P 251506Z MAR 09
FM AMEMBASSY KIGALI
TO SECSTATE WASHDC PRIORITY 5974
INFO AMEMBASSY ADDIS ABABA 
AMEMBASSY BRUSSELS 
AMEMBASSY BUJUMBURA 
AMEMBASSY DAR ES SALAAM 
AMEMBASSY KAMPALA 
AMEMBASSY KINSHASA 
AMEMBASSY LONDON 
AMEMBASSY NAIROBI 
AMEMBASSY PARIS 
AMEMBASSY PRETORIA

UNCLAS KIGALI 000181 
 
 
DEPT PASS TO DOC/FCS/NAIROBI JSULLIVAN 
DEPT PASS TO FAS NAIROBI 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN PGOV EINV USAID RW
SUBJECT: PYRETHRUM: BACK TO THE FUTURE? 
 
¶1. (U) Summary:  Rwandan production of pyrethrum, a natural 
insecticide that has been a key Rwandan export crop since 
1937, collapsed in 2007/8 due to the country's sole refiner 
mismanaging suppliers and buyers.  From a peak of 1,350 tons 
in 2006, production slipped to less than 220 tons in 2008. 
Now under new management, the refinery is seeking to rebuild 
its supply base and restore confidence with former buyers. 
At current market prices of over $200 per kilo for refined 
product, pyrethrum offers local and regional farmers a 
lucrative cash crop.  It also presents Rwanda with a chance 
to expand its export base and the government a way to 
increase rural employment.  End summary. 
 
What is Pyrethrum? 
------------------ 
 
¶2. (U) Pyrethrum is a Chrysanthemum-related flower that 
produces a powerful natural insecticide (pyrethrin) that 
attacks the nervous system of insects.  Among pyrethrum 
positive attributes, it has little effect on mammals, does 
not enter the food chain and is biodegradable.  It is 
considered among the safest insecticides available for uses 
that involve contact with humans, animals or use around food 
products.  Pyrethrum is one of the few insecticides approved 
for use on organic farms in Europe and the U.S.  Applications 
include insect repellents, flea and tick control and in 
foggers in food storage areas. 
 
 
Unsatisfied World Demand 
------------------------ 
 
¶3. (U) According to a March 2009 report by the USAID-funded 
Sustaining Partnerships to Enhance Rural Enterprise and 
Agribusiness Project (SPREAD), the potential demand for 
products that can be formulated with pyrethrum is huge, but 
difficult to estimate due to persistent shortages that have 
forced many manufacturers to switch to synthetic compounds. 
Even with unreliable production, the world market for 
pyrethrum is estimated at $40-50 million, only 50 percent of 
which is satisfied by current production.  Growing worldwide 
demand for "green" products could open new markets for 
pyrethrum. 
 
 
Rwanda Climate Ideal for Growing 
-------------------------------- 
 
¶4. (U) Pyrethrum production was introduced to East Africa 
during the 1930-40's for use by the allied armies.  The plant 
thrives in the fertile volcanic soils, low night 
temperatures, good rainfall and ample sunshine that are found 
in the East African highlands of Kenya, Tanzania, Rwanda and 
eastern Democratic Republic of Congo (DRC).  Kenya has 
traditionally been the largest source of pyrethrum, 
accounting for between 60-85 percent of total world 
production between 1940-2006.  Australia, Rwanda and Tanzania 
account for most of the remaining production.  There are only 
five pyrethrum refiners in the world including two in Kenya 
and one in Rwanda.  Experts consider the recently upgraded 
Rwandan refinery to be the most efficient in the world. 
 
¶5. (U) Ten thousand metric tons (m/t) of dried pyrethrum 
flowers are needed to produce 200 m/t of refined pyrethrum 
extract with 50 percent active ingredients (pyrethrins).  At 
optimum yields one hectare can produce 1,000 Kg of dried 
flowers.  Currently, refined pyrethrum sells at $200-220 per 
kilo.  Due to the high quality of its pyrethrum flowers and 
efficiency of its refinery, Rwanda is potentially able to 
Qefficiency of its refinery, Rwanda is potentially able to 
produce pyrethrum with 75-80 percent active ingredients, the 
highest in the world. 
 
