

COMPETITIVENESS FACTORS FOR AQUACULTURE

Regional or international peersDRCCompetitiveness indicator

Significant imports of frozen fish are facilitated through various trade routes and distribution channels

In Uganda, the largest producer in the region, commercial farms are strategically located near Kampala and neighboring countries, promoting efficient trade both within and beyond the country’s borders

The regions with the highest fish consumption are Kinshasa (17 million people), Lubumbashi (1 million people), Bukavu (1 million people) and Goma (600,000 people)

In Kinshasa, fish consumption is substantial across various markets, including high-income segments like hotels and restaurants.

There are important rivers and lakes near these main markets

Proximity to markets

Neighboring countries host large commercial farms with the financial resources to import high-quality aquafeed and fingerlings, enhancing their production efficiency. They can potentially aid small-scale producers by facilitating access to aquafeed

In Zambia, the development of local aquafeed producers contributed to lower prices.

Similarly, in Kenya, local fingerlings producers played a pivotal role in fostering sector growth

The high cost of inputs, specifically fingerlings, and aquafeed, add to an already high cost of production. DRC relies heavily on imported aquafeed (90%) due to minimal local production. Farm waste can be used in rural areas, albeit at the cost of extending the duration of fish growth.

Quality fingerlings are scarce beyond Kinshasa. Although public entities like IITA and SENAQUA own hatcheries in the Kivu provinces, their limited financial resources hinder their potential influence on the sector

Production costs

Cold chain infrastructure is critical for facilitating the smooth transportation of fresh fish from production to consumption centers.

In Uganda and Kenya, most commercial farms have refrigerated trucks to efficiently serve supermarkets and meet market demands.

In DRC, women traders (primarily individual women) are essential intermediaries between producers and wholesalers. In the Kivu provinces, they buy fish from abroad and sell it in Goma and Bukavu.

However,…