A lack of production centres in Timor-Leste means that raw materials are not used to their full potential. With 63% of the population dependant on agriculture, farmers are relying on the domestic market and missing out on the opportunity to export their products. Timor has a history of producing spices and there is great potential for this high-value crop to thrive, but trade structures were lost during the war and farmers have never regained confidence in returning to the crop due to an absence of a market to sell to. Spices are now predominantly grown wild in the back yards of farmers’ houses and are mostly managed by female members of the household.
Commodity Exchange is a food processing business, which uses raw, local materials to create products for both domestic and export markets. In the initial stages of the business, Commodity Exchange has invested in setting up a processing unit for a variety of spices, including cloves, black pepper and areca nut (also known as betel nut), largely for export.
Commodity Exchange has strong business links to India and they intend to leverage these relationships to take advantage of recently developed bilateral agreements with the Government of Timor-Leste and India, whereby Timor-Leste gets preferential treatment for export, including duty free and preferential market access. As India is a large consumer of spices and Timor-Leste has an untapped potential for spice production, there is great investment potential for local processing of spices for export. The company has good local business intelligence and is also exploring the export potential in other locations such as Singapore, as well as other agricultural products to process, like banana and cassava chips.
MDF is assisting Commodity Exchange with technical support in operationalising its spice processing facility and strengthening backward linkages with suppliers through continuous extension support to farmers. Improving farmer knowledge will ensure consistency and quality of supply of good quality spices. Alongside this, there will be support to develop technical expertise in-house to operate the processing unit, which will ensure timely processing of the spices, as well as supporting the cost of packaging machinery to enable access to the retail market. Having a continuous supply will also demonstrate the commercial viability of Timorese spices for the export market. Reviving spice production and creating a stable market for sales has the potential to create additional, supplementary income, particularly for female farmers.