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AGOA Forum 2010: Ministers learn importance of adding value to commodities

Thursday, 12 August 2010

Source: Media Newswire

Delegates to the ninth annual U.S.–Sub-Saharan Africa Trade and Economic Cooperation Forum were able to witness firsthand the importance of adding value to commodities when they visited a Kansas City coffee roaster.

AGOA ministers and other delegates to the forum — known as the AGOA Forum, for the African Growth and Opportunity Act — toured The Roasterie coffee roasting company to see how raw coffee beans from Africa and around the world are roasted and processed into a superior product for sale to U.S. consumers.

Adding value is important because it allows commodity producers to gain more income by creating higher-value specialty products rather than just selling the raw commodity.

Speaking on the importance of the AGOA visitors to his plant, self-described bean baron and owner of The Roasterie Danny O’Neill told America.gov, “There is nothing like face to face,” meetings like the one with the African visitors August 5. “Today, technically, you could stay on the Internet and not talk to anyone and do the business, but we are very old-fashioned, so it is great. There are all kinds of things that happen” during such a meeting.

O’Neill said that about 25 percent of his company’s output of premier, custom air-roasted coffees are from Africa — spread across Kenya, Ethiopia, Tanzania, Rwanda and Zambia. Central America, South America and Indonesian coffees make up the rest of his company’s 1 million pound ( 400,000 kilo ) annual production output, all in about 25 percent increments from the four geographic areas, he said.

The Roasterie is about an $8 million company that as a specialty coffee roaster is considered a small business, O’Neill said, adding that size does not matter to him as much as the quality of their product.

Because African farms are so small, O’Neill said, his company buys from agricultural cooperatives. “In a perfect world, we know the people we are buying from. We get involved in the community, we have long-term relationships. We are all about quality, quality, quality, quality.”

Additionally, he said, his company prides itself on paying just prices to farmers. “We are not in this for the short term; we are in this for the long term and looking for the best quality. If you are not making money, you are not going to be around. So it is in our selfish best interest to do well and that there is a good relationship” between his company and African farmers.

Profit is not a bad word, he said, if it is done right and everyone along the product chain benefits. “We compare profit to altitude if you are flying. You have options if you have altitude. If you are down close to the ground [with little money] you have no options, and if you are not making any money there are no options.”

Looking to the future, O’Neill said: “I think Africa has huge opportunities because there are people who are not growing coffee right now who could. There are areas that are not growing coffee that could. Global warming is going to … introduce new areas of the world that can grow coffee that cannot right now” and vice versa, and there will be much room to expand.

Africa, he said, “has a great agricultural base right now and as they continue to improve on that like the rest of the world, they will increase production from existing land — so that is on the supply side. On the demand side, that is increasing worldwide.

“Low-quality coffee demand is not” increasing, he said. “Demand for high-quality coffee is increasing,” he said, and farmers make more money growing and selling high-quality coffee. Speaking of Africa, he said, “I think they are set up and positioned well.”

Right now, he said, “Africa is ‘cool’” and the “in” place to be doing business, he said. “I think that bodes well for Africa too. That touches on everything. Selfishly, that makes African coffee more enticing, but I think it goes across all products.”

O’Neill said his company does process tea as well, but not as much. “With coffee, it is like 50 cups a pound, but with tea it is like 200 cups. People who drink tea don’t intend to drink as much as coffee.”

He said his company is not yet processing any African teas but he has visited tea farms in Kenya and sees great potential. Pointing to pictures of himself on a Kenyan tea farm that adorn his headquarters, he said, “I loved it, I absolutely loved it,” and fondly spoke of his exposure to African farmers. He said, affectionately, that he held so many Kenyan children on that visit to a tea farm that his arms hurt for days.

O’Neill said he has visited Kenya, Tanzania, Rwanda and Ethiopia, but looks forward to exploring more countries in Africa looking for product.

One of the AGOA guests who toured The Roasterie plant was Abdulsalam Usman, the assistant director of Nigeria’s Ministry of Commerce and Industry. “This is a very big lesson that we will be taking home on the importance of value-added,” he told America.gov. “We went around the factory and we saw bags of coffee beans that were imported from coffee-producing countries. The value-added that has been done with just simple technology — which is what Africa requires — is what Africans can do as well.”

There is a region in northeastern Nigeria where coffee is being produced but, unfortunately, not in large quantities, he explained. “With the backing of the financial institutions and those engaged in the coffee business, we can be able to add so much value to coffee production” that Nigerians will be able to make first-quality products, he said.

The ninth annual AGOA Forum, which met this year both in Washington and Kansas City, Missouri, adjourned August 6.

 

( This is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://www.america.gov )

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