Tree-based and other land management technologies for landscape restoration in Africa

Background Paper for the Investment Forum on Mobilizing Investment in Trees and Landscape Restoration

Frank Place

Oluyede C. Ajayi

Eliot Masters

World Agroforesty Centre

1. Introduction

1.1 Scope of paper and definition of terms

The main objective of this paper is to present an overview of proven tree and landscape restoration technologies, with a focus on identifying future opportunities based on projected trends in demand, prices, or other incentives. In this, the paper aims to stimulate interest and further assessment of specific investment opportunities in tree and landscape restoration. Although detailed information is not available on all potential investments, the review will also indicate limitations or risks associated with the different technologies. The paper is broad in scope, examining a variety of technologies applicable to the different climatic zones of Africa. However, it is not meant to be a comprehensive evaluation of the technologies across different regions, because available information on different technologies and from different climatic zones is quite variable.

The term ‘trees’ or ‘tree based technologies’ as used in this paper refers to a wide spectrum of systems and associated species in which trees play a critical role. Often, the main product is a tree product – directly harvested or derived - such as wood, gum, or fruit. In other cases, the trees may provide an input into the major product such as tree fodder for milk, tree nectar for honey, and tree leaves for crops. Environmental services from trees in larger systems are an added benefit to be considered.

‘Landscape restoration’ covers a wide range of practices which enrich the quality of the land resource, and provide additional environmental benefits such as watershed protection and biodiversity. The practices described may be applied in a number of different land use types such as forests, woodlands, rangelands, and farm lands. The word ‘landscape’ conveys the notion of large scale, covering a significant area. Large scale can be achieved by a single investor or community, and possibly through a single management plan or investment. However, in many African contexts it will likely reflect a combination of individual and collective investments on the part of a large number of rural residents, such as is the example of the re-greening of parklands in Niger Republic.

To summarize, this paper has the following major objectives:

1. Provide information about tree-based and other sustainable land management (SLM) technologies that provide significant economic or ecological benefits (e.g. soil health, water flows), and as such form important components of both private investment and land restoration strategies;

2. Among the many technologies, emphasize those that can provide both economic and ecological benefits in many cases; and

3. Provide information on demand and supply trends that shape incentives for private investment in these technologies.

This first background paper to the Investor Forum is therefore mainly about the ‘what’ – those technologies that form useful components of large scale private investment and land restoration strategies. Paper 2 (Scherr et al. 2011) focuses on the ‘where’ elements, firstly highlighting those cases where such components have come together to jointly provide economic and ecological impacts at scale and secondly to indicate locations where future impacts could similarly be achieved. The final paper (Buss et al. 2011) then discusses specific challenges as well as opportunities for making needed private and public investments happen.

1.2Overview of macro trends that have an impact on overall demand for tree products

There are many factors that shape both the demand for and supply of tree based products and services whether viewed from a global, regional, or local perspective. Critical among drivers are population growth and urbanization, income growth, changes in energy prices and sources, and emerging global attention to climate change mitigation and adaptation responses.

Trends and changes in key sectors around the globe have direct impacts on global demand for tree and wood products. These changes include (i) increases in global population, which is estimated to increase to 7.5 billion in 2020 - and 8.2 billion in 2030; (ii) increases in economic growth, with the global GDP increasing from about US$16 trillion in 1970 to US$47 trillion in 2005 and projected to reach about US$100 trillion by 2030;(iii) rapid increase in the rate of urbanization around the globe, especially in developing countries; and (iv) rapid changes in income growth and its distribution among the population of developing economies, particularly in Asia (FAO 2009). In the African context, population growth rates will remain above those in other continents for the next few decades. While urbanization will accelerate, high population growth rates will result in higher absolute numbers of rural people, up to about 2040 (IFAD 2010). While GDP growth is expected to enter a more rapid phase in Africa, the high population growth rates will keep per capita income growth rates modest.

Recent increase in energy prices and continuing concerns about the longevity of fossil fuels in the context of rapidly growing Chinese and Indian economies has led to greater attention to renewable resources. Under some IPCC scenarios, fuelwood assumes a greater role in meeting energy demand. Some analyses based on this assumption have found that this would have a major effect on wood prices, and that real prices would continue to increase for several decades (Raunikar et al. 2010). Thus, the political and market forces related to the energy sector are critical in shaping profitability and opportunities in wood and other tree product

production. Similarly, the emergence of financing for climate change mitigation and adaptation programmes (e.g. REDD+) have the potential to shift incentives for tree growing, management, and harvesting. Greater stewardship of forests and woodlands by governments could lead to higher prices and increase tree planting in plantations and on farms. The awareness of potential shortages of wood in some countries - which led policy makers to impose forest logging bans in countries such as India and Kenya - have resulted in higher prices, and more favorable market opportunities for investment in tree growing and forestry-related enterprises by the private sector (Cheboiwo et al. 2010).

Lastly, there are increasing calls for “sustainable agricultural intensification”, ”environmentally friendly agriculture”, “ecoagriculture” or even an “evergreen revolution” for Africa (ICRAF 2009). A growing consensus is emerging, driven by increasing awareness of increasing soil degradation, continued paltry use of mineral fertilizer, low staple food yields (whichhave hardly changed in decades), and growing concern at the effects of climate change. With increasing population, surely higher agricultural yields must be attained in a practical way that farmers and societies can affordboth financially and ecologically. Thus there is increased attention to what is termed sustainable land management (SLM) practices, which combine methods for soil conservation, organic nutrient application, and mineral fertilizer use to enhance yields of foods and feeds. Evergreen agriculture is the integration of trees, along with the practice of other SLM practices, into farming systems for increased agricultural productivity and sustainability. Evergreen agriculture and other SLM methods and technologies are also ‘climate smart’ in that they are measures which can mitigate or create a buffer that helps smallholder farmers cope with local climate effects, such as temperature stress (e.g. under shade) or water stress (e.g. improved soil moisture from mulching), seasonal uncertainty and increasing frequency of extreme weather events. Many of these practices (e.g. agroforestry) will also contribute to carbon sequestration, thus contributing to global efforts to mitigate climate change by reducing carbon dioxide in the atmosphere.

Some implications of these global forces

The factors and trends identified above lead broadly to increased demand for a host of tree products and services, as well as a change in the type and range of products and services demanded. The shift implied will entail the bringing in of new lands under tree based systems, as well enhancing the sustainability of land use.

Higher population, especially in Africa, is likely to continue to drive demand for wood as it has traditionally done (see Figure 1 – Sutton 1993). In sub-Saharan Africa, fuelwood dominates the energy sector as only 7.5% of the rural population has access to electricity (FAO 2009). Fuelwood also dominates use of wood in Africa and the situation is likely to remain so for the

next two decades because the consumption of fuelwood in Africa will increase by about 34% between 2000 and 2020 (FAO 2003). At the same time, as incomes rise, demand for other wood products (such as industrial roundwood, wood panels and paper), is expected to rise, as it has onother continents. Thusit is expected that there will be a future shift in consumption to higher value added wood products, and a reduction in use of fuelwood. This shift may have an effect on production opportunities because while all fuelwood is sourced domestically, other wood products may be sourced from abroad (as an example, North Africa imports a significant amount of wood products from Europe).

Figure 1: Relationship between Population and Volume of Wood Produced

Source: Sutton 1993

Higher population, but more particularly increased incomes, is likely to lead to more demand for fruits and nuts from trees. Tropical fresh fruit such as mangoes, guavas, papayas, avocadoes, fresh grapes and others have recorded the highest growth in imports globally since early 1990s; the value of imports of pineapples, mangoes, guavas, papayas, and avocados was 6 times greater in 2006 compared to 1990 (USDA, 2008). Increasing demand for fresh fruit products is driven by increasing nutritional awareness, and concerns about healthy eating. Increased consumption of imported fruits and processed fruit products is served by improvements in packing and shipping methods, which ensure that fruits can now be shipped long distances and still maintain high quality. In addition, plant breeding has produced new varieties of fruit (e.g. seedless grape) favoured by consumers (Nzaku and Houston, 2009), as well as more transportable (i.e. durable) commercial varieties.

The emergence of REDD and market-based approaches to mitigation against climate change provide opportunities to take cognizance of the role of trees in carbon sequestration. Attesting to this is that fact that the total volume of carbon markets (comprising those under Kyoto Protocol and the voluntary market) is increasingly steadily over time, amounting to US$64 billion in 2007, -twice the figure recorded in the previous year. A number of private sector operators and foundations have recently become involved in voluntary markets and carbon finance initiatives to support tree-based projects in several countries. Climate change adaptation initiatives, such as the nationally led National Adaptation Programmes of Action (NAPA), have emphasized sustainable land management practices, including tree management, as priority areas for investment. Similarly, payment schemes for other environmental services, notably watershed protection, are also on the increase. These also promote more investment in SLM and tree management.

In most regions where agriculture is rainfed, which describes the vast majority of African production systems, productivity is much below its potential due to the unpredictability and poor quality of rainfall seasons, associated with prolonged dry spells (Chikowo 2011). Management systems that positively alter the soil-crop environment are believed to help farmers cope with the negative impacts of limited access to production resources and climate change. The addition of trees into agricultural landscapes has been shown to positively affect the soil-crop environment, and the practice of agroforestry in crop fields has increased in Africa over the course of the past decades.

In this context, investment opportunities for restoration of productive African landscapes through tree-based enterprises are extremely attractive. In some situations, investment by large scale producers can result in a ‘confluence of interests’ generating multiple wins for the economy, for employment, and for the ecological integrity of whole landscapes. In many other situations, tens of millions of African households can ably serve global markets with a wide array of agricultural commodities and natural products, which offer profitability at scale to the farmer and investor alike.

1.3 Examples of successful practices of tree based and land restoration technologies in Africa

There are many examples of successful tree based technologies and systems in Africa. Beginning by looking at major tree products, Table 1 shows the global export value of major non-timber products of relevance to Africa. In total, the international trade of such products was valued at $142 billion in 2009. The actual production levels are much higher, considering that for products such as fruit, as much as 90% of production is consumed domestically. Of the products listed in Table 1, Africa is a major producer in most, such as coffee, cocoa, tea, coconut, cashew, kolanut, gum Arabic and other natural products such as shea butter, derived

from shea kernel collected from the wild. Africa is also increasing production in locally significant commodities such as avocado and honey, for which global demand is also increasing.

Table 1: The global export value of some major tree products relevant to Africa

(in US $1000’s)

Commodity 2001 2003 2005 2007 2008

Coffee 8661842 9769085 15637891 22061510 26800406

Citrus 7709475 10217484 11597821 15869879 17689609

Cocoa 2208064 4200355 4954083 5708236 7246038

Tea 2820992 2942887 3582778 4042636 5520560

Coconut 895924 1210337 1876246 1996676 2895301

Cashew 947931 1118091 1850100 2025783 2735722

Natural rubber 428511 808637 1055177 1910370 2052320

Honey, natural 440134 952515 717222 903082 1290940

Avocado 320124 545553 844884 1281887 1279566

Mango 428299 578874 646821 918524 1001681

Oil of Castor Beans 162196 158904 254711 363456 566613

Silk Raw 276138 239010 287825 377750 362587

Cinnamon 107135 109066 139606 185115 199092

Papaya 124014 161481 185248 186153 188050

Vanilla 175958 339358 117639 116372 125405

Fig 23073 38283 44751 57030 83125

Shea kernel 10452 22807 7167 30399 42410

Plant-based Gums 6628 11656 8311 6747 6513

Kolanut 6932 1668 477 1916 1904

Source: Compiled from FAOSTAT (2011)

A. Examples of successful tree systems are:

Coffee systems in East Africa and Cote d’Ivoire

Coffee is one of the top traded commodities in the world and Africa is a source of a considerable proportion of global production, both of the Arabica and Robusta varieties. In the 2000 decade, data showed that there were approximately 700,000 smallholder coffee growers in Ethiopia, 400,000 smallholder coffee farmers in Kenya and 500,000 smallholder coffee growers in Uganda. Although coffee prices have fluctuated over the years and governmental parastatals have not always functioned well, there is no doubt that coffee has had a significant role in rural income generation in eastern and central Africa.

Production in Ethiopia, the largest Arabica coffee producing country in Africa, has been increasing by about 1.6 percent annually to reach 207,000 MT by 2010. Coffee output also increased by between 0.7% and 3.8% annually in Uganda, Kenya, and Côte d'Ivoire(FAO 2003, Pay 2009 and Diop and Jaffee 2005). Over the past decade, world consumption of coffee has increased by 0.4 percent annually from 6.7 million MT (111 million bags) in 1998– 2000 to 6.9 million MT in 2010. Coffee consumption in developing countries grew from 1.7 million MT in 1998–2000 to 1.9 million MT in 2010, at an annual rate of 1.3 percent. Coffee prices reached lows in real terms between 2001 and 2002 partly due to structural changes in the global markets, booming supply, and changes in corporate strategies blending of beans (Daviron and Ponte, 2005). But prices have risen again, especially for high quality Arabica varieties and for organic coffee, including wild forest and agroforest coffees. Despite these fluctuations, coffee has remained a key enterprise in eastern Africa, though production is currently growing more slowly there than in Latin America and Asia. Much of the coffee in eastern Africa is found in the highlands and plays a significant role as perennial land cover -- helping to protect the hillsides against soil erosion. Some of the coffee systems, notably those in Ethiopia, are traditional forest or home-garden agroforestry systems which support a high degree of plant biodiversity (Hylander and Nemomissa (2008).

Tea in Kenya and Rwanda

Production of tea in Kenya, both from large estates and an estimated 350,000 smallholders has increased significantly in the past decades to the point that Kenya has become the world’s number one exporter in some recent years. In eastern Africa as a whole, tea production grew from 306,000 MT to 521,000 MT -- 70% --from 1990 to 2009, which was a higher rate than elsewhere in the world. In Rwanda, tea export earnings increased to $58 million in 2010 from $48 million in 2009, and the government is seeking to increase this to $90 million by 2015 (East

African 2011). Kenya exported 441,000 MT of tea in 2010, the largest volume it has ever exported (Kenya Tea Board 2011). The recent growth of tea, relative to coffee, is partly due to more distinct comparative advantage of the region, with its large area of highlands. But management of the sector has also played a role, with relatively efficient and transparent cooperative structures providing important production and marketing services. Tea cultivation has generally been of a monocropping nature so that the crop grows in full sun. Its historical expansion has often come at the expense of highland forests and therefore has had adverse ecological effects. However, recent expansion, e.g. in western Kenya, has been from conversion of annual crops which can result in both economic and ecological benefits.

