Shea Butter A Guide to Production and Marketing - AGOA Export ...

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Peace Corps Ghana Version 1, March 2008 uses include cosmetics and pharmaceuticals. The export market for CBRs is shared by Unilever (UK), Arhus (Denmark), Fuji Itoh and Kaneka-Mitsubishi (Japan). 3: The Shea Market The Shea Market: Local and International The local and international shea markets are two very different buyers with the international market having strict specifications while the local market uses shea butter for its traditional uses. These two markets are beginning to conflict with each other as demand forshea butter increases on the international market. As the international market demand increases, the price of nuts and butter in the local market increases at the same time. The high demands have made local shea butter and nuts less affordable on the local market creating an interesting situation for local consumers and producers. The Local Market: The local shea market exists because of the women of Ghana. There are men who trade in nuts and work in processing but women are the primary pickers, processors and sellers of shea butter in the local marketplace. The majority of shea butter consumption in Ghana is in the raw form for cooking and skin care. Some local shea butter is processed to make soaps that are sold in the market as well. The processors sell directly to the end consumer in the local market. Very little is packaged, labeled or certified before sale and it is sold in small balls or bowls in major markets throughout the country (Northern regions?). The International Market: The world’s biggest international markets for shea butter are in Europe and North America. Shea is used primarily for skin care cosmetics and for medicinal and cooking products. The industry is extremely competitive and is dominated by about six large international companies (see section 7). Supply to the major companies on the international market is typically done by another organization within Ghana that buys nuts and processes butter to the specifications of the major buyer. These contracts are very big and have extremely strict quality requirements. Communities in Ghana generally supply the nuts to local buyers who in turn supply the international companies with bulked shea nuts or butter. There are also certain organizations buying shea butter from individual communities but standard quality is a challenge. Increasingly due to corporate responsability, certain companies like Savannah Fruits Company, although relatively small, have been working to attain quality commercial production while supporting rural women’s groups. Page 10 of 28
Peace Corps Ghana Version 1, March 2008 The number one concern for international buyers is “perceived quality” before price. For edible products the major market is in Europe and India and the butter extraction and refining is done there. The major cosmetic and soap industry is in the United States and is known as the most lucrative global shea butter market. The majority of shea butter consumed internationally is mixed into a finished product containing a percentage of shea butter. The finished products in North America tend to have high tech containers and extensive marketing campaigns behind them and are high end products. Less than ten percent is used by the final consumer in its raw form. Shea nuts grow in 20 countries in the world, all of which are in Africa. The Export season is from August to April each year. It is estimated that 150,000 – 200,000 tonnes of nuts are exported each year from West Africa, 50,000 tonnes (approx. 33%) coming from Ghana alone. The nuts are shipped out of West Africa mainly from ports in Dakar, Senegal, Lome, Togo and Tema, Ghana. 4: The Shea Value Chain What’s a Value Chain? PCVs see shea butter at both extremes. Here in Ghana, we see it in the form of balls of local butter sold for around GH 0.50. In the US, we saw fancy cosmetic products sitting on supermarket shelves that sold for around $20. Where is that value added to the product? Who is making that profit? It will help to look at the shea butter value chain. A Value Chain includes all those groups involved at different levels of producing a single product. When considering shea, the members in a value chain are usually as follows: Nut Producers Nut Traders Butter Producers Each member of the chain affects the product. Each member also depends on the other members of the chain for supply and income. A chain is not supposed to be intra-competitive. Instead, the entire chain functions in union to compete with other chains (e.g. in other countries/markets). The value of the product is shared along the chain, meaning each member of the chain receives some income for their work. That causes the increase in price from local to foreign markets Strengths and Weaknesses of a Value Chain Although the members of the Value Chain are not intended to compete, the system is not perfect. Each member will have needs that counter the needs of other members. Page 11 of 28 Butter Traders Nut and Butter Exporters Producers of Food and Cosmetics
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