PhytoTrade Africa’s Approach
PhytoTrade Africa’s aim is to develop the natural products industry in Southern Africa for the mutual benefit of its people and its biodiversity. This “Triple Bottom Line” goal (i.e. promoting environmental, social and financial sustainability) is not always an easy one to attain, but PhytoTrade Africa has developed a systematic approach that maximises the chances of success. The key elements of this approach include:
Industry development
PhytoTrade Africa is the shortened name of the Southern African Natural Products Trade Association. In many respects it is just like any other trade association, in that it seeks to represent and promote the interests of producers in the region’s natural products industry. However, there are two key areas in which it differs from other trade associations:
- Firstly, it is operating in an industry that is almost entirely new to this geographic region. Much of its work is therefore oriented towards nurturing and developing the industry, rather than servicing an already well-established group of producers.
- Secondly, it has a clear developmental goal, aimed at creating economic opportunities for poor rural people. In this regard it is unique: development is usually the preserve of specialised governmental or non-governmental development agencies, whereas PhytoTrade Africa harnesses the power of the private sector to drive economic growth.
Because of these key differences, PhytoTrade Africa is resourced to engage in activities not usually undertaken by trade associations (e.g. product R&D and market development). Initially, these resources have been provided through grants and subsidies. Over time, however, the onus is shifting towards the Association itself, and measures have been put in place from the outset to generate a steady revenue from levies on members’ sales, as well as the provision of consulting services to others and the commercial exploitation of PhytoTrade Africa’s self-generated Intellectual Property.
A significant part of PhytoTrade Africa’s work, therefore, relates to the need to become financially self-sustaining. This creates a strong performance-related incentive: the more the industry grows, the more revenue the Association will generate. As a result, PhytoTrade Africa is very pro-actively engaged in measures to grow the industry.
Top of PageProduct development
Product R&D is an essential first step towards the industry’s growth. There is obvious sense in pooling collective resources to develop new products which multiple members of PhytoTrade Africa can then supply. Clearly, however, the Association needs to rationalise its R&D investments and ensure it gets the maximum value for its money. The strategy therefore is to pass as much of the responsibility (and costs) as possible on to selected commercial partners, whilst undertaking itself only as much as is necessary to attract such partners.
This still leaves plenty to be done. To further maximise its impact, PhytoTrade Africa focuses on no more than 10 different plant species at any one time, and chooses those with the most evident and immediate potential commercial application.
The R&D process typically includes the following steps:
- Collation of secondary literature relating to the commercially relevant properties of a particular species;
- Generation and analysis of samples from around the region, both to verify the constituent components of the product and to ascertain any regional variations in its composition;
- Assessment of the volumes and distribution of the raw material found in the region;
- Commissioning of more advanced technical research on any specific commercially interesting properties; and
- Development of product specifications and quality standards, detailing the relative proportions of each chemical compound found in the product, and any quality standards that may pertain to its marketability.
In many cases, PhytoTrade Africa goes on to more advanced R&D in conjunction with its commercial partners. This might include product formulation, pharmaceutical screening and pre-clinical trials, toxicity and safety trials, and run right through to full Phase I and II clinical trials. However, once the product has been taken on by a commercial partner, much of the emphasis from PhytoTrade Africa’s side shifts towards improving the production and processing technologies required to ensure its members are able to supply a consistent and high quality product.
Market development
PhytoTrade Africa’s approach to market development is closely interlinked with its R&D activities. As far as possible, the intention is that commercial partners engaged in a specific product’s R&D process will become that product’s eventual buyers once it is developed and launched. Exclusivity is a central part of this strategy, and the Association actively seeks to enter into mutually beneficial exclusivity agreements with appropriate partners.
Market development efforts are driven from the Association’s European office, based in London. This gives PhytoTrade Africa permanent European representation, and ensures it retains a visible profile and presence in its main market. Association members are represented through this office at all the major European trade shows and industry events, and there is a strong emphasis on the development of close interpersonal relationships with key players in the European market.
Once a product has been launched, PhytoTrade Africa’s role becomes more of a brokerage one, facilitating the development of a stable trading relationship between the buyer and one or more of its members. Whilst these relationships remain essentially bilateral between buyer and seller, PhytoTrade Africa is always on hand to aid the process. Whether it is a seller (i.e. a member) needing help with export regulations, or a buyer having problems with delivery dates, PhytoTrade Africa has a strong vested interest in making sure each transaction is as smooth as possible.
Supply chain development
Concurrent to product and market development is the need to ensure a reliable and efficient supply chain configuration. In this regard PhytoTrade Africa’s role is as a service-provider to its members, ensuring that each one is equipped with the necessary skills and resources to do business in a global market.
From its head office in the region, the Association supports its members through a team of business and technical advisors. Members can call on support at any time by phone or e-mail, and the advisors pay regular visits to each member to provide one-on-one assistance and back-up. Skills are available in the fields of quality control, production and processing technologies, business development, freight logistics and documentation and organic and Fair Trade certification. Where specific technical inputs are required the exceed the Association’s in-house capabilities, skills are outsourced from other service-providers.
An essential element in the development of the supply chain is the facilitation of linkages between primary producers and intermediary processors. A number of PhytoTrade Africa’s members are development-oriented agencies working directly with rural producers, and it is through them that links are made to other members who operate at the processing and export levels.
Since rigid adherence to quality standards is fundamental to the success of PhytoTrade Africa members in developing export businesses, the Association plays an active role in supporting quality standards through the issuance of Pre-Qualified Supplier certificates. Only those members who have demonstrated their ability to set and maintain appropriate quality standards are eligible for certification, and each Pre-Qualified Supplier is subject to regular inspection visits by PhytoTrade Africa staff.
A final component of supply chain development lies in assisting members to attain Fair Trade and organic certification. The costs associated with certification are high, and the Internal Control Systems associated with large numbers of small-scale producers can be complex. However, given PhytoTrade Africa’s strong orientation towards Fair Trade and environmental sustainability, many members see certification as an essential step in the commercial development process. PhytoTrade Africa has in-house knowledge and skills in these areas, and is able to provide regular back-up and support to members seeking certification.