African Development Foundation

A United States Government Agency

changing scents into dollars in rural ghana

 

 

Project	Location	Funding Level	Funding Period
Barbex Essential Oils Project	Adomfe, Ghana	$250,000	FY 2004-2008

Over the past few years, millions of North Americans and Europeans have embraced aromatherapy as a way to restore balance to their hectic lives. Based on the idea that distilled plant oils can have a therapeutic effect on a wide variety of physical ills and emotional stresses, aromatherapy has emerged as a major segment of the herbal medicine market in high-income countries.

Essential oils have become a key ingredient of many products, from massage creams, vapor rubs and scented candles to herbal teas, protein bars and other processed foods. According to the Foreign Agriculture Service (FAS) of the U.S. Department of Agriculture, sales of essential oils to the American market have more than tripled in the past three years, from US $313 million in 2002 to US $1.5 billion in 2004 (see graph below).

African producers of essential oils have barely begun to tap the international market, however. During 2004, the United States has purchased just US $6 million in essential oils from sub-Saharan producers, and most of the essential oils that African industries use as scents and flavorings in their products are currently imported from Europe.

As part of its program to help Ghanaian small enterprises move into the production of value-added goods for regional and international sale, ADF is providing Barbex Technology, Limited (BTL), in the rural village of Adomfe, with resources to expand its production of essential oils and aromatic crops. ADF's funding to BTL will help the company generate dozens of new jobs, provide BTL employees with better social and economic benefits, and provide low-income farming families around Adomfe with a ready market for their produce and a vital new source of cash income.

BTL was originally established as a coffee processing factory, but high local demand for essential oils has prompted the company to shift focus and become Ghana's first exclusive producer of essential oils.

The company has already achieved measurable successes. It has developed and successfully marketed a mosquito repellant derived from citronella and lemon grass oils - AromAshanti - that it is marketing across Ghana and exporting to Togo and Benin. BTL is also preparing to expand sales of bulk oil to other west African countries and to a French fragrance broker.

To generate new jobs for its workers and a stronger market for the family farms that supply its raw material, BTL needs additional capital. ADF's grant of US $238,082 will provide BTL with resources to acquire:

• A special distillation retort* to enhance the processing of high-value essential oils;
  
  
• A dryer to reduce raw plants with high water content to a form that can be readily processed;
  
  
• A fuel-powered electric generator to ensure 24-hour power delivery to the company;
  
  
• A truck to collect raw materials from local farms and deliver processed oils to purchasers;
  
  
• A pick-up truck and tractor to assist BTL in establishing a new outgrowers' program for local farmers;
  
  
• Computer equipment and accessories to enhance business management and accounting procedures;
  
  
• Commercial marketing through regional radio, television and billboard advertisements; and
  
  
• Working capital to purchase the reserves of raw plant material and packaging materials that BTL needs to expand its production capacity.

With these enhancements, BTL expects to quadruple its net profits over the span of the five-year project and expand the number of its full-time employees from 175 to 250. The company also plans to expand into the production of essential oils derived from ginger, basil, tagete and vetiver. These oils will be targeted for international export to perfume makers.

The project is expected to generate significant social and economic benefits for the company's employees and for local farming families and their communities. To help its workers plan for the future and save for retirement, BTL will provide all of its workers with an annual bonus package (also known as a "13th month salary") and establish a provident fund for retirement that will match employee contributions up to the level of five percent. The company also plans to expand the number of farmers in its supply network from 20 to 150, pay each farmer a premium price for their produce above market value, provide farmers with training in the cultivation of aromatic crops and offer low-cost access to tractor plowing.

BTL will make further investments in its workers and agricultural suppliers by dedicating five percent of its annual after-tax profit to a local community investment trust. The trust fund has already financed the construction of a rural health clinic and the launching of a youth soccer league. In the coming year, the trust will provide funds for youth education in HIV/AIDS prevention.

* Distillation retorts are vats in which raw plant material is mixed with water and heated to separate essential oil from biomass.
 

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