Flower Power short

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Flower Power – Project Summary: 

Flower Power – Project Summary Develop the oil roses cluster in Afghanistan to produce rose essence for the fragrance industry worldwide Objectives Production Local Development / Beneficiaries 240 ha. of cultivation Excellent conditions for organic cultivation of Damascena rose Value adding processing and distillation done locally Oil roses yield US$ 3,000 per ha. (US$ 1,650 farm-gate price), a good economic alternative to poppy 500 to 1,000 farmers involved Harvest: temporary employment for 3,000/5,000 workers including many women 10 to 30 local processing units will employ 50 to 150 workers – opportunity for women entrepreneurship 25 qualified workers in the central distillation unit


Phase 1 Market research Identification of opportunities for Flavor and Fragrance crops in Afghanistan Phase 3 Implementation and Business plans Phase 2 Field feasibility study Selection of crops Technical scheme for project implementation Phase 4 Sourcing of stakeholders IMPLEMENTATION Approach & Methodology Work plan


Approach & Methodology People interviewed Key industry leaders across all levels have been consulted through one to one interviews. GIVAUDAN Natalie Garcia-Cetto, Perfumer fine Fragrance Anna Estevane, European Marketing Director FIRMENICH Odile Pelissier, Account Manager TAKASAGO Jean Gatignol, Senior Vice President DUCROS Alain Carronnier L’OREAL Mathias Houpillart, Naturals RM buyer Marie Claude Fonade, Perfumer MADERA Alain de Bures, Founder Anne Lancelot, Country Director GERMAN AGRO ACTION Dr. Julius Obermaier, Expert in rose cultivation Alexandra Rueth, Field Manager URD Francois Grunewald, Founder OTHER Zalmai Chawali, Teacher and Farmer

The Flavor & Fragrance Market Market Mapping: 

The Flavor & Fragrance Market Market Mapping Market Size, in Bn US $, estimates CAGR* = 10.1% Note: *Figures come from the aggregated revenues from the companies dealing in the market. Actual growth should be lower according to our estimates Source: Freedonia Inc; Givaudan; Firmenich; Robertet; Altai Consulting analysis 87% 13% 1 2 3 4 Market Size 47.4 MM 0.9 Bn $ 16.6 Bn $ 6.3 Bn $ 13.8 16.6 18.4 Flavors Fragrance Natural Raw Material - Uniqueness - Bio / Well being - High Quality Synthetic Raw Material - Non speculative - Affordable - Allergy free Flavor/Fragrance Split 2002 2002 Flavor and Fragrance Market Size Of which we consider only the RM Of which we consider only the Natural RM The Flavor and Fragrance Market is a growing market estimated at 18.4 billion US $ Fragrances account for 40% of the market Natural Raw Materials (RM) represent 13% of the total RM used The market size for Natural Raw Material for the Flavor and Fragrance Market is 900 M $

Pre-selection Criteria for F&F crops in Afghanistan: 

Pre-selection Criteria for F&F crops in Afghanistan Size and growth of the market Differentiators in the market: Is it a value (quality) or volume (low cost) driven market? Structure of the market: presence of oligopolies, speculation…? Non-sustainability of the current supply chain: non-socially responsible suppliers, cartels,… Willingness of the buyers to find new variants Attractiveness of Afghanistan in this market: primary suitability (climate, soil) A B C D E F

Pre-selection Fragrance Crops: 

Pre-selection Fragrance Crops Suitability to Afghanistan High Low Business Attractiveness Low High Sandal (15-21 M $; 500-700 $/kg) Fragrance Crops (Market Size in M $; Essence Price per kg), 2002, est. Vetiver (6-14 M $; 50-120 $/kg) Clove (4.5 M $; 3 $/kg) Citronella (3-6 M $; 3-6 $/kg) Rose (18 M $(*); 4,400 $/kg) Geranium (9-12 M $; 45-60 $/kg) Sage (7.5 M $; 25 $/kg) Patchouli (25 M $; 25 $/kg) Jasmine (5.5 M $; 550 $/kg) Lavendin (12-13 M $; 12-13 $/kg) (*) including rose essence and concrete

Focus on the Damascena rose: 