Cocoa in Cote d’Ivoire, Ghana, Nigeria

An Amazonian tree first introduced to the West African mainland in 1878, cocoa (Theobroma cacao) has since grown to third ranking as a global export commodity following coffee and sugar, and has become the leading export in Ghana and Côte d’Ivoire in particular, with 80% of production being grown by smallholder farmers on plots of less than 10 ha (WWF 2006). Africa’s share of global cocoa production is just below 70% and about 50% of all cocoa exports are produced in Cote d’Ivoire, by an estimated 800,000 farmers. Another 700,000 farmers grow cocoa in Ghana. Cocoa cultivation in the West African forest zone has been increasing in some areas (western Ghana and Southwest Côte d’Ivoire in particular) at over rates of over 15% per annum over the past decade (Figure 2 -- Gockowski and Sonwa 2008). This is reflective of a general positive trend in demand for cocoa, mainly from developed countries such as the United States. There has been growing competition in the production of cocoa, however, from outside of Africa, and through new rules in the major cocoa import nations (especially EU) which authorizes the replacement of cocoa butter by less expensive cocoa butter substitutes up to 5% of the total weight of the finished product. Similar to tea, much of today’s cocoa was carved from forest lands. Although diversified shade cocoa systems are commonly observed, there are renewed efforts to improve the profitability and environmental services from existing cocoa production areas. Diversification strategies in which high value trees are integrated into the systems are however challenged by the generation of clonal varieties bred only for full sun.

Figure 2: West African cocoa production, 1961 – 2006 (from Gockowski and Sonwa 2008, from FAOSTAT data)

Fruits – notably in South Africa, Kenya

South Africa has developed one of the world’s leading fruit production and processing sectors. In 2008, nine of its top 20 agricultural exports were fruits. The fruits with the highest export values were oranges, grapes, and apples together accounting for $992 million dollars of export revenue. Combined with 6 other fruit categories, the country exported over of $1.6 billion of fruit and fruit products. Wine, which is derived from a woody plant, generated $759 million in export revenue and was South Africa’s number one agricultural export. The industry is not nearly as valuable in Kenya, but it is large and growing. National surveys have found that more than 80% of farmers grow fruits and half of all farmers are selling fruits. The most common ones are mango, avocado and papaya, but many others such as guava and passion fruit are emerging. Kenya exports of fruits were about $100 million in each of the past three years (Kenya Horticulture Development Program 2010). Exports are just a fraction of commercial value however. For example, only 1% of mangoes produced in Kenya are exported with a value of $14 million. However, about 50% of domestic production is sold in national markets (the other 50% is consumed on farm) (FAO 2005).

Fruit trees are commonly grown in virtually all other countries of Africa. Many important fruits are indigenous or naturalized and have been commercialized, including Sclerocarya birrea (marula), Adansonia digitata (baobab), Irvingia gabonensis (bush mango), and Ziziphus mauritiana. The number of fruit trees on smallholder farms is generally few and therefore the environmental services generated from them are relatively modest. Nonetheless, they do store carbon on a long term basis and provide homes and nectar for a variety of animal species.

Cashew in West Africa

West African countries, notably Cote d’Ivoire, Guinea Bissau and Nigeria, produce about 475,000 MT of cashew each year, or about 25% of global production (Boillereau and Adam 2007). Of this, about 10% is processed each year within the region with a farm value of about $21 million, while the processed retail value is about $134 million. Additionally, other raw nuts are exported for processing, chiefly by India and Vietnam. Globally, about 80% of all cashews are consumed in Europe and the USA and only the better grades of cashews qualify for exports. As of 2007, there were 12 large scale and 68 semi-industrial cashew processors in the region. Domestic consumption of cashews in the region is high in terms of percentage of the population consuming – about 85% -- but the quantities consumed are low due to the price, which is higher than that of groundnuts. It is projected that this could change if processing and other value addition efforts are improved within the continent as this will expectedly raise the profitability of the industry.

Shea (Vitellaria paradoxa) in Western, Central and Eastern Africa

The shea butter tree (Vitellaria paradoxa, syn. Butryospermum paradoxum) is a slow-growing fruit tree indigenous to the Sudanic savanna of sub-Saharan Africa. The tree occurs in a narrow band of vegetation extending some 5,000 km, from Senegal in the west to Uganda and Ethiopia in the south and east of the range. The shea tree provides an annual bounty of nutritious fruit to rural communities during the annual ‘hungry season’. The seeds of the shea fruit are large kernels with a high percentage of edible oil, known as shea butter, which is a very important nutritional and economic resource for households and communities across the shea parkland savanna.

Shea has been documented as a trade commodity – both an edible oil and skin care treatment locally, and a unique luxury item of considerable value in regional trade – as far back as the 14th Century. According to recent trade figures, regional shea butter exports are increasing exponentially, having multiplied fourfold between 2003 and 2007, while shea butter imports to the European Union in particular increased tenfold between 2000 and 2005. Due to the low price and relatively high quality of Ghanaian shea products, as well as the long history of the Ghanaian shea sector, regional trade patterns, and infrastructural factors, Ghana has become the most important source of shea kernel and shea butter of all the producing countries. Beyond the prominence of Ghana in context of the the West Africa region, which supplies shea kernel and butter to the global marketplace, it is possible to map out destinations of shea kernel and shea butter in a simplistic fashion, as per Scholz (2010) (see Figure 3).

Figure 3: Production and exportation of Shea in AfricaSource: Scholz (2010)

Charcoal – throughout Africa

By its sheer size as one of Africa’s most valuable traded commodities, there are certain to be opportunities for investment. Shackleton et al., 2004 state that South Africa alone has 13 million cubic meters fuelwood/charcoal demand. The world market for charcoal is estimated at $6.8 billion in 2010 and this figure is closer to $15 billion if informal sales are included (Pauli, 2011). In Kenya alone, the value was estimated at $375 million in 2004 (ESDA 2005). In Malawi, the value of charcoal in the four largest urban markets made it the third largest industry in the country, behind tobacco and tea (Kambewa et al. 2007).

Africa produces over half of the quantity of wood charcoal produced in the world. From producing 52% of global charcoal in the early 1990s, the proportion of charcoal production in

Africa has increased slightly over the years to 63% in 2009. In terms of the absolute quantity, the production of charcoal has also increased tremendously rising from 15 million MT in 1990 to 28 million MT in 2009 (Figure4). East Africa region is the largest producer of charcoal and consistently leads other regions in Africa leads other regions in charcoal production for the past two decades. However, southern Africa region recorded the highest growth rate of charcoal production. Using the production in 1990 as the baseline, production of charcoal generally increased between 150-180% in almost all the region but in southern Africa region, charcoal production increased by a very high rate, from a low baseline (Figure 4).

Charcoal production is undertaken by both large, formal businesses and small, informal charcoal producers. Larger companies not only supply local demand but also export charcoal, chiefly to Europe. Examples of successful large company investments are given below, in section 2. Informal, small scale charcoal production has acquired a reputation for adverse environmental effects due to the sourcing of wood from forests and woodlands and from the inefficient kiln methods used. With increased attention to these issues, there will certainly be opportunities for investments that generate profits while being more environmentally friendly.

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Fig. 4: Production of wood charcoal in Africa (tonnes)

Africa Eastern Africa Middle AfricaNorthern Africa Southern Africa Western Africa

Wood production -- (South Africa and eastern Africa highlands)

The growing of timber (including poles and fuelwood) on farm is a prominent feature in many African rural landscapes. Some of these plantations are industrial plantations, such as in South Africa, but many are in the form of small woodlots or boundary plantings and are particularly common in the east African highlands. Timber growing in South Africa and Zimbabwe feature a number of outgrower schemes, in most cases with small plantations of 1-3 hectares in size. Woodlots densely populated east Africa are much smaller, but yet occupy a significant area. Aerial photos from across 30 districts in Kenya found that about 2% of all land area was under woodlots with much denser plantings in some districts such as Vihiga (Place et al 2006). The planting of Grevillea robusta in central Kenya is widespread, with practically every farmer planting it on boundaries in the coffee zone. Similarly, there are wide scale plantings of woodlots in Rwanda and Ethiopia, the former mainly on private fields, but in the case of Ethiopia, there has been considerable afforestation on former communal hillsides (Jagger and Pender 2000). In Rwanda, there were estimated to be more area under private plantation than state owned plantation as long ago as 1990 (Mihigo 1999). The growth in on farm wood production is largely in response to the disappearance of forests and woodlands which previously supplied the wood needs of rural households. Most of the wood production is used for either fuelwood or poles with much of it being consumed on farm. If remaining woodlands are to be conserved, agricultural land will need to supply an ever growing amount of wood. There have been growing concerns with the water use of eucalyptus, a key woodlot species. Thus, there are increasing attempts to identify alternative species, especially indigenous species, for locations where water is scarcity is a factor.

B. Examples of other restoration practices at scale

Conservation agriculture in cotton and maize (Zambia)

Conservation farming (CF) is a package of agronomic practices which had been promoted to for smallholders in Zambia since the 1990s. The system is comprised of three principles: (i) dry-season land preparation using minimum tillage methods, utilizing fixed planting stations (small shallow basins); (ii) retention of crop residue from the prior harvest in the field or use of other mulches/ground covers; and (iii) rotation of crops in the field. Available evidence suggests that up to 60,000 farmers practiced CF in 2001/02 season (Haggblade and Tembo, 2003). From a recent concerted effort in dissemination, this figure has increased to over 180,000 farmers at the end of 2010, and this figure is projected to rise to 250,000 farmers by 2011 -- representing some 30% of the population of small-scale farmers in Zambia (CFU, 2011). The scaling up programme has recently added a tree component, the planting of Faidherbia albida to provide mulch and nutrients to the system. Several years of research has shown that through leaf and pod fall, nitrogen fixation in conservation farming under mature canopy of Faidherbia is as

follows:- 75kg of nitrogen per ha; 27kg of P205 per ha; 183kg of Ca0 per ha. This is equivalent to 300kg (six bags) of formulated fertiliser (Aagaard, 2011). These practices have been found to be highly profitable and not only after soil health is improved. By eliminating the need for laborious land preparation, farmers adopting the system have been better able to plant close to the onset of the rains and that alone has had a significant impact on yields.

Natural regeneration of parklands in Niger and rest of Sahel

Figure 5 :Galma, Niger in 1975 and 2003 Source: World Vision Australia

From the 1980s, a major transformation of landscapes occurred in Niger, especially the Maradi and Zinder regions. The former heavy role of the forestry department in regulating the use of trees on farms was reduced and farmers had more incentive to grow trees. After more than two decades, the results have been phenomenal, with over 5 million hectares of rejuvenated parklands being documented (see Figure 5). The practice mainly involved the selection and protection of tree species that were regenerating naturally from seed or roots in the soil. The most common species protected by farmers in Niger include Faidherbia albida(winter thorn, commonly known as gao in Niger), Combretum glutinosum, Guiera senegalensis, Piliostigma reticulatum (camel’s foot), and Bauhinia rufescens. Depending on the location of the village, other species can be important, such as Adansonia digitata (baobab) and Prosopis Africana (ironwood) (Reij et al. 2009). This range of species provide for improved soil fertility (especially Faidherbia), fodder (Piliostigma, e.g.), wood and fuel, and a variety of fruits and foods and a recent study has shown incomes to be higher among farmers practicing regeneration (Haglund et. al. 2011). The interesting aspect of this expansion was that it was truly an organic process, expanding out from a few early innovative sites village to village and farmer to farmer with minimal external support.

Exclosure / enclosure practices (e.g. Ngitili in Tanzania)

Exclosure practices, in which an area of land is set aside for reduced use, have long been used throughout the world as a restoration practice. Enclosure practices build on this by purposeful enrichment of defined areas. Sometimes both practices are combined – that is exclosures to encourage natural regeneration, along with investment in other land management practices to restore valued environmental services (e.g. spring rehabilitation) and for needed profits and income. These are now common practices in Ethiopia and in the Sahel, but one of the largest exclosure movements is the expansion of the ngitili system in north-central Tanzania. Ngitili is a traditional agro-pastoralism ‘enclosure systems’ that involves conservation of fallow and range lands by encouraging regeneration of vegetation through controlled livestock grazing during the wet season for use in the dry seasons. Vegetation and trees are nurtured on fallow lands during the wet season so that livestock fodder supplies are available for dry months.These can take place both on communal and private lands.

The HASHI programme, started in 1986, expanded this practice throughout many districts and in some cases introduced other land management practices into the ngitili, such as the planting of desirable trees. In western Tanzania, from about 600 hectares in 1986, documented ngitili enclosures reached 78,122 hectares in the 1990s. By 2004, 18 years into the project, more than 350,000 hectares of ngitili had been restored or created in 833 villages encompassing a population of 2.8 million in Tanzania (WRI, 2005). A recent study found that the system provided significant consumption and income effects as well as a variety of ecological impacts such as increased vegetation cover, woody biomass, and plant biodiversity (Monela et al 2005). The economic value generated was significant, estimated at $14 per person per month in resources and products. In Bukombe District, this was estimated to result in an annual gain of almost $90 million for the population.

2. Major tree based investment opportunities

Many of the successes noted above remain viable investment opportunities in the future. In addition, there are some more nascent investment opportunities with high potential. This section presents a large number of these opportunities, though not all at the same level of detail. Information on tree products -- be it related to forecasting, prices, production or profits -- is spotty. Thus we present information where it is available, which often turns out to be limited to a particular species and/or location. Certainly, more analysis would need to be done by an investor in terms of due diligence, but this section should at least serve the purpose of identifying a number of promising opportunities on the basis of the information available.

2.1 Tropical Fruit

The tropical fruit market has evolved significantly since the 1980s. This has been due to rising incomes, improved technology, and evolving international agreements (Huang 2004). Tropical fruit crops are important for the food security and cash income in many developing countries both from the nutritional perspectives and through their contribution to farmer income and export earnings.The value of international trade of fresh tropical fruit in 2008 was $ 4.5 billion (compared with $ 7.5 billion for banana, $6.2 billion for apple and $ 3.3 billion for orange). Processed tropical fruit transactions were valued at USD 1.9 in 2008 (FAOSTAT 2011).As a major player in the global trade, developed countries such as Japan, U.S. and other developing countries expanded their imports of fruit juices significantly after the mid-1990s when citrus and non-citrus juice import restrictions were liberalized (Feleke and Kilmer, 2009). About 90% of tropical fruits produced globally are sold and consumed within the producing countries, thus the traded value is but a small fraction of the value of production. In terms of consumption of internationally traded fresh fruits the EU and US alone accounts for 75 percent of all the quantity of pineapple, mango and avocado and 68% of papaya fruit traded in the world market. FAOSTAT data show that China’s imports of fresh minor tropical fruits ballooned from $17 to $176 million between 2000 and 2008. However, in the past, Africa has almost completely failed to participate in China’s imported fruit growth (Huang 2002).

