Finnfund, a Finnish development finance company, has provided a 2,5 million euro secured loan to Africado, a Tanzanian avocado producer. Sustainable avocado farming is a viable alternative for farmers in Tanzania’s Kilimanjaro region whose livelihoods have been shaken by the plunging price of coffee. The price of coffee has fallen sharply in recent years primarily due to expanded production in Brazil and Vietnam. The impact is felt also in Tanzania’s Kilimanjaro region where coffee farming has long been an important source of livelihood. Now local farmers are urgently seeking alternative crops.
Africado was established in 2007 as Tanzania’s first commercial and international grade producer of avocados. The company farms 137 hectares around the Kilimanjaro area and contracts other commercial and local small holder farmers. They are specialised in Hass variety, which are exported primarily to the EU.
Avocado farming provides the company’s employees and contract farmers with higher and more secured income than coffee production.With the help of the new financing, Africado has started to expand and develop its operations. For instance, the company is aiming to extend its avocado plantations and the operation of the present packing department. Furthermore, the company intends to diversify, for example, to other avocado varieties and nuts.
“Finnfund’s funding of Africado,” says James Parsons, CEO of Africado, “has enabled the company to pursue new investment opportunities. In expanding production areas and with the introduction of new avocado cultivars, Africado will have a sustainable business to the economic benefit of the local community in terms of employment and development, and nationally in terms of increasing export earnings.”
Avocados have been widely grown for domestic household consumption in gardens and small farms within Kilimanjaro for more than 100 years since it was introduced by the Germans. The humid tropical climate in the area provide ideal growing conditions where avocados flourish naturally but a lack of markets and knowledge of commercial varieties has meant that avocado production has provided no economic value.
Commercial production only started in 2007, when Africado introduced Hass to Kilimanjaro at its own orchards after which the company has worked closely with local smallholders, distributing avocado seedlings, training about good agricultural practices, and providing market access.
The outgrower programme currently encompasses around 2 000 local farmers, creating employment and income to thousands of people in the area.
The company has, for instance, received an international Global GAP certification for safe and sustainable agricultural practices. In 2016, its outgrower programme also became GAP Award winner as the second African company.
With new development operations, it is expected that the number of jobs may double and provide employment particularly for women. From the point of view of the Siha district and of the whole of Tanzania, Africado promotes responsible agricultural and employment practices, and generate export income, strengthening the balance of current payments of the country.
“We want to support the growth of Africado as well as strengthen the development of the whole area,” says Jari Matero, Finnfund’s senior investment manager in charge of its agri-and-forestry portfolio. “It is important to promote responsible farming methods of avocados and other crops”.