The Damascena Rose is recognized as the best oil rose Market price for rose essence, has been US$ 4,000 to 5,000 per Kg It takes 3,500 Kg of rose flowers to make one Kg of essence Rose concrete is sold for US$ 700 to 800 per Kg It takes 450 Kg of rose flowers to extract one Kg of concrete Value Chain: Focus on the Damascena rose Production: 2,100 $ Production + Processing: 3,200 $ Value Chain of 1 kg of Rose Essence (~1.3 hectare), est., in US $

Damascena Rose: Market Research and Feasibility Study: 

Damascena Rose: Market Research and Feasibility Study Market size: the “rose extract for fragrance” market segment represents US$ 18 million (*) yearly worldwide (10,000 tons of flowers) Main producers are Bulgaria and Turkey (~90% of the market), others include Morocco, Lebanon, Iran Market Opportunities: buyers want to change suppliers production costs in Bulgaria likely to increase with entry in EU “Afghan Rose” quality and concept (*) including essential oil and concrete Oil roses will grow well above 1,000 meters elevation in the central and eastern regions: water quality is good salt content is low Other fragrance crops can be cultivated there: geranium under 1,000 meters lavender at all altitudes other local specialties to be explored Farmers can intercrop with vegetables and clover for additional revenue Market Research Main findings Feasibility Study Main findings


Phase 1 Market research Phase 3 Implementation and Business plans Financial scheme for project implementation Phase 2 Field feasibility study Sourcing of stakeholders IMPLEMENTATION Approach & Methodology Work plan Phase 4

Production Plan: 

Production Plan Farmers Rose Flowers Processing Unit Rose Flowers Distillation / Extraction Unit Farmers Rose Flowers Farmers Rose Flowers Rose Water Rose Essence / Concrete Rose Flowers Processing Unit Distillation / Extraction Unit

Site selection: 

Site selection Spring frost free areas south of the Hindu Kush 1,000 meters elevation Irrigation water security Low salt content The Central region (around Kabul) and Eastern regions (around Jalalabad) have been identified as suitable See details on map Central region: Easier logistics, less transportation costs and time Rehabilitation (Chamali plain) Bigger landholdings – potential for more efficiency and quality Eastern region: Smaller landholdings Remote locations Natural flower garden Alternative livelihood for farmers

Site Selection: Suitable areas for Rose Damascena cultivation in Eastern Afghanistan: 

Site Selection: Suitable areas for Rose Damascena cultivation in Eastern Afghanistan

Flower Power – Presentation of Actors and Roles: 

Flower Power – Presentation of Actors and Roles FARMERS Cultivation – Harvest DONORS Funding PROJECT MANAGEMENT Research – Steering – Coordination – Marketing - Local Processing Units (10 to 30) Post-Harvest Processing – Rose Water Distilling - Afghan Rose Co. Production – Distribution – Logistics – Marketing NGOs Training – Production Control PRIVATE BUSINESSES

Actors and Roles: 

Infrastructure Cultivation Actors and Roles Rose Water Production Units Afghan Rose Co. Transformation and Sales Training Production Control Funds Rose Flowers Rose Water International Market Rose Essence Farmers Donors NGOs Processing Sales

Action Plan: 

Action Plan Post Harvest Processing Investment Market Research DONORS Training Production Monitoring Distillation Sales and Promotion FUNDING IMPLEMENTATION DONORS (Grants for R&D and Infrastructure) Market Research Feasibility Study Business plans and partner recruitment Train the trainers Practical training for farmers Demons-tration plots PROJECT MANAGEMENT TEAM Capacity building Develop Quality Control procedures 10 to 30 decentralized post-harvest processing units Potential for women entrepreneur-ship programs Develop relationship with international buyers Certification of the production process Main distillation units Distillation Techniques R&D NGOs PRIVATE INVESTORS PRIVATE INVESTOR AFGHAN ROSE CO PRIVATE INVESTORS PROJECT MANAGEMENT TEAM Project Management – Marketing – Coordination

Focus on Farmers: 

Focus on Farmers Expected average landholding: 2 jeribs (0.4 hectare) Investment is US$ 1,050 per hectare Revenue of rose flowers is US$ 1,650 per hectare after year 3, and reaches over US$ 2,000 per hectare including intercrops Profit is around US$ 400 per year after year 5 The return rate for this investment is 17% a year on 10 years cash flow Advantages for farmers: income security, training, access to international markets