Africa has witnessed a massive production increase in fruits such as mangoes, citrus fruits and bananas. African production of fruit and vegetables grew by 9 percent between 1990 and 2003. Output was anticipated to increase from 961,000 MT in 1998–2000 to 1.1 million MT by the year 2010. Currently, Africa accounts for 16% of global papaya production, 11 % of mango production, and 10% of avocado production. However, the share of fruit exports from Africa is low and despite massive production dating to 1950s, export share has been dwindling since 1980s, while that of Asia and Latin America has increased, due to (i) variable quality of fruits from large numbers of producers which do not comply with export requirements, (ii) an oligopolistic market structure favouring only few exporting players. For example, in 2005, there were only four private exporting companies in Uganda, all of which focus exclusively on exportation of raw cocoa (Gibbon et al. 2009).

Projections indicate that global production of tropical fruits will increase from 70 million tons in 2006 to 81 million tons in 2015, an increase of 16% within a decade. Similar to what occurs presently, import demand for fruits is projected to be dominated by developed countries by 2015. Annual export growth rates in the near term expected to be 1.4% for mango, 2% for avocado, and 5.6% for papaya (FAO, 2004). Within these global growth rates, Africa is

projected to have faster growth in avocado and papaya production (both over 4% per annum) than the world average, but slower growth in mango. Indeed, recent growth in avocado production in eastern Africa has been staggering, rising by 420% from 1990 to 2008 (compared to 79% globally – FAOSTAT 2011). Global prices for tropical fruits fluctuate and are influenced by exchange rate movements of buying and producing countries, in addition to aggregate supply and demand factors. Among the tropical fruits, prices for papaya have risen the most between 2003-2008 (from €2.2 to €2.5 per kg), followed by avocado. According to FAO, there are now few novelty based premiums for fruits, but premiums still exist for quality (FAO 2004). Although price data in Africa are hard to come by, prices of avocadoes, mangoes and passion fruit have increased about 50% from 2007-2009, significantly greater than the inflation rate (Kenya Horticulture Development Programme 2010).

Growth of per capita consumption of fruits in developed countries appears to have slowed. For example, over the period 1980 to 2003, the per capita consumption of citrus fruits (oranges, grapefruit and lemons and limes) in these countries grew at an average rate of one percent per annum.However, demand for fruit products has been increasing faster, especially for juices. For example, in the United Kingdom, market value of fruit juice increased 37% from 1999-2004 ending up at a market value of £3 billion. Within Africa, per capita consumption of fruit and fruit products is expected to grow more rapidly. Expenditure analysis has shown that for each 1% increase in income in an average African household, the purchase of fruits increases at a relatively high rate of 0.6 to 0.7%1 (Ruel et al. 2005). Due to income and population growth, it is estimated that fruit demand in Africa will increase at a rate of about 5% per year over the next 10 years. Taking FAO’s figures of current consumption in the continent, this can be equated very approximately to an annual increase in consumption of more than 10 million MT over the next decade, which equates to around $2 billion in farm gate value at current prices.

There is very little up to date data on production costs and returns for fruit growing. Estimated revenues per hectare from Kenya, which uses current prices and actual average yields from farms, are available from the Kenya Horticulture Crops Development Authority(2008):

Guavas: 5 tons /ha @ 15 Ksh/kg = $950

Tree Tomato: 8 tons/ha @ 15 Ksh/kg = $1,500

Grapes: 3 tons/ha @ 35 Ksh/kg = $1,300

Papaya: 30 tons/ha @ 15 Ksh/kg = $5,625

Passion: 12.5 tons/ha @ 30 Ksh/kg = $4,685

1Based on household surveys in 10 African countries: Burundi, Ethiopia, Ghana, Guinea, Kenya, Malawi, Mozambique, Rwanda, Tanzania and Uganda.

Citrus: 8 tons/ha @ 20 Ksh/kg = $2,000

Avocado: 13 tons/ha @ 15 Ksh/kg = $2,437

Mango: 12 tons/ha @16 Ksh/kg = $2,440

Of course, it is not possible to only compare revenues across crops without taking cognizanceof the production costs for the respective crops, but it is useful to note that average maize yields for all farmers (i.e. the same ones growing the fruits in the list above) in Kenya are about 1.5 tons/ha which gives a revenue per hectare of about $300.

More research has been carried out on mango production in Kenya, since it such a valuable and widespread fruit (183,000 MT produced in 2003). Kaminchia (2006) found that the break-even return for a mango orchard with grafted seedlings is achieved in the 5th or 6th year of production with high returns accumulating thereafter. Costs per fruit are estimated at between $0.03 and $0.07 while prices per kg can be as high as $0.40 for high quality mango.

2.1.1 Indigenous fruits, nuts, and kernels

As can be seen in the examples from above, there is keen interest in growing exotic fruits for domestic and export markets. Indeed, in terms of value of marketed product, the most important fruits are often exotics. However, when taken as a group, African indigenous fruits are also highly valuable. In this section we highlight a few of these and conclude with a more substantive write up of one in particular – the baobab.

Dacryodes edulis, or African plum which is known locally as safou, is a tree highly valued for its fruits in Cameroon, Nigeria and elsewhere in humid west Africa. Yields are between 20 – 50 kg per year, and an orchard can therefore produce up to 10 tons per ha (Verheij 2002). With prices at around $0.20 per kg, this implies a revenue per ha of about $2,000. Awono et al. (2002) report that $2.4 million of the safou fruit was exported to Europe in 1999 while demand in Cameroon alone was about 7 times that quantity.

Irvingia gabonensis and I. wambolu, or bush mango, found in the lowlands of west Africa. They occur naturally on farms in Cameroon, but farmers in Nigeria plant them in homegardens. Good producing trees can generate up to 180 kg of fruit per tree and 100 kg of kernels. The fruits are eaten and traded locally, but the kernels have a wider traded value as they are a key ingredient in soups and stews.Ndoye (1997) estimated that the demand for kernels in southern Nigeria is about 80,000 MT per year (value of $40 million).

Ricinodendron heudeloth, or njansang, produces highly valued kernels which are ground and used in cooking. The kernels are high in protein and are used as a spice and thickener. Exports of the kernels from Cameroon to neighboring countries were found to be about $ 1 million in 1996 (Perez et al. 1999).

Uapaca kirkiana is a fruit tree found in the miombo ecosystem. It is not commercially planted, but a large number of people harvest fruits and market them for domestic markets. A study in Zimbabwe showed that households in several regions benefitted from between $10 and $40 annually per household from sales of its fruit (Mithoefer and Waibel 2003).

Baobab

The Baobab is an African tree indigenous to the arid and semi-arid savannah of western, eastern and southern Africa, including Angola, Benin, Botswana, Burkina Faso, Cameroon, Chad, Congo, Côte d’Ivoire, Ethiopia, Eritrea, Gambia, Ghana, Guinea, Kenya, Malawi, Mali, Mauritania, Mozambique, Namibia, Niger, Nigeria, Senegal, Sierra Leone, Somalia, South Africa, Sudan, Tanzania, Togo, Zambia and Zimbabwe. Perhaps the most charismatic of African trees, the baobab provides highly nutritious leaves and fruit for local consumption, and other products which serve a multiplicity of uses, including water storage and medicinal, fodder, fiber and fuel products, some of which have been studied by scientists for their nutritional, cosmetic, pharmaceutical, and veterinary applications. Compared gram for gram with other dried fruits, baobab fruit pulp offers more than twice the dietary fibre of apple, more than twice the Calcium of milk, more than twice the Iron of spinach, and significantly more Potassium and Magnesium than banana (Phytotrade/Afriplex 2009). The soluble fiber pectin (at 56 g per 100g of pulp) has been identified as active in cholesterol reduction (both LDL and total) and as a ‘probiotic’ compound supportive of beneficial intestinal flora.

According to a recent study by IUCN, baobab production in the 10 SADCC countries alone represents a US$11 million industry to over 1 million households, with great potential for growth; extrapolation of these figures to include the heavy baobab production areas of western and eastern Africa could involve more than 5 million households –with a value to local producers of over $250 million per annum (Gruenwald and Galizia 2005, Bennet 2006).

Global trade in baobab products – primarily fruit pulp powder and seed oil - is fairly recent, having been greatly facilitated by EU Novel Food and USDA GRAS (Generally Recognized as Safe) food ingredient status as a result of the efforts of Phytotrade Africa and others. Though recent regulatory approval in developed country markets present new commercial opportunities for expansion of a global market in baobab products, the characteristics of the baobab value chain vary widely between sub-regions and countries of origin, with a wide

diversity of pricing and very little transparency, exchange of information or horizontal integration between producers of different countries and origins.

Due to its naturally low moisture content, baobab fruit pulp is classified as a dry fruit powder in the EU, which imported €53 million of fruit powder in 2004, representing a 13% increase in the import value of this commodity over 2003 EU imports according to Eurostat figures. The most important EU importers of fruit powders are Germany, France and the Netherlands, serving production of breakfast cereals, cereal bars, granola, functional foods and functional drinks.

The main current and potential market for baobab fruit pulp serves the food and beverage and pharmaceutical industries (functional foods or ‘nutraceuticals’ in particular), while other baobab products including the seed oil are relevant to the natural cosmetics and ‘cosmeceuticals’ industries. Due to the its diversity of health claims - including pre-biotic and antioxidant functions, high vitamin C, calcium and insoluble fiber content, and the anti-inflammatory properties - and other specialized food technology attributes (high pectin and soluble fiber content gives blended drinks a thicker consistency), baobab fruit pulp has become a valuable new high-value ingredient in a new generation of functional foods and drinks.

Economic data on production and trade of baobab products is patchy, inconsistent and dispersed, originating from just a few of the many producing countries – most notably Malawi, Senegal, Kenya and Sudan. It is clear that price points and trade patterns for each of these origins is very different, and thus producers in some countries (e.g. Malawi and Senegal) may earn considerably less than their counterparts in other origins (e.g. Kenya and Sudan), as clearly shown in Figure 6.

Figure 6: Price variations for baobab products across Africa

Typical prices for products in the Sahel region [from SCUC (2006)]Fresh leaves, sold during the rainy season: US$ 0.06–0.18 per kgDried leaves, sold in the local market: US$ 0.09–0.18 per kgDried leaves, sold for export: US$2.73 per kgPowder from dried leaves sold in the local markets (of Mali): US$ 0.23–0.27 per kgWhole fruits, sold locally: US$ 0.18–0.46 per kg, but sold for export: US$ 6.4 per kgPowder from fruits sold in the local markets: US$ 0.73–0.91 per kg

Baobab Fruit and Fruit Powder*Whole fruits, sold locally: US$ 0.18–0.46 per kg, but sold for export: US$ 6.4 per kg.* Baobab Fruit Powder (Sahel) sold on local markets: US$ 0.73–0.91 per kg

**Supplier Price: Approximately US$ 3 to US$ 20 per kg FOBPrices depending upon the quantity, quality and other trade terms**Organic and Fair Trade certified fruits, with certification costs, may increase theprice fetched by US $ 5 per kg FOB. +Tree Crops Ltd. (Malawi) purchases fruit pulp powder from local producers at a price of US$20 per 200 kg, or US$0.10 per kg [CFC 2006]

*SCUC (2006) ** Gruenwald and Galizia (2005) +CFC (2007)

2.2 Other Food Products

2.2.1 Cashew (Anacardium occidentale)

A native of Brazil, the cashew was introduced to Africa as early as the 17th Century, and it remains an important crop in the lusophone countries of Guinea Bissau and Mozambique, as well as Tanzania and, more recently, in Côte d’Ivoire, Ghana and Benin.Cashew is a global ‘success story’ – export trade nearly trebled in the decade from 1998 to 2008, from 243,000 MT valued at to over 707,000 MT, with the value of shelled cashew exports nearly trebling from $724 million in 1998 to over $2 billion in 2008. In recent decades, the dynamics of production and processing have evolved rapidly, with new and emerging opportunities for African producers and significant potential for restoration of existing plantations and smallholder stands of cashew in the coastal lowlands of both eastern and western Africa.

Africa entered the world market in processed cashew with construction of mechanized processing plants in Tanzania and Mozambique in the 1970s, but largely for political reasons these did not long remain operational. Recent decades have thus seen a rise and fall in Africa’s position as a supplier of processed cashew to the global marketplace (see Figure 7). During the past decade, Africa’s competitive position as a producer of processed cashew has thus been challenged, as cashew production and export has taken off in Vietnam and in India, which currently imports nearly all of Africa’s whole raw cashew nut exports for processing in order to serve its huge domestic demand.

Figure 7: Cashew Nut Production Trends in Major Producing Areas

Source: Poulton 2006 (data from FAOSTAT)

Growing constraints in India and Vietnam combined with Africa’s much lower labor costs and geographicproximity to the US and European markets present a significant opportunity for Africa to increase its processingcapacity and process more of its crop. It is estimated that if Africa’s crop was processed domestically, it wouldgenerate more than US$150 million in added value and more than 250,000 new jobs, particularly benefitingwomen in rural areas’ (WATH 2010). Much has been written on the desirability and economic sustainability of industrial processing facilities in the African context, particularly in light of the misadventures of Mozambique and Tanzania in the 1970s, as well as the challenges of capacity and scale presented by generally poor transport infrastructure (e.g.Poulton 2006), but there is optimism that African producers will find ready markets either for processed cashew of African origin, or from exports of unprocessed nuts to the Asian processing countries (Horus 2005).

Cashew trees bear their first harvest at around 5 years, reaching peak productivity at about 15 years, and tailing off at around 40 years; annual yield per tree in Mozambique has been estimated at 3 kg per year, with significant potential for improved yields with increased availability of inputs (ACI 2010). Prices fluctuate considerably; in late 2010, prices in Tanzania rose considerably from about $0.60 to $1.30 per kg. While the true profitability of cashew production to rural producers has historically been variable, they provide a significant long-term resource in diversification of livelihoods, as well as significant environmental services such as windbreak and shade compatible with a variety of cropping systems. Cashew grows on very poor sandy soils, is drought-tolerant, and is commonly intercropped with cultivated food crops such as cassava, thus providing a buffer against failure of rainfed annual crops in a context of

climatic uncertainty (Mitchell 2004). From an ecological perspective, the cashew tree has been shown to have high potential for the restoration of severely degraded lands, including sand tailings from mining operations in Sierra Leone (Dick et al. 2010).

