Squeezing Out More Profit for Small-Scale Orange Growers

The Ghana News Agency reported in August that 60 percent of the oranges harvested in the lush groves of Ghana’s Cape Coast region go rotten due to a lack of market. This situation is depriving local smallholders of essential income and forcing young people to migrate to urban areas in search of basic employment.

Through its trade and investment program, ADF is helping Coastal Groves, Limited scale up its purchase of fresh oranges by enhancing the small agro-processing company’s capacity to deliver certified organic orange juice to a European market thirsting for all-natural access to Vitamin C.

Since the mid 1990s, the market for organic foods has been expanding rapidly in many developed countries. The Food and Agriculture Organization (FAO) and the International Trade Center (ITC) estimate that world retail sales of organic foods reached US $20 billion in 2001, a figure that represented a 20 percent jump over 2000 sales. While the current market for organic orange juice is extremely small – representing just 0.3 percent of total worldwide consumption – there is considerable room for growth among increasingly health-conscious consumers in high-income nations.

To tap this market, Coastal Groves will use ADF project funds to scale up its capacity to deliver up to six million liters of organic juice per year to Africa-Bio Trade of France. The product will be sealed and transported to Europe in 1,000 liter aseptic bags.

Coastal Groves is uniquely positioned to expand into organic juice production because it has secured internationally recognized organic certification for several local groves from Ecocert International of Germany, and it has established a strong track record with European buyers of its orange products. Coastal Groves is a primary producer of the orange essence that flavors the popular French liqueur, Cointreau, and it also exports dried orange rind, orange leaves and lemon grass. Until recently, however, it discarded the inner fruit of the oranges it processes because the company has had no domestic or international buyer for the fruit itself.

The ADF project will provide Coastal Groves with resources to:

• Establish a working fund to expand its purchase of oranges from local small growers in the Cape Coast region;
• Purchase new haulage trucks, tractors, and laboratory equipment to improve the speed and quality of its operations;
• Provide farmer groups with training in new agronomic practices; and
• Train Coastal Groves staff and employees in juice processing and marketing techniques

A substantial impact of the project will be the development of a more consistent buyer for local orange out-growers, the vast majority of whom are women. More than 2,000 local farmers will work with Coastal Groves as suppliers.

Coastal Groves will also implement an innovative “rainy day fund” for its orange suppliers that is designed to earn the loyalty of certified organic orange producers while also providing them with savings accounts. Coastal Groves will pay producers a 20 percent premium on the orange boxes it purchases from farmers and deposit that money in individually held escrow accounts that will be controlled by the farmers themselves. The program will allow farmers to save toward their retirement. The company will also contribute two percent of its annual profits to local development programs designed to enhance social and economic opportunities for the network of villages where its local suppliers reside.

Finally, Coastal Groves will purchase group health insurance plans for its employees and orange suppliers, and it will establish a provident fund for its employees that will match salary contributions up to the level of five percent of an individual’s annual income.

The expansion of Coastal Groves’ factory operations is also expected to raise the number of the company’s full-time employees from 76 to 162 over five years.

The ultimate goal of the ADF project is to ensure the delivery of higher incomes to producers of primary products in Ghana by expanding the profitability and social investment of a company committed to the manufacture of value-added products.

Graphics/Captions: 

Coastal Groves, Limited, of Ghana's Cape Coast region, is already a major supplier of orange essence for the popular liqueur Cointreau.  With support from ADF, the company will expand into the production of organic orange juice for the European market, and undertake investments in the economic security of its employees and the famers who supply its product.

Photos by Christine Fowles, Samuel Opoku and Kojo Osae-Addo.