Onion in Senegal: FAO-MAFAP and the Ministry of Trade working together to improve the competitiveness of local value chain
The collaboration between FAO Programme for Monitoring and Analysing Food and Agricultural Policies (MAFAP), the Ministry of Trade (MoT) of Senegal and the private sector aims at increasing the quality and the commercialization of the domestic onion through contract farming.
Onion is the most dynamic horticultural crop in Senegal with a fourfold increase in production since 2001. With approximately 22,000 households involved in the production of onion, it is among the priority crops identified in both the country’s national development and growth strategy (Plan Sénégal Emergent) as well as sector-specific planning instruments (Programme de Relance et d’Accéleration de la Cadende ce l’Agriculture Sénégalaise). However, the poor quality of the domestic onion significantly hampers its overall competitiveness, and although current domestic production is 360,000 tons, imports reach around 170,000 tons and are growing.
Public policy response adopted in the past years – quota, temporary import ban and a 35% tariff – has not provided sustainable solutions. The Government decided to tackle the issue with an innovative approach involving evidence-based policy advice (FAO-MAFAP), parastatal leadership (Agence de Régulation des Marchés - ARM) and inclusive consultation with value-chain stakeholders. This partnership was expected to result in the formulation of sustainable policy reform options to: (i) improve quality and competitiveness of the local onion (ii) increase predictability of prices and quality premium (iii) formalize specifications and supply conditions in the value chain.
Upon request from MoT, the FAO-MAFAP started on December 2016 an analysis on sustainable policy options to create a contractualization and financing mechanism for the production of local onions. The study was launched in the presence of the ARM General Manager, the regional coordinator of the MAFAP program, as well as many key players in the sector. Among them: the Ministry of Agriculture and Rural Equipment (MAER), banks, importers, wholesalers and producers.
Few months later, FAO-MAFAP presented several contractual and financing options and suggested a series of public policy measures based on the study results. During a working session jointly organized by MoT and FAO-MAFAP, major producer organizations, traders, banks, and donors were invited to provide their feedback. This session improved the content of the proposed measures and strengthened the consensus on their implementation. Specifically, the participants expressed their preference for a tripartite pilot contract between a producer group and a large trader, with the provision of credit at a subsidized rate by a specialized banking institution. The credit ensures the purchase of quality inputs and the use of good agricultural practices, with technical support from the MAER and MoT for quality control and construction and management of storage.
In line with additional FAO-MAFAP policy recommendations, the MoT decided to establish an inter-ministerial Steering Committee that will implement, supervise, mobilize resources and evaluate the pilot contracts for the 2018/2019 cropping season. Last March, during the first meeting of the Steering Committee, the ARM gave mandate to the Senegal Strategic Investment Fund of the Ministry of Finance (FONSIS) to design a marketing fund that will co-finance priority investments to facilitate the implementation of the marketing contracts. The collaboration between FAO-MAFAP, the Ministry of Trade and the multi-stakeholder platform will continue in the next months with the objective of accompanying the implementation of the pilot contracts and evaluating the possibility to scale it up at the national level.