 
Poor Management/Declining Production 
------------------------------------ 
 
¶6. (U) Production of pyrethrum has declined dramatically in 
Rwanda (and Kenya) over the last few years.  Rwandan 
production declined from 1,350 m/t (of dried flowers) in 2004 
to 209 m/t in 2008.  (Note: Production in Kenya reportedly 
declined from 2,300 m/t of (dried flowers) in 2005 to 70 m/t 
in 2008.  End Note).  Societe de Pyrethre au Rwanda (SOPYRWA 
- Rwanda pyrethrum refinery) is the only buyer of dried 
pyrethrum flowers in Rwanda.  Production declined largely 
because farmers were not paid for their crops by the sole 
buyer and as a result switched to other cash crops like 
potatoes. 
 
¶7. (U) Properly managed, pyrethrum offers a higher return to 
farmers than potatoes.  But unlike potatoes, pyrethrum poses 
more economic risk to farmers because there is only one 
buyer, the flowers cannot be consumed as a subsistence crop 
and maximum yields per hectare are not achieved until the 
third year of production.  Farmers in Rwanda are paid $2 per 
Kg of dried flowers.  Currently, due to uncertain selling 
conditions and poor husbandry, farmers are producing an 
average of 250 Kg per hectare compared to 1,000 Kg they could 
potentially produce with better land management. 
 
¶8. (U)  Financial mismanagement at SOPYRWA in 2002-2008 led 
to cash shortages in the refinery, farmers not being paid, 
buyers not being supplied and SOPYRWA's failure to invest in 
new seed stocks, extension services and refinery maintenance. 
 As a result, SOPYRWA was unable to produce or ship millions 
of dollars of confirmed orders to key buyers such as 
American-owned Valent BioSciences, Whitmeyer and SC Johnson. 
As production declined and debts accumulated, the company 
faced bankruptcy. 
 
 
Rwandan Refinery Under New Management 
------------------------------------- 
 
¶9. (U) In June 2008, SOPYRWA was acquired by Horizon Ltd., a 
private company with links to the Rwandan government and 
military that invests in distressed businesses in strategic 
economic sectors.  Horizon has brought in new management and 
capital and is seeking to increase refining of dried flower 
stock to 1,800 m/t's by 2012.  At current market prices this 
represents sales of $6-7 million annually and would support 
an estimated 8,000 rural farm families.  Sopyrwa has a 
production capacity of 3-4,000 m/t (about $15 million in 
sales) that could be expanded further if adequate stock of 
dried flowers were available.  John Zigira, CEO of Horizon, 
said because SOPYRWA failed to honor commitments to farmers 
and buyers, he now has to restore trust with them and rebuild 
the company.  Zigira admitted financing the rebuilding of 
SOPYRWA remains a challenge as the company is deeply in debt. 
 
¶10. (U) The new General Manager of SOPYRWA, David 
Rwiyamirira, told emboffs that by introducing extension 
services and better planing and production controls, Horizon 
hopes to help farmers increase yields to over 800 Kg per 
hectare by 2013 and increase the active ingredients in dried 
flowers 60 percent by introducing new seedlings and better 
drying stations.  Horizon also hopes to tap new sources of 
dried pyrethrum flowers in the eastern DRC (Note: SOPYRWA 
bought 500 m/t of dried pyrethrum from the DRC in 2008 and 
believes this region could be an important source of raw 
materials for the refinery.  End Note).  Rwiyamirira agreed 
with Zigira that sourcing financing has been difficult.  He 
noted local farmers have been fully paid for past purchases 
Qnoted local farmers have been fully paid for past purchases 
but the company lacks sufficient funds to invest in new seed 
stocks and adequately support needed extension services. 
Rwiyamirira added new financing is urgent as this year's crop 
must to be planted in April for SOPYRWA to meet production 
targets. 
 
 
Opportunity Knocking 
-------------------- 
 
¶11. (U) Comment:  With Kenyan production in decline and world 
demand for natural pyrethrum increasing, Rwanda has an 
opportunity to take a leading position in world pyrethrum 
production and sales.  If it is able to build a reputation as 
a reliable supplier, demand for Rwandan refined pyrethrum 
could grow even further, providing lucrative income for 
thousands of rural families and opening opportunities for 
expanded trade with the eastern DRC.  It also opens up 
opportunities for possible downstream production of 
added-value finished insecticide products for the regional 
market. 
 
 
SYMINGTON