While the private sector should lead with market-based solutions to productivity challenges, national governments and inter-governmental trade bodies must also support research and development, and establish constructive policies favoring re-investment by smallholder producers and other stakeholders of the African cashew value chain including ‘elimination of tariffs, duties and taxes levied on raw cashew nuts traded between African countries as provided by the ECOWAS, CEMAC and SADC trade agreements’(ACA 2010).

Recent donor initiativesare supportive of renovation of African cashew production through direct support to producers and by bringing together various stakeholders under public-private partnerships and similar arrangements, e.g. the African Cashew Alliance supported by USAID, the Bill & Melinda Gates Foundation and GIZ (formerly GTZ), with participation by NGOs such as Technoserve, partnered with the private sector (ACI 2010).

More encouraging, there are signs that the private sector is stepping up with investment in processing facilities with commitment to commercial viability and sustainability of operations over time. One example is the manual processing plant established by the multinational commodity company Olamat Mtwara (a remote and underserved area of southwest Tanzania) which supports replanting of old cashew stands -- and has grown from an initial 350 employees producing 4 MT of cashew a day to 4,500 workers producing 72 MT per day in 2009 (Olam 2009).

2.2.2 Honey

The global trade in honey is valued at approximately US$1.4 billion per annum, of which the 15 countries of the EU comprise 20-25%, China 15% and the USA 10% of consumption (CBI 2009). The global market for beeswax is more limited, at US$65 million, of which the EU consumes about 30%, the USA 17%, and Japan 9% (FAOSTAT 2011). Whereas global demand for honey and bee products is growing, its supply is in decline in regions such as North America and Europe. Other producing regions have seen similar productivity decline in recent years, e.g. South America and India (down by 30-40% due to inclement weather in 2011), resulting in ‘extremely high prices’ which may be seen as a growing trend likely to continue, given stable or increasing demand (Kamberg 2011). Africa is uniquely positioned to benefit from the emerging opportunities presented by this developing trend.

As elsewhere in the world, honey is produced widely across Africa, in deep forest, savanna, lowland and highlands, including some distinctive specialty honeys found nowhere else in the world. Also in common with other honey producing origins, internal demand for honey in many African countries is growing rapidly, as middle classes become more aware of the health impacts of sugar consumption versus the perceived health benefits of natural honey. The advantages of serving local and national market opportunities first include lower transaction costs (including marketing), less stringent quality criteria and acceptability of smaller volumes, as well as reduced transactional risks overall (UNCTAD 2006).

Unlike many other global honey origins, however, the African honeybee Apismellifera does not suffer from Colony Collapse Disorder (CCD), and it displays resistance to (or tolerance of) the varroa mite (Varroa destructor syn. V. jacobsoni) implicated as a contributing factor in CCD. These and other global trends seem to ensure a promising future for African honey producers to meet growing market demand for African honey at the national, regional and global levels (CBI 2009). Though some ‘generic’ honeys of African origin are perceived as being dark and smoky due to traditional methods of smoking the hive, there are examples of fine light honeys of specific provenance (SFP 2010), the distinctive Mt Oku white honey of the Cameroon highlands (Niba and Ingram 2008), and the exquisite monofloralshea flower honey of Fada N’Gourma, Burkina Faso.

There should be a favorable future for African honey exports, if African producers can overcome challenges of quality assurance at scale through collective marketing and other measures (Bradbear 2009). Fortunately there are some good examples of private sector initiatives on product development and marketing of African honey, some with targeted support by bilateral and multilateral donors with technical support from NGOs and the NARS.

Honey Care Africa has operations in Kenya, Tanzania, Uganda, and Sudan, incorporating 12,000 household honey-suppliers into the product’s value chain. They introduced improved hives and bee keeping management which increased honey yields/hive from 15 to 40 kg per year. Farmers purchased the hives on credit and after repayment, the typical household was earning $180 to $250 per year from honey sales. Studies have also found honey production to be profitable and growing in many other countries, e.g. Ghana and Ethiopia.

2.3 Timber and wood products

In Africa, wood production doubled within two decades, the increasing from 340 million m3 in 1980 to 699 million m3 in 2000. Over 90% of all wood produced in Africa was used as fuel, including off-takes from forest, where 618 of 688 m3 of forest removals in 2008 was for

fuelwood (FAO 2010). The wood demand-supply balance varies by sub-regions. North Africa ranking as the most wood-deficit sub-region and depends mainly on imports. West Africa is also exhibiting a deficit in recent years while in East Africa, demand and supply of wood are in relatively balance. Africa’s share of global wood production has declined progressively in recent years (FAO, 2003b). Similarly, while the global value of traded forest products increased from $57 to $143 billion between 1980 and 2000, Africa’s portion went from $1.6 to $2.9 billion and thus lost they lost share of production value. To counter this, there has been a movement within African countries to qualify for certification programmes which may increase market opportunities for forest products. To date, about 1 million hectares of African forests and plantations have been accepted into certification schemes.

It will be important to track import demands and patterns from China in particular. The value of wood imports into China soared from $5.4 billion in 1990 to $23.7 billion in 2009. The share of China of Africa’s log exports increased significantly from the 1990s while that of Europe has decreased. In fact, from West Africa and the Congo Basin, exports to China were significantly more than to the rest of the world combined (almost 2 million m3 to China in 2009 versus 0.4 million m3 to the EU and just under 0.4 million m3 to the rest of the world). Whether this can be sustained or will be sustained is another matter. China has increased its plantation area by a tremendous amount and in the future will be able to source much more wood domestically. While almost all of Africa’s wood exports are with little or no processing, South Africa is the only ‘serious’ exporter of value added products in wood.

In terms of specific wood products, Africa produces only a small proportion of global industrial roundwood, accounting for between 4-5% of the global production in the past two decades. Africa produces only 1% of global paper and paperboards. Southern Africa leads the other regions in the production both of these wood products (mainly due to South Africa’s well developed industry). Production of sawnwood in Africa is low, estimated at between 8-9 million MT annually, or only about 2% of the global quantity of this type of wood. The continent’s production of sawnwood is led by West Africa followed by Southern Africa and Eastern Africa in that order. Although West Africa accounts for the largest proportion of sawnwood in the continent, it records a slightly negative growth rate while in the other regions, production growth rates are either increasing or they are fairly static. On the other hand, with a steady increase from about 500 million cubic metres in early 1990s to about 700 million cubic metres in 2009, Africa’s proportion of global production of roundwoods increased from about 14% to 20% in the past two decades. The continent’s production is dominated by Eastern Africa followed by West Africa regions. Production has generally increased in all the regions with East Africa recoding the highest increase in production in the past two decades.

Projections for consumption of wood in Africa

As a starting point, it is useful to compare wood consumption patterns in Africa with those in other regions because one can anticipate that as incomes rise, African consumption patterns may become more congruent with those in places like Asia, for example. Table 2 shows how African consumption is relatively high for roundwood and fuelwood, but less in all the other categories, notably wood panels and paper. So demand in these other product categories is likely to accelerate in the medium term.

Table 2: Per capita consumption of various wood products by region, 2008

(cubic meters or metric tons per 1000 people)

Product Africa Europe North America

Latin America

Asia World

Roundwood (m3/cap) 714 869 1532 831 256 511Fuelwood (m3/cap) 646 207 135 496 185 280Industrial roundwood (m3/cap) 69 662 1398 334 71 231Sawnwood (m3/cap) 12 155 320 74 27 59Wood panels (m3/cap) 3 104 146 22 27 38Pulp and paper 9 214 440 58 49 82

Source: Compiled from FAO (2010b)

Projections for biomass energy indicate that its production will continue to grow in Africa due primarily to relatively small processing sector and dearth of alternative renewable energy sources. Although the importance of fuelwood and other forms of biomass energy is expected to decline as incomes rise and other alternative sources of energy are made available, it is estimated that the consumption of fuelwood in Africa will increase by about 34% between 2000 and 2020 (FAO, 2003b).

Table 3: Production and consumption of sawnwood in 2005 and projections to 2030

Region2005 2020 2030

Production(million m3)

consumption (million m3)

Production(million m3)

consumption (million m3)

Production(million m3)

consumption (million m3)

Africa 9 12 11 19 14 26Europe 136 121 175 151 201 171North America 156 158 191 188 219 211

Asia and the Pacific 71 84 83 97 97 113

Latin America + Caribbean

39 32 50 42 60 50

World 417 421 520 515 603 594

Source: compiled from FAO (2009)

Sawnwood, which is used mainly in the construction and furniture industry is one the most important end uses for industrial roundwood. As indicated in Table 3, the rate of change in consumption of sawnwood higher (2.8% annually between 2005-2020 and 3.5% annually between 2020-2030) than all other regions, although starting from a low base. The FAO predicts that while Africa recorded a 75% self sufficiency in sawnwood in 2005, this ratio is projected to decline to 58% in 2020 and further down to 54% in 2030. Paper products are another product line for which Africa relies on imports. In 2000, production of printing and writing paper in Africa accounted for only 46% of the consumption, thus necessitating substantial imports to fill a big gap which is expected to continue in through the next two decades (FAO, 2003b).

As regards the wood-based panels, estimates by FAO (2009) show a relatively more parity between production and consumption of the commodity in most of the regions of the world.One noticeable trend in wood-based panels is that there is an increasing shift from plywood to particle board and fibre boards.As regards paper and paperboard, global production is expanding rapidly with an annual growth rateof 2.8% between 1990 and 2005 and much less increase in both production and consumption in more recent years.

Although it is clear that demand will increase for a variety of wood products ranging from lower value fuelwood to higher value wood panels, there is less clarity on whether such demand will

be met from African producers or from imports. In the case of paper and paper products, it is noted that in sub-Saharan Africa, the only well developed industry is in South Africa and the FAO does not see such an industry developing in other African countries given the rather low increments in demand growth over the coming years (FAO 2003b). This holds also for other higher value products where demand may be too fragmented to spur investment in local industry. This is obviously an area meriting more attention for it could have enormous implications on management of tree and forest resources.

Supply conditions in Africa

Most wood products have traditionally been sourced from Africa’s forests and woodlands. However, between 1990 and 2000, Africa lost 40.7 million ha of forests, with 31% cleared in southern Africa, 44% in Zambia, Sudan, and DRC. There was a reduction of deforestation between 2000 and 2010, but nonetheless, 34.1 million hectares were again lost. Nigeria, Zimbabwe, Tanzania and DRC are all in the top 10 countries in terms of area deforested between 2000 and 2010 (FAO 2010).

The Forest Resource Assessment of FAO (FAO 2010) estimates that only 2.3% of forests in Africa are planted (as opposed to 35.3% in East Asia). Exceptions include South Africa and Sudan. There are about 8 million ha of plantations in Africa as a whole. Plantations involve both exotic and indigenous species, the former being most common in East Africa (e.g. pines and eucalyptus). Plantation area is growing at about 1.75% per year in Africa which is below the global rate and it should be noted that this growth rate is on top of a very low base. Estimations by FAO (2009) indicate that the area of planted forests will increase noticeably in all regions except Africa, with the highest increase occurring in Asia.

In this context, agricultural land area will become an increasingly important frontier for tree growing. Tree growing on agriculture land is already a common feature in Africa and this includes the growing of trees for wood. As an example, Table 4 shows the area of eucalyptus plantations, much of which is on agricultural land, in different countries of the world. Several African countries already have large stands. The species is particularly popular in eastern Africa, with sizeable plantings in Ethiopia, Rwanda, Kenya and Sudan. Grevillea robusta is another tree that is widely grown and gaining in area. It is the dominant tree in central Kenya demarcating external and internal borders. Casuarina equisitifolia is an important timber species in coastal areas and Acacia mearnsi is common in central and western Kenya. In fact, the FAO sees tree growing on agricultural land as the major bright spot in forestry for Africa (FAO 2003b) namely in the form of expansion of private woodlots, increased planting in homegardens, and increased outgrower schemes.

Table 4: Countries with largest areas under Eucalyptus planting

Country Area (ha) under Eucalyptus

Percentage (%) of country’s area

India 3,088,400 1.03

Brazil 2,717,300 0.3

China 662,600 0.07

South Africa 557,200 0.5

Vietnam 483,100 1.6

Ethiopia 477,000 0.4

Morocco 186,500 0.4

Madagascar 105,600 0.18

Rwanda 86,500 3.3

Kenya 70,000 0.12

Angola 67,000 0.05

Sudan 53,500 0.02

Presented in Cheboiwo et al. (2010)

2.3.1 Timber planting in Kenya, with focus on Eucalyptus

Tree planting by farmers in Kenya is not a new phenomenon. A survey in the 1980s indicated that woody biomass occupied 21.9% of land area in Kakamega, 20.0% in Kisii and 20.8% in Murang’a, all three being very densely populated areas (Kenya Woodfuel Development Programme 1985). Recent reports indicate that farm forests are producing between 300,000 and 400,000 m3 of saw logs and between 100,000 and 150,000 m3 of pulpwood annually and demand would increase (Ngibuini, 2003).The wood is used to meet household and market demands. More recently, tea factories have been reducing their energy costs by incorporating more fuelwood resources and the significance of this demand translates into about 30,000 ha in total (Cheboiwo et al 2010). Much of this is met by growing eucalyptus. The Kenya Forest Services predicts that over 80% of Kenya’s wood needs would be met from farm land by 2050.

Eucalyptus was introduced into Kenya in 1902 and is appreciated for its fast growth, multiple uses, and suitability to small scale farmers and overall support to key sectors of the economy. The area under Eucalyptus in Kenya is estimated at about 100,000 hectares. Its contribution to

the national economy is estimated at over Ksh 1.6 billion (over US$20 million). There has recently been a lot of controversy regarding the effect of Eucalyptus on hydrology and the environment especially the fear that the tree causes the drying up of water sources, rivers and springs, so there is now more discussion on better matching of eucalyptus to suitable environments.

Studies show that the private forestry sector in Kenya is heavily skewed towards eucalyptus as compared to other tree species. This is obviously due to the higher financial returns obtained from eucalyptus compared with other tree plantations. Cost-benefit analysis for on farm eucalyptus enterprise to produce various products shows relatively high production values – see Table 5. Polewood for transmission or construction appears to be the more profitable ventures after considering rotation periods. High profits were also found for the growing of Grevillea and Melia in Kenya.

