Afghanistan’s raisin farmers used to supply snacks for people around the world. For many decades through the 1970s, the country claimed about 20 percent of the global market for raisins. But years of conflict and political instability contributed to a decline in production volumes and quality, and farmers lost market share—as well as income.
Today, less than 40 percent of Afghan raisins are exported. These are traded at deep discounts compared with those from neighboring countries because they fall short of international quality and food safety standards.
But a local company aims to help Afghanistan reclaim its status as a world-class raisin producer and exporter. With support from the World Bank Group, the family-owned Rikweda Fruit Processing Company is building a state-of-the-art processing plant in Kabul province. It is expected to nearly double the country's raisin processing capacity and help 3,000 small-scale raisin farmers improve yields and incomes.
“The processing plant helps farmers because there is an existing buyer on their doorstep,” says Chief Executive Officer Mase Rikweda, whose family has been in Afghanistan’s raisin business for nearly three decades. Farmers feel more comfortable investing in their activity knowing that their produce will be bought at harvest, according to Rikweda. That’s why the processing plant, currently under construction, is already bearing fruit: “Farmers are putting in new trees, just because they can see the factory overlooking their farm.”
The processing plant will use laser-sorting technology never before available in Afghanistan to produce raisins that are calibrated to fit the size and color specifications of international buyers. This will help boost exports to wholesalers and retailers in important markets like Eastern Europe and Central Asia.
Maximizing Finance for Development
Like many projects in fragile and conflict-affected countries, the transformation of Afghanistan’s underdeveloped raisin sector relies on close collaboration among a number of organizations committed to long-term change.
In this case, members of the World Bank Group are coming together to support the Rikweda Fruit Processing Company and ultimately revitalize Afghanistan’s raisin industry. The Afghanistan Reconstruction Trust Fund (ARTF), managed by the World Bank, is providing $190 million through an existing project to enhance farmers’ agricultural practices, introduce new technologies including for raisin drying and handling, and linking farmers to markets. IFC is providing a working capital facility of up to $2.5 million and a long-term loan up to $500,000.
The Bank Group’s Multilateral Investment Guarantee Agency (MIGA) is planning to provide guarantees against the risk of war and civil disturbance to cover the investors’ equity and quasi-equity investments of up to $7.8 million. The project also taps into resources from the private sector window of the Global Agriculture and Food Security Program (GAFSP).
Image: A valley between the cities of Ghazni and Kabul. © Wandel Guides/Shutterstock
A Sweet Export History
Some of the specific challenges to Afghanistan’s raisin producers have included lack of infrastructure and technology, absence of efficient regulatory frameworks, dearth of market outlets for raisin farmers, and inefficient farming practices, including post-harvest practices.
The Rikweda Fruit Processing Company can help address these issues—contributing to rebuilding the raisin industry while also boosting Afghanistan’s economy. The two are linked because of agriculture plays a central role in the national economy. It accounts for 25 percent of Afghanistan's GDP and supports more than 80 percent of the population. Horticultural exports are estimated at more than $700 million per year, of which raisins are Afghanistan's largest legal agricultural export.
In addition to helping build the processing plant, IFC is providing guidance to smallholder grape farmers in the region. The support will allow them to improve farming practices and implement harvesting, storage, and drying technologies that will sustainably produce high-quality grapes and raisins. These improvements, along with the subsequent elimination of intermediaries from the procurement structure, could lead to a 15 to 20 percent increase in prices to farmers.
Collaborating for Change in Afghanistan
This is IFC's first investment in the agribusiness sector of Afghanistan—among the world’s poorest countries, and one that depends heavily on foreign aid. The Bank Group’s efforts are critical because there would be almost no financing options for the greenfield project otherwise.
The new raisin processing plant will create a total of 50 full time jobs, of which 35 will likely be held by women. Once the facility is at full production after it opens later this year, the project will also help avoid up to 3,000 tons of carbon dioxide equivalent per year—because the adoption of commercial-grade processing standards will reduce losses of grapes.
The agriculture sector is a priority area of the Bank Group’s engagement in Afghanistan because of that sector’s role in job creation and inclusion in the country. The World Bank is currently engaged in developing Afghanistan’s Agribusiness Job Charter, a project to promote the agribusiness sector as an area with greater job opportunities. IFC's experience with Rikweda Fruit Processing Company will help inform the Agribusiness Job Charter, identifying further areas of policy reforms needed to unlock potential investments.
Read more about IFC’s work in agribusiness at www.ifc.org/agribusiness.
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Published in June 2018