15 December 2012

Rwanda: Local Oil Processor Contracts Farmers to Supply Raw Materials

A private processor of essential oils, Ikirezi Natural Products Limited has signed a Memorandum of Understanding with farmers to buy from them patchouli leaves in order to process products for export.

The government is banking on export diversification, especially in nontraditional exports like coffee, tea and minerals to cushion the economy and bridge the existing trade imbalance.

Ikirezi Natural Products Limited is one of the companies said to have great potential and currently processes essential oils from other products like geranium with patchouli now its third raw material.

According to the MoU, farmers will for a period of three years supply dry leaves to the company which will then be processed into the final products including perfumes, medicine and different food flavours.

"Ikirezi have been in this business to process and produce essential oils; thus, we hope farmers will greatly benefit from this MoU," said Assinath Uwimbabazi Director of Diversification in National Agriculture and Exports Development Board (NAEB).

She said that Ikirezi steps in to fill the gap left by a private French investor who has been in business since 2008 but decided not to renew his contract with the farmers.

According to Uwimbabazi, district authorities in collaboration with NAEB intervened and approached different investors to take up the market gap left by the French investor. Ikirezi finally accepted to venture into the business.

Patchouli is considered as one of the new export products with high returns.

Farmers are projected to earn $3000 per year per hectare.

"Prices are likely to increase depending on how this product is selling and I am convinced the demand is there," Uwimbabazi said.

On average, it is said that five millitres of patchouli oils cost between $10 and $12 while, a kilogramme of patchouli dry leaves from farmers will cost Rwf400.

The product is grown in Bugarama, Rusizi District by Inyesamihigo Cooperative and in Kirehe District by ND-Oyak Limited. The product is mainly exported to the United States, United Kingdom and France.

NAEB pledged to work closely with Ikirezi to support farmers to improve the product in terms of quality and quantity through extension services, training on how to handle the product, supplying them with seeds and any other technical assistance they may need.

In a bid to encourage farmers to grow the crop, government through NAEB will provide concessional loans to investors and a 15 per cent discount per tree for farmers with a maximum of 100,000 plants.

To date, traditional commodities contribute above 70 percent of exports. The government has pledged to focus on horticulture and other new export products to reduce this dependency on traditional export commodities.

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