Table 5: Financial returns from various farm forestry enterprises in western Kenya

Enterprise Yield/Hectare Unit price Rotation Nominal Value of Production

Sawlog 420m3 3,000 25 years $15,750

Sawlog 560m3 1500 30 $10,500

Transmission polewood

1600 pieces 700 12 years $14,000

Pulpwood 320m3 750 10 years $3,000

Construction polewood

320m3 800 2-3 years $3,200

Black wattle: Charcoal

: Bark

23 MT

10 MT

7500

2900

7 years

7 years

$2,150

Source: Cheboiwo (2007)

2.3.2 Charcoal production

With overall forest cover falling and rewards for carbon and other environmental services from forests increasing, there is likely to be further regulation of forests as well. The projected increase in demand – e.g. by 50% up to 2030 in Kenya (UNEP 2006) – means that prices will rise, providing greater incentives for wood production for charcoal. This is already occurring in some

instances, as in South Africa and Kenya, but expansion is almost certain. At the same time, charcoal production is becoming legalized and de-regulated in some countries. This is expected to have the effect of promoting investment in charcoal making equipment and methods.

Being the main source of energy in most developing countries, it is estimated that majority of households in Africa will continue to depend on charcoal and fuelwood to meet their energy needs in the near to medium term (Harsh, 2001). In addition, due to the increasing rural-urban migration, the demand for charcoal in most African countries is expected to continue to grow at high rates. The United Kingdom imports 60,000 MT annually, an almost all (90%) of this is sourced in Africa mainly from Nigeria. With over 13 million MT, Brazil is the global leading producer of charcoal in the world. It is well ahead of the two topmost producers in Africa- Nigeria and Ethiopia- each of which produces about 3.5 million MT annually (Pauli, 2011).

The high demand for charcoal production in both local and international markets (Harsch, 2001) can spur private investors to take advantage of the gap between the growing demand and wood energy supply. A number of opportunities exists that may be exploited to promote investment in charcoal and fuelwood production. Syndicated loans from several local banks can be used to overcome weak local financing of charcoal production (NEPAD-OECD, 2009). Syndicated loans have been successful in other African states. For example, in 2006, eight local banks financed a number of projects in East and West African regions. The same model can also be applied in soliciting funds for private investments in charcoal production.

A few examples of private investment in charcoal production are as follows:

CHARCOAL INVESTMENT INC, NigeriaCHARCOAL INVESTMENT is one of Nigeria's leading producers of wood charcoal. It produces charcoal for industrial use, restaurants and in homes. Its charcoal sales are estimated at 400 MT per month. It exports charcoal to six countries in Europe: Germany, Spain, England, France, Portugal, and Italy and aims at expanding their export market. Wood charcoal exported by the company is made from mesquite, oakwood, lapacho, and other hardwoods. The product is packaged in different weights ranging from 3 kg to 20 kg.

E&C Charcoal, South Africa E&C Charcoal and its predecessors have been producing charcoal from wattle trees since the 1930’s. It is the largest charcoal producer in South Africa, producing over 32,000 tons of products per year from three main production sites. Much of the output is exported to Europe. E&C Charcoal became FSC accredited in 1997.

GREEN CHARCOAL ENTERPRISESThis is an environmental business enterprise that reduces deforestation, produces carbon credits through reduced greenhouse gas emissions and provides cost-effective energy fordomestic and industrial uses, in countries highly dependent upon wood charcoal. Through the purchase of Pro-Natura’s patented Pyro 7 Green Charcoal machine, the company help operators to meet local charcoal energy needs in a cost-effective and environmentallyfriendly manner. Profitable in its own right, with a payback within 3 years, this greenenterprise can help to tackle local environmental concerns and contribute to the fightagainst global warming. The company is located in the USA but has business links in some countries in Africa such as Mali.

2.4 Lipids, Gums, and Resins

2.4.1 Shea

The shea butter tree (Vitellariaparadoxa, syn. Butryospermumparadoxum) is a slow-growing fruit tree indigenous to the Sudanic savanna of sub-Saharan Africa. The tree occurs in a narrow band of vegetation extending some 5,000 km, from Senegal in the west to Uganda and Ethiopia in the south and east of the range. The shea tree provides an annual bounty of nutritious fruit to rural communities during the annual ‘hungry season’. The seeds of the shea fruit are large kernels with a high percentage of edible oil, known as shea butter, which is a very important nutritional and economic resource for households and communities across the shea parkland savanna.

Shea has been documented as a trade commodity – both an edible oil and skin care treatment locally, and a unique luxury item of considerable value in regional trade – as far back as the 14th Century. From the earliest years of British involvement in the territory which comprises modern Ghana, shea was seen as a potentially valuable commodity, but there was a contradiction between its high local value and demand for cheap industrial feedstock in metropolitan Europe; early exports were undertaken by the colonial administration at a net loss in order to encourage its trade.

Shea kernel exported as such is largely destined for industrial extraction and fractionation into olein and stearin, of which the latter is used as a cocoa butter improver (CBI) for chocolate sold in the European Union, while the specific countries that allow its manufacture include the UK, Denmark, Sweden, Portugal, Ireland, Russia and Japan (3F 2010). While shea kernel has historically comprised some 95% of shea exports from the African continent, prior to

establishment of the ADM complex at Tema, current trends point to an increasing export share of shea butter.

As recently as 2005, buyers for cosmetic manufacturers and formulators were exclusively interested in refined shea butter - an odorless, hard white fat – while shea butter prior to its refining and deodorizing was commonly termed ‘crude’ shea butter in both French and English. In 2005, a regional process of elaboration of product quality grades and standards under the ProKarité project led to development of new standards which endorsed at the inter-governmental and regional level, with approval in July 2007 by all 16 shea producing countries under the aegis of the Africa Regional Standards Organisation (ARSO).

An important aspect of these standards was the formal designation of ‘unrefined’ in place of ‘crude’ to define natural shea butter, which (of sufficient quality) has no inherent need of further processing to serve even the highest-value product and market applications.In this context, market adoption of ‘unrefined’ shea butter as a sought-after commodity shows that the global market for shea butter has evolved in recent years, to recognize the quality improvements made at the village level in the producing countries – most notably in Uganda (where unrefined shea butter of the Nilotica variety was developed as a niche product in the mid-1990s), and in Ghana.

Most of the shea butter currently exported from West Africa is often procured by export agents directly from the pickers or a network of local intermediaries without regard to quality, at volume-discount prices often significantly below prevailing local market rates. After undergoing chemical refinement (drying, bleaching, deodorising), the bulk of this is further fractionated into an olein (or oleate) component and the more valued stearin component. The implications of this fact at the producer level means simply that there is no quality premium paid to the producer to reward her efforts at producing an improved quality shea kernel; some producers thus keep the best of their kernel for home consumption, selling off the poorest quality to serve the kernel market.

Whereas North America, the UK and Europe remain first choice among destination markets, with Japan not far behind, and increasing interest on the part of cosmetics manufacturers in emerging economies such as those of eastern Europe and Russia.Brazil is a fairly recent entrant to the shea consuming countries; while its chocolate industry allows for admixture of shea butter as a cocoa butter improver, several cosmetics companies currently use shea butter in their product lines.

The market demand for shea butter of African origin is currently estimated at roughly 5,000 to 8,000 MT per year, mostly to Europe (including both the UK, where Body Shop established its global foothold, and the continental mainland, where shea butter was largely popularized by the French company l’Occitane) - and the USA, served by a broad multiplicity of suppliers. Direct shea butter exports to Canada are typified by 10,000 Villages, which sources its butter directly from the same Burkinabe producers cooperative which supplies l’Occitane, with facilitation of the Canadian NGO CECI.

The table below (Table 6) gives an indication of prices for shea through an export market chain originating in Mali.

Table 6: Breakdown of cost elements, Mali Shea Kernel

Cost elementScenario A

Kita to Bobo (BF)Scenario B

Kolondieba to Lomé

FCFA/kg % Total FCFA/kg % Total

Purchase price from women

20.0 28.6% 25.0 26.3%

Packaging 3.0 4.3% 1.0 1.0%Handling 2.5 3.6% 2.5 2.6%Storage 1.0 1.4% 1.0 1.0%In-country transport 10.0 14.3% 15.0 15.8%International transport 15.0 21.4% 20.0 21.0%Export & road fees 3.7 5.3% 8.0 8.4%Profit marginsCollector 5.0 7.1% 5.0 5.2%Consolidator 5.0 7.1% 5.0 5.2%Consolidator 5.0 5.2%Exporter 4.8 6.8% 7.5 7.9%Buyer price at destination

70.0 100% 95.0 100%

Source : (Derks 2005)

In order to effectively grow profits for all actors in the sector, a strategy of product and market differentiation is seen as paramount. Simply put, producers need access to more and better opportunities to serve a variety of product and market applications, ranging from the low-value, low-input, high-volume (e.g. shea kernel to bulk buyers and their local agents) to more rarified

niches for high-value, high-input opportunities of more limited volume (demand). Among these, the building up of product quality assurance is essential. Product certification offers significant potential for adding further value. Some European fair trade certification bodies seem to be making the process less cumbersome and expensive for African producers, and this recent trend seems promising.

2.4.2. Allanblackia

Allanblackia spp. is an indigenous African species that has a commercially important feature. Like shea, its seed produces an oil that is comprised of stearic and oleic acids is solid at room temperature. This makes it an ideal ingredient in spreads such as margarine. Because of this, Unilever has estimated that a potential 200,000 MT could be bought and used each year. This could have an annual value of near $2 billion for farmers. One of the bottlenecks in the domestication of the species has been methods for its propagation and multiplication. It does not germinate well from seed and even when it does, growth is slow – about 20 years until full production. But vegetative propagation methods now exist for establishing Allanblackia which (a) reduce by 50% time to full production and (b) increase production levels through selection of germplasm from best performing trees.

It is too early for financial analyses to be made on the domestication initiative, but ex ante calculations have been made in the key growing regions of humid Ghana, Nigeria and Tanzania. An individual tree can produce up to 300 fruits a year,with the average bearing 100–150 in a good season,each containing up to 40 separate seeds. Ten fruits yield approximately 3 kg of dried seeds containing around 1 kg of Allanblackia oil. So an individual tree could generate up to 30 kg of oil. A dense stand of Allanblackia is about 90 trees per hectare so at full production, about 2.7 tons of oil is produced. Based on the current price, this translates into about $800 in revenue. Although there is an establishment cost of about $400 for the 90 trees, the annual maintenance is low, only weeding for the first four years, after which only harvesting labour is needed, and that is negligible. So net annual benefits are anticipated to move from $250 to $600 per hectare from years 5 to 10 and then reach about $750 / ha per year onwards. This compares favorably with other tree crops also grown in the same environments (cocoa and oil palm) (Pye-Smith 2009).

2.4.3 Biofuels – jatropha

There has been much hype about the potential of biofuels, including jatropha, to become a major cash crop for African farmers, particularly those in less-favorable lands. Part of the optimism comes from experiences in India where regulations prescribe that a minimum level of

biofuels be used in public transportation systems. There has subsequently been promotion of jatropha in many countries in east and southern Africa. However, agronomic and financial analyses that have been conducted on the first five years of jatropha system planting in Tanzania, Zimbabwe and Kenya show that yields are very low, well under a mean of 1kg / tree against projections of more than 5 times that amount (Iiyama et al. 2011) and that under such conditions, there are no profits. Compounding the poor agronomic results is the fact that marketing chains are not well developed and potential profits are very dependent upon oil prices. Certainly, more analyses will need to be done on the sector as the recent large and small scale plantations mature.

2.5 Tree crops

Growth in tree crops is likely to continue with population growth and in some cases, like for tea, growth in consumption may be higher due to income growth in China and India. Prices have fluctuated over time, moreso for some crops like coffee, than others due to changes in supply brought about by a proliferation of producing countries. Coffee production growth has been lower in Africa than outside Africa since 1990, with some growth exhibited in East Africa (where Arabica is grown), but not elsewhere (all data from FAOSTAT 2011). Tea was a good growth sector, again for East Africa, where production outpaced global production growth since 1990. In the region, annual production growth averaged 3.7% per year from 1990-2009 as opposed to 2.8% globally. Cocoa also exhibited good growth in Africa, growing at about 2.8% per year since 1990; this matched the global growth rate, which is not surprising since Africa has a high share of cocoa production. One of the more recent developments in the tree crop sector is the scope for adding value through certification or diversification of systems. The case of cocoa below is given as an example.

2.5.1 Cocoa agroforestry

The potential for profit making in cocoa growing in suitable areas, such as the humid lowlands of West Africa, is well known. Cocoa prices have increased recently offering even stronger incentives for production. On the other hand, there is competition from outside of Africa and thus efforts to increase profitability are constantly being examined. A key management consideration is the growing of cocoa in diversified systems that (a) offer shade for cocoa, (b) provide alternative (mainly tree) products, and (c) can provide environmental services that may be recognized in reward or certification schemes. This is recognized by the development of a guideline for tree diversification in cocoa systems (Asare and David 2010). This section thus focuses on cocoa agroforestry systems in Africa.

Historically shade-grown in multi-strata agroforests, traditional cocoa production systems characterized by a high degree of biodiversity and crop diversification, recent trends have seen a decline both in productivity and in the ecological integrity of production systems, as farmers have opted for full sun cocoa that had become higher yielding due to research advances. Full sun production can offer yields as much as three times above shaded agroforestry systems, but is heavily reliant on chemical inputs to sustain productivity, and requires replacement much sooner than shade-grown systems – at 10-20 years as compared to 40-60 years – so limited availability of planting material is also a constraint (Ruf and Zadi1998). Full sun cocoa has facilitated significant expansion of cocoa production across West Africa in recent decades, and has resulted in cocoa being identified as a ‘serious agent of deforestation… threatening globally important protected areas and the integrity of the ecosystem’ (Gockowski 2007).

However, as noted in a global study on best practice models by WWF (WWF 2006), smallholder cocoa ‘has the potential to [serve as] both an agent of ecosystem fragmentation [as well as] protection’ depending on whether it is grown in extensive systems (largely responsible for forest thinning or clearing) or intensive systems such as the multi-strata cocoa agroforests mentioned above, which typically also provide farmers with a diversified range of edible tree fruits and other food crops for nutritional and economic sustainability (WWF 2006).

While recent studies (viz Somarriba and Beer 2011) indicate that shade trees do not reduce cocoa yields during at least the initial 10-12 years of production, and that ‘detailed analysis of net income flows, their present values, and related risk measures provides evidence in favor of diversified [cocoa] agroforestry system technologies’ as compared to monocultures (Ramirez and Somarriba 2000), another motivation of cocoa farmers to clear existing forest without replanting lies in the lack of policies favoring ownership and utilization of timber trees by farmers. For example, lack of private rights to trees is a major factor behind Ghanaian cocoa farmers shift towards full sun varieties (Ruf 2011).

