I thought it was time for a catch up with our first BIF Malawi cost sharing project: Afri-Nut. On Wednesday afternoon I popped in to visit Richard Kettlewell, the interim MD, on the premises the company is currently sharing with one of its investors, NASFAM. The visit was timely as the plant had just started operating a week earlier and I took the opportunity to take a guided tour.
The factory building is split between a section being used for manual NASFAM processing (rice and nut seeds were being sorted by hand), a section for the Afri-Nut processing machinery and the Afri-Nut office. The latter is still a work in progress with the worker’s washrooms, offices and the aflatoxin test laboratory still being fitted out. Afri-Nut currently employees around 60 people, most of whom are casual labour involved in the processing.
Richard took me to the start of the processing unit, where the bags of shelled nuts, which are collected from NASFAM storage centres and local traders, are poured into the first hopper. Nuts are purchased between July and September but can be stored for processing throughout the year. The company would prefer to buy nuts in their pods but the culture among farmers to shell the nuts is ingrained and has proven impossible to change; when removing shells the smallholders sometimes wet the nuts to make it easier and this increases the risk of aflatoxin contamination. From the first hopper the nuts are taken up a conveyor and then dropped onto a gravity separator that grades the nuts by size. A small proportion of small and damaged nuts are separated at this stage for sale locally, most likely to be crushed for oil.
The remaining nuts are sent through to the “clean” processing room where they are once again separated by size into large bins. The nuts are then hand sorted on conveyors – a process which works well once the speed of the conveyors has been matched to the capacity of the sorters! The poor and discoloured nuts are rejected – it is these nuts that have the highest chance of being contaminated by aflatoxins. The raw kernels emerging from this process can then be bagged and ready for export to local markets such as South Africa. Once the laboratory is up and running, Afri-Nut will be able to demonstrate aflatoxin levels which meet the certification required standards by profitable markets such as European supermarkets and large buyers such as Intersnack.
The last pieces of equipment in the factory are not quite yet online. The blanching processor will heat and cool the nuts to loosen their skin and then run them over abrasive metal surfaces to peel them. Two cameras will then be used to distinguish good nuts from bad – this is only possible with the blanched nuts since the colour range is smaller than the nuts in their skins. From here the nuts can be turned into paste, some of which is likely to be sold to Valid Nutrition or Project Peanut Butter which supply high nutrition paste as a health supplement. Afri-Nut also plans to experiment with making their own brand of peanut butter.
In the first year of production, the business is likely to produce 1,500 tonnes of processed nuts, with the aim of reaching the maximum output of 6,000 tonnes per year in subsequent years. The exact product mix will be determined as Richard and his team work out the most profitable approach. This is not as straightforward as it might seem – blanched nuts command a higher price than raw kernels but the percentage of skin on the nuts and the subsequent weight loss in the blanching process can vary between nuts. The numbers need to be analysed once the full production processes are up and running.
Caroline Ashley from the BIF team is working with the Afri-Nut board to develop some key performance indicators (KPIs) for the company. These are particularly important for a start up business in order to be able to track results and adapt accordingly. In the case of Afri-Nut as an inclusive and “mission driven” business consideration both commercial performance and social impact KPIs are needed. Inevitably it is the measurement of farmer impact that is hardest to do – it is extremely hard to capture information about the individuals at the start of the supply chain. Would it be worth investing in a data management system or are there more pragmatic ways of measuring farmer benefits? At the high level the benefits to the Malawian smallholder farmers are less likely to be price increases (Richard believes the nut prices are relatively good in Malawi) but in the security of demand.
I asked Richard what challenges lay ahead… a question that currently elicits a hollow laugh among businessmen in Malawi. The lack of fuel in the country caused by a shortage of FOREX is reaching crisis point and the taxation levels on the private sector as a result of the “zero deficit” budget are crippling. He has had to go back to the shareholders to find more capital for the groundnut processing machinery following the cancellation of import tax breaks on agro-processing equipment. Fuel for the generator for the factory is almost impossible to find. Setting these serious economic issues aside, Richard would like to see farmers increasing their yields and moving towards more aflatoxin friendly practices. Benefits will be seen realised for both the farmers and for the Malawian economy through increased peanut exports as a result of Afri-Nut’s business. The impact will be even greater if smallholders can make quality and productivity improvements.
Photos from the visit can be found at: http://www.facebook.com/media/set/?set=a.10150445744956804.423243.7…