Focus on Farmers – Financing Scheme: 

Focus on Farmers – Financing Scheme Early farmers (50 of them) will need to import cuttings for an expensive US$ 1 a piece. They will nevertheless make more profit from selling many cuttings for reproduction. These early farmers will produce cuttings and sell them to new farmers for US$ 0.35 All farmers will need a credit scheme in order to make up for the investment and lack of production in year 1 These figures do not include any grants from donors. Interest free credit schemes or grants could be built in to help farmers invest in cuttings

Value to farmers and their communities: 

Value to farmers and their communities Very high labor costs (harvest) are detrimental to the farmer’s bottom line, but they are a plus for the extended family / community: (*) NPV= net present value of projected cash flow Value to the community Value to the extended family Value to the farmer

Business Plan – Local Processing Unit: 

Business Plan – Local Processing Unit Investment is $4,000 Good return on investment US$ 500 profit per year With donor grants of $3,000 per unit, each unit can bring a 35% return on a 10-year period Advantages for entrepreneurs: proven technology, natural investment for the surrounding community

Business Plan – Afghan Rose Co.: 

Business Plan – Afghan Rose Co. Investment is US$ 400,000 The company shows 19% Internal Return Rate on a 10-year period, when taking into account: US$ 150,000 grants to purchase equipment Donors participation in R&D, Marketing Other flowers, roots and herbs can be distilled for the fragrance industry, adding to the profitability of the distillation and marketing company Advantages for private investors: market segment where Afghanistan can be very successful (and become a brand)

Donors Involvement: 

Donors Involvement Funding for agricultural infrastructure Project Management Import and reproduction of roses Selection and contracting of farmers Grants and credit scheme for farmers Training of extension agents and farmers Extension / field work Funding for distillation infrastructure Research and Development, Marketing, Project Management Grants for test distillation units Training of distillation staff Early test of roses for distillation Sourcing or cultivation of test crops for distillation

How to get started: 

How to get started Cultivation of potential crops (flowers and herbs) Training of personnel Distillation tests/ Research and Development Market research, involvement of key stakeholders in the market Support of other Essential Oil projects (local roses, other flowers, dried spices and wild herbs) Phase 1 – Pilot farm and distillation unit Phase 2 – Development Production and marketing of successful Phase 1 Essential Oils Expansion of pilot farm by private investors Final selection of crops for Afghanistan Extension projects in several regions

Pilot Farm - Objectives: 

Pilot Farm - Objectives Market research and selection of crops, sourcing of cuttings and seeds (potential crops are geranium, lavender, iris, sage, mint, basil, citronella) Hiring and Training of personnel (management, horticulture, distillation) Cultivation and harvest Sourcing of additional distillation raw material (such as orange blossoms, vetiver, cardamom, aniseed, cumin, saffron) Distillation Test of distillation material Promotion of results Phase 1

Pilot farm - Details : 

Pilot farm - Details 25 to 40 hectares Cultivation 7 to 10 hectares imported Damascena roses Remaining lands and intercrops: local roses, other flowers and herbs Employment: 20 to 30 employees Potential to populate 20 hectares every year with local cuttings of Damascena roses Phase 1

Milestones and Timeline: 

Milestones and Timeline Phase 1 – Pilot Farm Extension Jun 04 Order cuttings Oct 04 Plant cuttings 2005 2006 2007 2008 2009 2004 Apr 07 First Large Scale Rose Flowers Harvest Contracting and training of farmers Production and Quality control Import and cultivation of roses and other crops Training of personnel Test distillation Build more capacity Production of essential oils Processing and Distillation Sales and Promotion 2010

Afghan Roses – Executive Summary: 

Afghan Roses – Executive Summary Position Afghanistan on a promising market segment: flowers for the fragrance industry worldwide Provide access to international markets for 500 to 1,000 farmers in mountainous remote areas Create 100+ jobs and 3,000 to 5,000 temporary jobs Help private companies invest in processing and distillation capacity in order to add value locally Create a sizeable revenue stream for the country

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