In their detailed financial analysis of shaded coffee production in Ghana, using discounted cash flow and including such standard analytical parameters such as net present value (NPV), benefit-cost (B/C), internal rate of return (IRR) as well as land expectation value (LEV), Obiri et al. concluded that ‘cocoa production is, in general, profitable. The change from the traditional system to one with hybrid cocoa raised the IRR from 31% to 57% with planted shade and 67% without, although extra agrochemical costs would tend to reduce the profitability of unshaded hybrid cocoa in particular’ – for which the study determined that the ‘optimum economic rotation for the hybrid cocoa is between 18 and 29 years, much less than the traditional system’ (Obiri et al. 2007). So the integration of improved varieties into shade systems can be

competitive with cocoa monocrops and can even become more profitable with an appropriate selection of other fruit or timber trees.

One of the difficulties in advancing agroforestry tree crop systems is that recent hybrid varieties are commonly tested in full sun conditions. In the case of rubber in Indonesia, it was only recently that new rubber hybrids were tested in traditional rubber agroforestry systems. Research has found that such combinations – hybrid rubber with selected high value trees – were economically competitive with rubber monocrop systems except under higher rubber price scenarios and were more resilient to market fluctuations (Wibawa et al. 2007)

2.6 Fertilizer tree systems for food production systems

The addition of trees into agricultural landscapes has been shown to positively alter the soil-crop environment by improving soil aggregation, enhancing water infiltration and water holding capacity which reduces water runoff and soil erosion and thus contribute to reduction of the effects of droughts in soils under trees (Phiri et al., 2003). The trees in farmland increase soil water recharge over time due to improved infiltration and reduced soil evaporation, and subsequent changes in water balance in the deeper soil layers that can be exploited by the roots. Long term experiments lasting over a decade conducted in Zambia and Nigeria shows that higher rainfall use efficiency (crop production per unit of rainwater) was recorded consistently in agricultural fields where trees were grown than where they are not (Sileshi, Akinnifesi, Ajayi and Muys, 2011). Strategic combination of trees in agricultural fields can help farmers to minimize the impact of extreme weather events and other climatic variations, and offers opportunities for adaptation to climate change. Nitrogen fixing trees used in fallow or intercrop systems further enrich soils through the generation and application of more than 200 kgs of nitrogen per hectare. They can also provide other nutrients and of course important mulch cover.

2.6.1 Faidherbia albida inter- cropping systems

There are a variety of agroforestry systems that can enrich soils and increase crop yields at low cost. One is the use of a tree indigenous to Africa, Faidherbia albida. Faidherbia has a wide natural distribution in Africa from Senegal eastward to Ethiopia and then south to Zimbabwe and Namibia. It is the signature species in many Sahelian parkland systems, where densities vary from just a few per hectare to over 50. There, it is rarely planted by farmers, but establishes through regeneration from seed or from offshoots of roots in the ground. It is easily recognized in the rainy season by its absence of leaves. Indeed, it has a unique phenology in

that it drops its leaves just in advance of the rainy season in unimodal areas. Since it is a nitrogen fixing tree, the leaf litter brings significant nitrogen and other nutrients to the soil. Without leaves, there is no light competition from the trees. And the species sinks a deep tap root to draw most of its water from deep layers so as not to compete for water with crops.

Its effect on millet and sorghum yields are well known in west Africa, but data are just becoming available for southern Africa. In Zambia, data from the 2010 season show that mean maize yields obtained from under canopies of the Faidherbia albida tree were 5460 kg/ha which is significantly higher than 2360 kg/ha recorded in plots outside the canopies of the tree (Shitumbanuma, 2010). The factors behind the increase in yield are to do partly with the nitrogen rich leaves that fall and are either incorporated into the soils or left as a mulch. Studies have found that the litterfall beneath Faidherbia contains over 100 kg nitrogen per hectare (Phombeya 1999). There is also a water effect – studies show that soil moisture in the crop root zone is higher under Faidherbia than outside (Rhoades 1997).

For a project or investor, there is interest to move from regeneration to planting. This is the approach taken by the conservation agriculture project in Zambia, where they are promoting the planting of Faidherbia at 10 x 10 meter spacing. The seedling costs are minimal, less than $0.30 per seedling, so that the cash outlays required would be a one time cost of $30 per hectare. Results on crops do however take several years (between 3 and 8 depending on the climate) to be observed. So other methods, including other agroforestry practices are necessary in the early years and can be continued at modest rates when the fFaidherbia systems have matured.

2.6.2 Other fertilizer tree systems

Two agroforestry systems that have been extended primarily in southern Africa are the improved fallow and intercrop systems. An improved tree fallow involves a short-term (1 to 3 year) improved or managed fallow to allow for rapid replenishment of soil fertility. A range of leguminous trees and shrubs was screened to identify promising species that would add high amounts of nitrogen-rich organic resources into the soil while also possibly producing fuel wood. Sesbania sesban, Tephrosia vogelii and T.candida, Gliricidia sepium, Crotolaria grahamiana, and Leucaena leucocephala are the most promising N-fixing trees identified for soil fertility replenishment (Kwesiga et al. 1999). The ability for N-fixation and the high quality or decomposability of litter and pruning tissues characterize improved tree fallows with greatest potential for increased soil N availability (Barrios et al. 1997). Such systems (e.g. Zambia, Ajayi et al., 2007) proved to increase maize productivity and greatly increase economic returns as compared to natural fallowing or continuous maize growing with low fertilizer inputs

(Kwesiga et al., 2003 and Place et al. 2002). A detailed review of the implications of choices on duration, species, density and combinations can be found in Kwesiga et al. (2003). As with all agroforestry systems, using judicious amounts of mineral fertilizer in combination is often the best practice, both agronomically and economically speaking.

In terms of economic performance, field studies done in Zambia show that improved fallows perform much better than continuous maize production without fertilizer (Franzel, 2004; Franzel et al., 2002; Ajayi et al, 2007). Over a five-year cycle, the net profit from unfertilized maize was US$130 per hectare compared to US$$269 and US$307 for maize grown with Gliricidia or Sesbania, respectively. With respect to returns per investment, improved fallows performed better with a benefit to cost ratio (BCR) ranging between 2.77 to 3.13 in contrast to 2.65 in (subsidized) fertilizer fields, 1.77 in (non-subsidized) fertilizer fields and 2.01 in non-fertilized fields (Ajayi et al, 2009).

A second system is a permanent intercrop which has been tested and disseminated widely in Malawi. The work on a tree-crop intercrop system using Gliricidia sepium was developed to address the needs of small farms who could neither fallow their land nor afford fertilizer (Akinnifesi et al, 2010). It is a modification of the alley farming system to address key shortcomings that affected crop performance, including eliminating “hedge competition effect”. It allows concurrent cultivation of trees with crops during rainy seasons and fallow during off-seasons up to 20 years without replanting (Akinnifesi et al, 2008). The density of trees is extremely high, at 1 x 2 meter spacing for example. The tree is cut to ground level just before seeding of the crop. As a result, the tree remains in a dormant stage for a lengthy period of time allowing the crop (e.g. maize) to germinate and to grow well above the stump. So there is no significant competition from the tree at this stage. After a month or so, the tree does begin to regrow, but the maize remains well above the tree to capture all the light it needs. Species like Gliricidia are also useful in their rooting patterns which generally do not compete for surface water with crops.

As compared with an improved fallow, the advantage of the intercrop is that the trees need to be planted only once, although they then require a couple of prunings during the year. Yields have been shown to be consistently higher with the gliricidia system than those of continuous cropping with no fertilizer used. Figure 8 shows a comparison of those yields over 14 years from Malawi.

Figure 8: Maize Yields Comparing Gliricidia intercrop and maize monocrop systems over 14 years in Makoka Malawi

Source: ICRAF 2009

2.6.3 Carbon storage in fertilizer tree systems

Carbon storage in tree biomass and in soils is one of the most important strategies to mitigate the global greenhouse gas effect. Nair et al (2009) studied soil carbon under tree systems in 5 countries (USA, Spain, Brazil, India and Mali) and concluded that “tree-based agricultural systems, compared totreeless systems, stored more carbon in deeper soil layers up to 1 m depth under comparable conditions.” Furthermore, they found that higher species richness and tree density was associated with higher soil organic carbon and that C3 plants appear to generate more stable carbon in the soil than C4 plants. Other studies in southern Africa have shown that improved fallows can store large quantities of carbon stocks in plant biomass and in the soil (Kaonga 2005, Makumba et al. 2007), and thus provide opportunity to potentially mitigate global greenhouse gas emissions (Sileshi et al. 2007). Several studies and reviews have highlighted soil carbon stored at depths below the plow layer. The amount of carbon sequestered varies depending on type of fertilizer tree system, the specific tree species, and the depth of soil.

Depommier et al. (1992) documented 54% increase in soil organic carbon in the first 20cm soil depth and 35% increase in the 20-40cm depth from under mature Faidherbia versus away from Faidherbia in Burkina Faso. Okorio also documented a 9.3% increase in soil organic carbon

with seven-year-old Faidherbia trees in Tanzania. The data from Kaonga and Makumbain Table 7support the theory that carbon stocks can be brought above 100 Mg ha-1 in East Africa, where rainfall is sufficient. Contrast the performance of Gliricidia in Mali with 300mm rainfall in the study by Takimoto et al (2008). West African systems may develop the same levels of soil carbon (see Dossa), but must be in a rainfall zone sufficient for biomass production.

Table 7: Carbon sequestration in fertilizer tree Systems (all figures in Mg ha-1) ___________________________ Author Soil Depth Biomass Soil Total (cm) Aboveground Belowground Dossa et al. Shade coffee 40 62 15 97.3 174

Non-shade coffee 40 13.8 9.2 95.8119

Kaonga et al. (Msek-2 yr-coppicing) 6.1 (4.3-9.5)* 2.4 (1.7-3.7)(Kalu -2 yr-coppicing) 5.5 (2.1-9.5) 1.8 (0.8-3.2) (Kalu -2 yr-non-copp.) 200 5.75 (3.0-7.9) 3.3 (1.5-9.0) 25.7 (23-31) 34.75(Kali -2 yr.-non-copp.) 200 78 (48-127)(Msek-4-non-copp.) 200 120 (102.0-184.5)(Msek-10-non-copp.) 200 255 (154-291)

Makumba et al. (MZ12-Gliricidia) 20 negligible 30200 negligible 123

Makumba et al. (MZ21-Gliricidia) 20 negligible 30200 negligible 149

Phombeya (Faidherbia albida) 20 106 35 38.1 179**

Takimoto et al. (Faidherbia albida) 10 40.5*** 13.5 5.8 59.840 40.5 13.5 16.8 70.8100 40.5 13.5 33.3 87.3

Takimoto et al. (Gliricidia-fodder bank) 10 4.840 14.0

100 35.6

Walker &Desanker (miombo) 150 82.5(maize-based cropping) 150 49.0(miombo-fallow) 150 52.2

Woomer, 2005 (miombo woodland) 20 28 48 (after maize cropping) 0 9 9 *denotes ranges of data **back of envelope calculation, data were not gathered for C measurement *** Numbers in italics are estimated from a figure

2.7 Fodder shrubs for dairy systems

Milk is one of the most significant agricultural commodities in terms of traded value worldwide. In SSA, Delgado et al. (2001) estimates milk consumption to increase 3.3% annually from 1997 to 2020. A more recent estimate finds that milk demand is projected to increase by 8 million tons between 2009-2019, while production is estimated to increase by 5.6 million tons (Fonterra 2011). That is more than current levels of milk production in Kenya, which has one of the highest milk consumption per capita figures in the developing world (at 145 liters/person), where there are almost 1.5 million dairy cattle. Thus there will need to be significant investment in building high quality dairy herds.

There will also be need for investment in livestock feeding systems and one component is likely to be trees and shrubs. Trees and shrubs are important sources of high quality fodder in all ecozones of Africa and for a variety of animals. For examples, leaves and pods from species such as Pterocarpus and Piliostigma are important dry season feeds in the Sahel. A new more intensively managed shrub system is expanding rapidly in East Africa for intensive cut and carry dairy systems. Fodder shrubs are easy to grow, can withstand repeated pruning and do not compete with food crops. The plants mature in about twelve months, after which they can be pruned and fed to livestock for up to 20 years. By maintaining 500 shrubs, a farmer will be able to feed about 2kg dry leaf matter each day. This supplementary amount has been found to raise milk yield by 1.5 to 2 kg of milk per day among smallholder farmers, translating into more than $100 extra revenue per cow, per year (Franzel 2004; Place et al 2009). The most promising species for the east African highlands are Calliandra, Leucaena, Tree Lucerne (for the high elevations), and mulberry (for the drier climates). By 2009, well over 200,000 farmers in Kenya, Uganda, and Rwanda had adopted the technology.

2.8 Opportunities for marketing or processing investments in tree based products

In addition to production investments highlighted in the examples above, there will be scope for investment in marketing, processing, or other value adding activities related to tree and forest products. Three perspectives on this are the extent to which there are additional value adding opportunities in (a) export markets, (b) import substitution, or (c) catering for expected domestic growth in demand.

With respect to exports ((a) above), that is where there is perhaps the least degree of optimism. Most of Africa’s tree products are exported with little or minimal processing/value adding. For many commodities, that is not likely to change as many commodities need to be transformed as per the preferences of the importing country populations. By and large this is not a feasible undertaking for countries where industries are not well developed. Possible exceptions would

be for the more developed wood manufacturing industries in South Africa to supply the furniture, panel, or paper needs of consumers in other African countries.

For import substitution ((b above), there is potentially greater scope, although again, FAO analysts feel that for more processed wood products, the fragmented and slowly growing nature of demand may lend itself to being filled by more efficient and cheaper imports. One promising area, however, is with fruit juice production. Currently, although there are mature juice producers in South Africa (Ceres, Liquifruit) and relatively new ones in other countries such as Kenya (Del Monte, Pick N Peel) and Uganda (Britannia – Splash), much of the concentrates used are imported, mainly from South America (exceptions being grapes and apples in South Africa and pineapples in Kenya). However, the East African companies are all investing in trying to boost local sources of fruit pulp. In addition, Coca – Cola has also announced a major investment in the region, and especially Kenya to develop fruit juice supply chains involving smallholder farmers. As indicated among the success stories, this seems a natural downstream investment to take advantage of the large number of fruit growers. However, there are many obstacles to overcome, notably the range of varieties and production quality of fruits grown and the dispersed nature of the growers. To realize the potential for market growth in fruits, there is need for improvements in the field-to-market supply chain of the fruits, new technologies, and enhancement of distribution networks to enable the fruit industry players operate at lower costs throughout the value chain and to remain competitive. Policies to support the commercialization of fruits include better support for improved access to credit, appropriate technologies and empowerment of smallholder fruit producers.

