Feasibility study on protected cultivation of vegetables in Rwanda

1. Feasibilitystudy on protected cultivation of vegetables in Rwanda

2. Content 0 Executive Summary 1 Description of the context 2 Definition of objectives and logic of the intervention 3 Identification of the project 4 Technical feasibility & environmental sustainability 4.1 Demand analysis 4.2 Option analysis 4.3 Environmental considerations, including EIA and climate change 4.4 Technical design and cost estimates 4.5 Plan for implementation of the project 4.6 Plan for operation of the project 5 Financial analysis 5.1 General Assumptions of this project 5.2 Projected statement of profit and losses 5.3 Sources of financing 5.4 Financial profitability & sustainability 6 Economic analysis 6.1 Fiscal corrections 6.2 Evaluation of non-market impacts 6.3 Economic viability 7 Risk assessment 7.1 Sensitivity analysis 7.2 Qualitative and probabilistic risk analysis 8 Conclusions of the feasibility analysis and recommendations Annexes

3. Background • Rwanda is expected to be a middle income country by 2030 • The Strategic plan for agriculture transformation (PSTA4) proposes the promotion of private sector investment to increase food security and revenues from agriculture as one of its strategic pillars • One of the activities planned is to develop targets at least 1250 hectares under modern protected agriculture • The majority of horticulture farmers are smallholder farmers with on average around 0.3 ha. • The current level of vegetable production in the country yearly production is around 308,000 mt. • Per capita consumption of fruits and vegetables in Rwanda is still low 61kg/per capita/year from recommended 146kg/per capita/year 2010 and before 2011-2017 2017 and after

4. Current situation • From existing data, Rwanda has around 45-50 ha of different protected cultivation structures (out of these 40 ha are under flowers and only between 5-10 ha are under vegetables). • In 2010-11 APFH-HIF project under RHODA distributed close to 40 units of walk-in tunnels but most of them destroyed by now • In 2016, KWAMP project distributed 20 units in Kirehe with complete irrigation kits, 50% of them were destroyed by heavy rains of 2017 • Other partners also provided greenhouses and tunnels to different group of farmers, those include Imbuto foundation, World Vision, FAO, etc • Most farmers have complained about the capacity of tunnels distributed by the sole distributer Balton to make profit • There are many farmers who abandoned the business due to several reasons • Demand for greenhouse produced product is still high and they sell high compared to open field produced

5. Objectives the Project Objectives • To contribute to increased income of farmers • To ensure continuous supply of vegetables thought the year • To improve food security status of farmers • Contribute to the balance of trade by reduction of imported vegetables and increased exports • To increase private investments in agriculture

6. Project partners and related programmes RAB: SSIT programme supports access to subsidized irrigation kits BRD: Export Growth Facility, provides financial support to export oriented projects BDF: its Guaranty facility helps investors to get access to financial loans through support to get collaterals Knowledge centres: UR and other HLI to provide research back up, HCoE to support capacity building Development partners: Some DP have programmes to support modern production technologies

7. Suggested PC structures options • The term ‘protected agriculture’ covers different protected cultivation techniques (PCT) used with the same objective, to modify the natural environment to achieve optimal plant growth. Those include: • Greenhouses • Shade-nets • Plastic tunnels • Wilk-in tunnels • Low cover tunnels In some cases soil plastic mulches may be included

8. Suggested structures/technologies

9. Activity plan

10. Project roll out plan Note: the target was taken from PSTA 4 targets, 1250ha by 2024

11. Crop choices and plan

12. Financial calculations

13. Assumptions • Crop selection • Model crops were assumed for each structure for financial calculation • Selected crops include: Tomato, chilli, cucumber, asparagus, strawberries and lettuce • Prices and sales • We assume that 100 percent of the high quality selected crops will be sold in local market except for chilli where 90% will be sold on export market and 10% on local market • We assume the discount rate is about 10.5% , Given by MINECOFIN (NISR 2017) • Average loss on production is 5% • Unit prices for each product was taken from prevailing market prices in Kigali markets   • Financing model • The cost of protected cultivation technology and small-scale irrigation material will be subsidized at 50% • The farmer contribution is estimated at 25 % of the cost technology • The cost of land was considered as the beneficiaries input to the project as it is expected that applicants will have the minimum required land for protected cultivation structures • Depreciation: It is defined as the loss in value of an asset over time, mainly because of obsolescence. Obviously, part of the reduced value of the buildings and equipment is the result of usage and is considered a variable cost. The entire depreciation is considered a fixed cost. • Production Materials and Supplies: Production materials and supplies included the purchase of seeds, fertilizers, chemicals etc... Costs of production materials and supplies were the actual figures provided during data collection. • Miscellaneous Costs: These costs include other costs incurred in a greenhouse operation, but not reported under any other heading.

14. Total investment

15. Investment outlay

16. Investment outlay…..

17. Cost-benefit analysis • Note: • The project is highly profitable • However, if no Government support injected small farmers will not be able to afford technologies • Sensitivity analysis was conducted in case of increase in the cost of capital, inputs and reduction in commodity prices at different percentages, the model was found not negatively affected, the project remaining profitable

18. Implementation modalities • This project will be part of the wider National Programme on Protected Cultivation (NPPC). • NPPC will be composed of • (1) protected cultivation of vegetables, • (2) aeroponics and hydroponics including seed production in research, • (3) commercial flowers production, • (4) potted plants and nurseries for planting materials. • The coordination of this programme will be done through a consortium • The consortium will be led by the Programme Manager, co-chaired by one of the protected cultivation service provider • The consortium will include • Service providers to be recruited in this project, • Knowledge centres, local private companies investing different protected cultivation technologies and • different NGOs/Development Partners supporting protected cultivation technologies

19. Implementation modalities,… • The projected to be implemented under NAEB SPIU • The technical team will be composed of • the Programme Manager, • Protected Cultivation Specialist/Extension specialist, • Supply advisor, • Produce marketing Specialist, • Four Provincial level Extensionist. • These will be supported by the International Protected cultivation expert who will support capacity building for the first two years of the programme. • International framework contracts will be signed with recognize service providers • The project will be implemented as turn key where the service provider will be paid for the developed and running structures • Mobilization of beneficiaries will be done by Government through awareness campaigns • The selection of beneficiaries of the subsidy scheme will be done jointly with Government and the service provider

20. Thank you