For meeting growing domestic demand ((c above) there will surely need to be greater investment in handling, transport, and value adding in products that are currently sourced domestically and for which demand will grow. Income growth and urbanization will surely drive these processes and there are going to be many potential investments related to such growth. In the past, a clear example was related to coffee in Kenya. Though a leading producer of high quality, retail outlets in Kenya did not sell its own high grade coffee until the late 1990s when the growing local market for high quality coffee catalyzed local roasting, packaging and selling of coffee.

3. Beyond Trees and Incomes to Broader Landscape Restoration and Ecosystem Services

3.1 Other sustainable land management practices for landscape restoration

There is a very rich recent literature and guidelines on the practical use of sustainable land management (SLM) practices for agriculture and other land uses. Key publications are:

Sustainable Land Management Sourcebook (World Bank 2008) Using Sustainable Land Management Practices To Adapt To And Mitigate Climate

Change In Sub-Saharan Africa (Woodfine 2009)

There is also a web portal that contains practical examples of SLM from around the world, the World Overview of Conservation Approaches and Technologies (WOCAT) which can be found at: http://www.wocat.net/

Integrated Soil Fertility Management (ISFM)

ISFM is broadly defined as the use of organic nutrients along with mineral fertilizer and combined with improved soil conservation methods. ISFM is viewed as an improved method for soil management given that: (a) mineral fertilizer use is low in Africa and prices remain high, (b) soils which are degraded require organic matter to improve fertilizer response, and (c) the majority of trials of ISFM find it to be superior agronomically and economically compared to mineral fertilizer alone. Some important sources of organic nutrients in Africa are animal manure, agroforestry trees and shrubs, grain legumes, and herbaceous cover crops. Of particular interest are nitrogen fixing plants, which include a large number of trees. These plants can transform atmospheric nitrogen into roots and leaves for eventual uptake by other crops. Given that many African soils are nitrogen depleted and fertilizer prices remain high, the spread of biological nitrogen fixation widened considerably in recent years. For Africa to meet food security goals, there is no doubt that integrated approaches to soil fertility management will be needed. Integrated systems also foster improved soil biodiversity, improved soil physical structure (e.g. for water infiltration), and can increase soil carbon. This approach is being more widely adopted in development programmes such as the Alliance for a Green Revolution in Africa (AGRA).

Soil conservation methods

Integrated soil fertility management in a broad sense would include aspects of soil conservation. Soil erosion, if unchecked, will eventually reverse efforts to improve soil health through nutrient applications. There are many tested and widely applied soil conservation methods at farm and field level. These are often site-specific in that the most appropriate methods depend on local circumstances, including slope of land, rainfall level, and available materials. For example, the steeper the slope, the more likely it will be that bench terracing is needed and the length between structures needs to be reduced. Digging of bunds and ridges is common as is the use of vegetative strips, the latter being more appropriate in humid areas.

Shrubs are used in conjunction with grasses to help hold soil in place. In some places, the use of stones as barriers is common (e.g. in the Tigray region of Ethiopia, the Dogon region of Mali, and parts of Burkina Faso), making use of their abundance. Farmers have also increased the economic value on these conservation strips by planting trees of economic value on them.

At a larger landscape level, the concept of soil conservation is more broadly conceived as vegetation management or watershed management in catchment or basin areas with downstream effects that may extend to eutrophication of freshwater resources, or even as far as coastal fisheries, which may be negatively impacted by silt washing down from far inland. Managing surface water flow is most critical in soil conservation. At the landscape scale, techniques such as natural habitat protection, vegetation cover, gully rehabilitation, water flow and drainage management and land use planning are key concepts. This requires coordination among many stakeholders across communities. There are also issues to do with wind and fire management. Windbreaks or shelterbelts are employed in areas prone to strong winds. Fire management is also important as wild fires can cause significant damage to vegetation and increase vulnerability to soil erosion.

Conservation Agriculture

Conservation agriculture is defined by adherence towards three principles: (a) minimal soil disturbance, (b) maintenance of ground cover and (c) crop rotation. This system is adopted in millions of hectares in North America and South America, but for the most part has been disseminated only in the context of small pilot projects in Africa. An exception is the case study noted above in Zambia. A particularly attractive result of applying conservation agriculture is that by reducing tillage requirements, farmers are more likely to be able to plant quickly after the rainy season begins. This has been shown to have a huge effect on crop yields, which are immediate. Many other impacts of conservation, notably on soil quality, are built up over time. There are some deterrents to the wider adoption of the system, one being the problems with weed growth in a no-tillage system, especially in the first cropping seasons. The standard practice in the developed countries has been the application of chemical herbicides, but these are expensive for African farmers. A second deterrent is the need for equipment for seeding or light harrowing. Such equipment is not available in most of Africa. Third, where the farming system is dominated by agro-pastoralism, there is a challenge to conservation agriculture as farmers face competition for crop residues with livestock.

Rainwater harvesting and irrigation management

One of the most significant barriers to improved crop productivity is lack of water management. This includes both the capture or collection of water, and its distribution on the farm. Much of

the rainfall that does occur is lost to evaporation, surface runoff, or seepage into the ground with the effect that even when total seasonal rainfall is adequate for crop growth, crops can fail due to inadequate distribution of the rains. Thus, water harvesting is vitally important for smallholder farmers to be able to access modest water supplies for temporary drought periods, in order to bridge the gap between rainstorms. There are many techniques for collecting water, including dug structures in the earth (both improved and unimproved) and above ground structures that often rely on collecting rainfall from roof tops. Among the earth structures are micro catchments – such as zai pits and ‘half moons’ – which channel surface rainwater into small growing pits. Other structures may be very large and lined with stones and polythene to store thousands of liters of water. Low cost irrigation management systems are also being explored in a range of sites. These vary in scale, from within farm to across many farms and in method, including carry systems, gravity systems, drip irrigation investments, etc..

Integrated Crop- Livestock management.

Integrated crop – livestock systems are those where there are clear mutual benefits linking the two. The example of where crops provide stover for feed to animals and animals provide manure for crop growth or power for land preparation are the most common linkages. Manure is critically important as many studies have found manure to be the most commonly used soil nutrient input. Where intensive dairy systems have emerged, as in Kenya, the use and importance of manure on crop yields is evident, as shown on maize in Kenya and banana in Uganda (Yamano et al. 2011). The potential synergies can be seen in other ways as well. Labor can be complementary – e.g. there is greater labor demand to find livestock feeds during the dry season, when crop labor demands are low. Milk production can yield daily or weekly income which can help farmers to pay for fertilizer for crops. Besides cattle, goats, sheep and poultry are common livestock in Africa and appear to be gaining importance in areas where farm sizes are diminishing (Mathenge et al. 2010)

Pastoralism and Range land management

There are many practices of importance for improving productivity and reinforcing the environmental stability livestock and rangeland management. These include sustainable grazing management which focuses on recovery periods for grasses and other vegetation, reduced use of rangeland fires to prevent loss of soil carbon, and silvopastoral management which involves balancing vegetation and biomass to meet a variety of needs (Woodfine 2009). Most management techniques are designed around regenerating resources – to facilitate fresh grass and shrub biomass growth. This is essential given the very low labor to land ratios in typical rangeland areas. In more intensive systems or in strategically placed sites, purposeful planting of grasses and shrubs can also be undertaken, benefiting from research on improved

species and establishment methods. Although overstocking has been often cited as a culprit behind apparent rangeland degradation, the holistic approach to grazing management emphasizes more the importance of rotations and recovery periods of the resource, which if done properly, could greatly improve productivity and therefore carrying capacity.

Sustainable Planted Forest Management

African forests fulfill important roles in the environmental, economic, social and cultural functions of the continent. Currently, forests and forestry in Africa are confronted by rapid decline in forest cover, loss of biological diversity and unsustainable uses that may compromise future flow of forest goods and services. Globally, forest plantations have expanded substantially the last two decades, leading to a shift towards plantation forests as the source of industrial wood supply as natural forests diminished over time. However, this shift towards plantation forests has been limited in Africa occurring mainly in few countries only especially, South Africa, Swaziland and Zimbabwe (FAO, 2003b). With an estimated area of 8.0 million ha of plantations or 4.3% of the global figure, annual tree planting in Africa is estimated at 194 000 ha or 4.4% of the global rate and most of the new plantings is for non-industrial purposes (FAO, 2003b). Most plantations are in forest-poor countries and very limited planting takes place in countries where there are still large tracts of natural forests. In the earlier years of plantation forestry, focus was on high value trees such as teak, but recently, attention has shifted to other tree species especially eucalypts and pines.

According to FAO (2011b), forest cover loss is Africa is estimated at 0.49% per annum between 2000 and 2010, but with a considerable variation in rates between the different sub-regions. The West Africa region recorded the highest annual forest cover loss estimated at 1.12% per annum, followed by East Africa which lost 1.02% each year. North Africa exhibited almost no change (-0.05%) and the rate of loss in Central Africa was also relatively low (-0.26%). Overall, the rate of deforestation eased somewhat from its annual rate of 0.56% between 1990 and 2000. Although there is some expansion of tree planting on private land, trees on communal land continue to be depleted because of policy and institutional constraints especially, the decline of traditional community arrangements. Tenure and markets are important drivers of private investments in tree growing.

Originally established to provide industrial timber, forest plantations have since the mid-1980s assumed greater importance as a source of fuelwood in most countries as they engage in forest plantations to take pressure off the natural forest and to provide ecosystem serviced functions. Countries which are among the largest plantation nations in the world include India (3.2 million ha), New Zealand and the United Kingdom (1.9 million ha each), Australia (1.8 million ha),

Malaysia (1.6 million ha) and South Africa (1.4 million ha). In the Africa region, South Africa has the largest area of forest plantation followed by Nigeria, Malawi, Kenya, Ghana and Tanzania. A very wide range of tree species are used for plantations with the important ones including Eucalyptus, Acacia spp., Teak and Pines. In addition, Poplar trees, and Rubber are grown for logs too.

'Sustainable Forest Management

Conversion of forest lands into cultivated mosaics has had adverse effects on water flows, has greatly reduced plant and animal biodiversity, and has been a chief emitter of greenhouse gases. While some forests need to be conserved and protected, there are many new examples of integrated management that involve sustainable use of forests and forest products. According to FAO (2010), sustainable forest management aims to ensure that the goods and services derived from the forest meet present-day needs while at the same time securing their continued availability and contribution to long-term development. There are silvicultural practices to guide governments and other managers on sustainable harvesting and off-take for different species. New management models include some form of local ownership or rights, where local communities have vested interests in the long term health of the forest. The rights could be varied, from home consumption of forest products (e.g. fuelwood) to marketing of specified products (e.g. fruits) to establishment of eco-tourism businesses.

3.2 Ecosystem services from tree based and other landscape restoration practices

Forests and trees are vital land uses for providing environmental services such as carbon sequestration, watershed protection and biodiversity conservation. The environmental services provided by trees and forests—including protecting and revitalizing soils, regulating water regimes for rural producers and urban consumers, providing habitat for pollinators and seed dispersers, and absorbing and storing carbon—are valued in the tens of billions of dollars annually (Costanza et al. 1997). As many as 97 of the 180 Natural World Heritage Sites listed by UNESCO are in forested areas (UNESCO 2010).

Not all tree-based systems will provide the same degree of environmental services, as noted earlier. For example, while trees can play important roles in regulating water flow, they are also users of water and this balance must be taken into account. Nitrogen fixing trees can bring in new nitrogen into soils, but others can only recycle nutrients from soil depths. All trees can sequester carbon but some trees for wood will be cut after a period of time; other trees may be regularly pruned for livestock feeds and never reach a significant size.

As for the other land restoration practices, all of them will benefit soil health and thereby soil biodiversity (e.g. micro-fauna). They also will all lead to improved watershed management if practiced at scale and for the most part will improve vegetation cover. If vegetation is managed to accommodate a diversity of plants, including indigenous ones, then animal diversity will also increase. There is less known on the magnitude of the carbon sequestration effects of many land restoration practices. Whereas measurement of above ground biomass is relatively straightforward (e.g. the carbon content in woody biomass is about 50% of total biomass), measuring soil carbon is not a simple task. The addition of organic matter to soils will definitely increase soil carbon, but this may range widely in different soil and rainfall regimes. Its permanence is also affected by other land management practices. In the case of minimum tillage, there is a debate as to whether that technique alone can sequester carbon, as recent paper suggests that minimum tillage alone may just redeposit soil carbon at different depths (Baker et al. 2007).

4. Value chain innovations for promoting investment

There are numerous marketing and finance arrangements that can foster large scale investment in trees and land restoration. Historical data on domestic private investment are difficult to come by in SSA countries, particularly at the sectoral level. A significant proportion of such investments is in small- to medium-scale producers and enterprises and tends to be informal, thus not captured in national statistics. Given limited access to credit and capital, African entrepreneurs rely on personal savings to finance their business entities (Mhlanga, 2010). With the exception of Malawi, Tanzania and Uganda, commercial banks in SSA lend less than 10% of their total credit to the agricultural sector.

The lack of available credit for short-term agricultural production makes it obvious that credit for long-term production such as with trees is virtually nonexistent. Because of this credit gap, there is more emphasis on vertical integration of value chains, such as where large scale agribusiness interests acquire land for production or where outgrower arrangements are established. These arrangements often involve the transfer of finance from buyers/processors to producers thus enabling investments to take place that will help to meet production quantity and quality needs of buyers. Moreover, there is an increasing trend for multinationals and foreign companies to purchase or lease large land areas in African countries for export-oriented agricultural production. Most of the transactions are arranged between the foreign private investors and the targeted host governments (Mhlanga, 2010). Although driven primarily by the desire to secure long-term supplies of food or biofuels for investor countries, these agricultural land investments provide opportunities for increased investment in SSA agriculture.

Three important directions for investment for tree-based systems are (1) through outgrower schemes / cooperatives (2) through certification schemes based on ecologically friendly production and (3) through payments for environmental services. Tree crop systems have long been supported by government investment in providing inputs on credit, in funding local collection infrastructure, and in participating in export marketing chains. The outgrower model is a private sector corollary to this, in which private agribusiness companies contract with farmers, small and large, for tree products. Participation in certification schemes does not often assist with financing apart from training on production management standards, but they can provide opportunities to access new markets which attract higher commodity prices, which can increase the returns and reduce the risks to investments.

Contract farming and outgrower schemes

There are already examples of successful outgrower schemes for many products in Africa, including timber/wood production. The different arrangements that have been developed for trading wood between growers and the processing industry include the following:

· Wood processing companies obtain their supplies through trading intermediaries (i.e. market agents) and do not have a direct relationship with farmers/growers

· Wood processing companies lease land under contract for a specific period from landholders to grow the trees themselves

· Wood processing companies enter into a contract with farmers to grow trees which are then sold to the companies

· Cropshare joint ventures involves contract agreements between landowners and wood processing company (investor) specifying responsibilities of each partner and on the sharing of costs and benefits throughout the life of the tree crop. The returns from the harvest are determined from the market price at harvest.

· Guarantee tree ventures is an arrangements where wood processors guarantee sale of tree/wood for the tree grower based on specified market price. In return, the tree grower offers the processing company partner the first option of purchase of the tree/wood but, with a provision that the grower may sell to another purchaser that proposes a better price. The guaranteed market offer provides incentives to tree growers because it provides them a worst scenario of a lower minimum price that they can expect for their wood and tree products.

Each of these is observed in various outgrower arrangements for wood in Africa (Mayers and Vermeulen 2002). Some of them are noted in Table 8.

Table 8: Select cases of tree outgrowers scheme in Africa

Company and Outgrower scheme

Year scheme started

Primary product/s

Total area planned

(ha)

Importanceof product to

company

Area planted

(ha)

Number of growers

Typical area

planted by growers

(ha)

Border Timbers - Zimbabwe: Outgrower Scheme

1996 poles 2,000 60% of supply/year

450 65 3-4

Mondi Ltd - South Africa: Khulanathi Scheme

1994 pulpwood 8,000 strategic value 5,900 2,854 2

PS Zimboard - Zimbabwe: Fallscroft Estate Scheme

1997 pulpwood 60 2,100 m3/year 40 1

PS Zimboard - Zimbabwe: Himalaya Cooperative Scheme

1999 pulpwood 500 - nil cooperative

(22 people)

PS Zimboard - Zimbabwe: Kaerezi Estate Scheme

1997 pulpwood 1,000 60% eucalypt pulpwood

600 1

PS Zimboard - Zimbabwe: Manicaland Development Association Scheme

1998 pulpwood 300 10,500 m3/year 100 1

PS Zimboard - Zimbabwe: Nyafarm Development Cooperative Scheme

1999 pulpwood 300 17 000 m3/year nil cooperative(20 people)

South Africa Wattle Industry - South Africa: Phezu Komkhono Scheme

1995 wattle bark 2,000 5% of supply 436 430 1

Swiss Lumber Company - Ghana: Outgrower Scheme

1991 sawlogs 25 ha/year public relations 150 25 4-10

Source: Desmond and Race (2000)

Tree outgrower schemes are beneficial to wood companies and tree growers in different ways. To wood processing companies, the scheme provides access to additional, more secure, and/or cheaper supplies of wood and tree products, diversifies the sources of raw materials, and avoids the overhead and fixed costs usually associated with direct growing of trees by companies. The benefits of the scheme to tree growers are that it provides opportunities for community involvement and facilitates support for tree growing by local communities. To tree growers/farmers and the local communities, outgrower schemes provides access to financial support while trees mature, provides higher net returns from trees, provides relatively more

secure markets for wood (Desmond and Race (2000). SAPPI and Mondi are the key companies in the pulp and paper industry in South Africa. Both have a flourishing outgrower scheme especially in Kwazulu-Natal province. Initiated in mid-1980s, SAPPI tree growers established plantations (1.2 ha on average) and provides subsidized inputs, technical field support and loans to growers against the final harvest. In return, the growers undertake to sell their trees and wood to the company. As at 1999, the companies support over 12,500 smallholder outgrowers who have established about 27,000 ha of Eucalyptus woodlots and, delivering delivered over 200,000 tonnes of wood to the industry (FAO, 2003). In Ghana, Swiss Lumber Company operates a tree outgrower scheme to supply their sawmill with adequate wood supply. The company developed strategies to attract outgrowers to grow trees on land which was degraded and has low crop yield potentials. There is potential to expand these arrangements in places where many farmers are already growing trees, such as in Ghana, Kenya, Burundi and Rwanda or where there is land available for increased private plantations (Mozambique, Tanzania and Zambia).

Investments in certified organic production of fruits and tree products Moving from conventional farming to organic farming involves incurring some conversion costs which include certification costs, specialized training costs; conversion-related shocks at the beginning of the conversion (e.g. temporary crop failures, reduced crop yield). These initial costs can be offset by external or public support through the payment of conversion subsidies to new organic farmers. External private subsidies and coordination are required to enable smallholders convert to organic farming for export. Almost all the certified organic export smallholder production in tropical Africa has developed under these conditions. However, given that the use of synthetic inputs in conventional farms in tropical Africa is very low, conversion from conventional farming to organic agriculture will be expected to be less radical and therefore, changes associated with conversion to organic agriculture – such as reductions in crop yield, labour inputs, savings from reduced use of synthetic inputs and farm profitability- are expected to be considerably limited compared relative to the situation in developed countries (Gibbon and Bolwig, 2007).

The past decade has witnessed a tremendous increase in the market for certified organic agricultural products both in North America and the EU. From a base of an insignificant level in the past, the market for organic agricultural produce has risen to between 1.5 to 2.5% of total food sales in these two regions of the world. The sales volume and incomes from organic farming is strongly influenced by area grown to organic certification and the numbers of certified organic crop planted by farmers. Fuelled in part by concerns for food safety and increasing awareness of the public on food safety, the rising demand and increasing profile of

organic farm products in international agricultural trade has encouraged the promotion of certified organic export production in a number of tropical African countries.

In Africa, farms that engaged in certified organic export production were significantly more profitable in terms of net farm income earnings than those that engaged only in conventional production (Gibbon and Bolwig, 2007). This ‘profitability gap’ is due to differences between organic and conventional farms’ gross farm incomes, and differences in production costs. There are wide variations in the net profit of various crops grown using organic farming approach. For example, pineapple farmers earn three times higher net profit than organic cocoa and five time higher profit than coffee farmers for the same amount of land. Contrary conditions in the developed world where organic farming is associated with reductions in crop yields, organic farming in Africa often results in increases in crop yield; the difference is explained by the low-input characteristics of conventional farming in Africa (Gibbon and Bolwig 2007).

Payments for environmental services

In terms of generating public finance for tree-based systems and other land restoration practices, a major new emerging source is through finance for environmental services, most notably market-based systems based on quantifiable sequestration of carbon through tree planting or avoided deforestation. A number of financial mechanisms and incentives are being initiated to encourage farmers and investors to adopt practices and systems that will generate carbon sequestration and other environmental benefits. These incentives seek to align farmers’ and investors’ incentives with those of the national or global society, and encourage them to be cognizant of environmental effects when making choices on agricultural/forestry production decisions. This is with a view to unlock the potential of eco-friendly systems to satisfy both food production and provide global environmental services.

Examples of incentives to promote investment are:

Conditional reward mechanism for eco-friendly systems

Most eco-friendly systems are profitable over time (i.e. they have positive net present values), but private investors often have to wait several years before they begin to realize these benefits. In a few cases, the break-even point is even longer. This poses a challenge for farmers especially in a sub-region where the cost of capital and discounting factor is high. During the waiting period, investors are at their most financially vulnerable state and may need some form of support. One example is the approach used by Total Land Care (TLC) in Malawi where priority is given to farmers to access subsidized farm inputs in the first couple of years on the

condition that such farmers have established plots where eco-friendly production method are used. This mechanism is currently primarily used to promote conservation agriculture.

Another example is in Zambia where Community Markets for Conservation (COMACO) targets poor and food insecure families. They are organized into producer groups and sign an agreement with COMACO which gives conservation dividends to farmers for adhering to sustainable land use practices in the agreement. As part of the incentive to farmers to support adoption of the eco-friendly approach, COMACO buys any surplus crops grown from member farmers at fair market prices, then resells them as processed, value-added products. Such reward schemes need not be monetary; the HKM programme of the Government of Indonesia rewards communities with increased security of tenure in exchange for environmental stewardship.

Direct payment for carbon sequestration

Several programmes of direct payments to investors are implemented in tree and agroforestry projects to sequester carbon. These incentives include paying investors the monetary equivalent of the estimated amount of carbon that trees sequester. Specific cases are Plan Vivo carbon payment scheme in a number of African countries; others are voluntary carbon credit schemes being funded by private foundations. Some governments also pay farmers to plant trees for sequestration of carbon e.g. the current Malawi government. The first soil carbon payment programme in Africa has recently been established in western Kenya with Vi Agroforestry.

Direct payment for watershed protection

Under this method, investors and farmers receive various amounts of money as a reward for planting trees and for undertaking land management practices which provide various water shed functions. These functions include improvement of water quality (usually paid by water corporations and utility boards) and ‘Green Water’ credit schemes, which reward land managers for reducing surface runoff and river siltation. Under the auspices of the Millennium Challenge Account, the US Government has recently provided over US$300 million to Malawi, part of which is to be used to support tree planting along the Shire River.

Tax holidays

Investors in eco-friendly systems may be given complete tax holidays or access to reduced tax rates in order to encourage them to adopt eco-friendly systems of production.

5. Conclusions

There are six main conclusions from the information and analyses presented in this paper:

1. Many tree based investments are highly profitable and are projected to remain so.

Furthermore, such systems often require relatively little labor, and diversify income streams (fruits, timber, tree crops, etc..). A tradeoff is that for many tree products, there is a delay of several years before reaping the majority of benefits. This need not be the case however as fodder systems, leguminous trees for soils, and grafted fruits can all yield significant early benefits. It is important to select the right species and even the right variety (or establishment method) for the particular circumstance and this is an area for broader information dissemination. While exotic tree species receive much attention, the analysis also shows that there are many native species that are not only well adapted ecologically, but can generate high profits. Their economic impacts could be higher if they received even a fraction of the research attention that exotic species do (e.g. in the area of selection of better germplasm and management).

2. Many tree based investments are critically important for providing environmental services and restoring landscapes (fertilizer tree systems, parkland systems, exclosure based systems)

Trees are very important plants. There are many trees species and much intra-specfic genetic diversity among them. Trees host a number of animals including pollinators. In systems they can be important niches or corridors for other types of animals. They have deep rooting systems to help keep soil in place and improve water infiltration and soil structure. They provide lifts (through roots) to recycle nutrients and water from deep soils. Their cover intercepts rainfall and can provide microclimates to reduce soil temperature and evaporation. They drop organic matter from leaves and roots that helps to spur greater biological activity in soils.

However, some highly productive trees consume a great deal of water, eucalyptus being the most well known of these. Planting a large number of such trees in sensitive hydrological areas has been found to create negative impacts on water flow, even though private profits are high. Some trees can also compete with crops and other understorey plants for sunlight, water and soil nutrients, and so even though ecological outcomes are improved, economic outcomes may suffer. However, there are always some tradeoffs in integrated systems.

3. Some tree based investments provide win – win outcomes in terms of profits and ecological services (the parkland systems)

Parkland systems predominate in the savanna and Sahel biomes for good reason: they provide nutritional and economic benefits as well as ecological benefits which in turn benefit farming system components (cultivated crops and livestock). Similarly, innovations such as nitrogen fixing shrubs boost yields as well as improving soil health and providing some additional fuelwood benefits. Fodder shrubs are yet another which boost milk production and income and can also serve as good soil conservation barriers and fix nitrogen. Boundary planting of timber trees is used worldwide as income and wood sources and also as windbreaks and as boundary markers.

Not all tree species or systems would qualify as ‘win-wins’ of course, and the example above of eucalyptus is more indicative of a sometimes considerable tradeoff with respect to environmental benefits, given the extreme water requirements of its rapid growth, as well as the phytotoxic effects of its foliage, which make cultivation impossible beneath the tree. Diversifying tree crop systems with shade trees in some cases can reduce profits, especially if tree crop values are high – but this is not to suggest that such systems should be dismissed uniformly – rather, that their location and scale do need to be taken into consideration from both ecological and economic perspectives. In addition, in terms of broader planning, they should rightly be viewed as components of a broader system of resource management and enterprise development that is designed to deliver long-term private and social benefits.

4. Some other tree based investments could be improved upon to better deliver both profits and ecological benefits (e.g. integrating high value trees into tree crop systems)

The phrase ‘green deserts’ has been coined to denote monocropped systems like oil palm and eucalyptus, the term implying that very few other plant or animal species can be found growingin such systems. While this may be an exaggeration, it is nonetheless true that there is scope for enhancing such monocropped systems through diversification not only to the benefit of biodiversity, but to profits as well. Multispecies agroforests are traditional systems in many humid areas of the world. In Africa, the Chagga homegarden system of the Mt. Kilimanjaro region of Tanzania and the ‘wild forest’ coffee agroforestry systems in southwest Ethiopia may be the best known examples, but this paper mentions many more. Farmers appreciate the diversity offered by these agroforests not only for the range of nutritional and economic resources which sustain the food security of their households, but also the role of diversified production as a buffer against the market shocks and price fluctuations which are common to almost all agricultural and forestry products. The integration of trees and crops in agroforestry

systems also mitigate the effects of climate change, such as unpredictability of seasonal rainfall and increasing frequency of extreme weather events (such as drought and flood) which affect annual crops much moreso than perennial tree crops.

The major impediment against greater expansion of integrated agroforestrysystems is that research has overwhelmingly bred ‘improved’ crop varieties bred for high external inputs andmanagement practices under moncropped (or full sun) changing the balance of the economic and ecological tradeoffs whichwere not previously significant.

5. Achieving large scale restoration will almost always require a combination of investments in tree and non-tree technologies (e.g. vegetation regeneration, soil conservation, planning for woodland/riparian management, etc..)

Tree-based technologies are just one component which contribute to long term economic and ecological benefits in landscapes. Other technologies are as or more important to apply depending on the circumstance. There are many different land uses and each of which requires its own type of sustainable management practices. Improved pastures and grasses are key in rejuvenating rangeland while contour management with vegetation like grasses and shrubs are important in managing hillsides. Exclosure practices are critical in rehabilitating highly degraded lands while existing woodlands and forests require rules for sustainable use and water sources require protection and regulated utilization. This paper has attempted to describe many of these landscape management tools or components, with an emphasis on tree-based technologies. Paper 2 provides examples of where these have been successfully combined to lead to landscape level impacts and provides insights as to where future successes could be likely.

6. Emerging markets in rewarding environment services or stewardship offer new opportunities for financing of tree-based technologies and land restoration practices

The types of technologies and management practices described in this paper are those which stand to gain the most from environmental service payment schemes. Such payments are not likely to be significant relative to the private benefits received from investments. However, because tree-based and land restoration technologies do not give a quick return on investment, the environmental service payments become very important in providing incentives for such investment.

The analysis above also demonstrates that although global and African demand prospects for many tree-based products are favorable and financing opportunities are expanding, there remains multiple challenges to translate these into private investment opportunities in the African context. Paper 3 examines in more detail the constraints to achieve landscape level economic and ecological rejuvenation and opportunities for overcoming the constraints.

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