Interview with Dan Glickman, vice president and executive director of the Aspen Institute Congressional Program
Co-Chair, Agree, Former U.S. Secretary of Agriculture (1995-2001)
By Dave Ramaswamy, Africa Agribusiness Magazine
Dave: Dan, if you look at American foreign policy, our focus over the past 15 years has been around national security, terrorism and issues related to that, fighting battles, and exercising military options. Food insecurity, especially in Africa and the Middle East, is both a cause and consequence of conflict. Going forward, how do you think food policy can integrate itself into national security, especially with respect to Africa?
Dan: It’s a complicated question, but a couple of things. The problem with food policy is that there’s no stability in it. One year you may have surpluses, low prices, lots of rainfall, and fairly free flow of markets working well. Like this year and last year — prices are lower, supplies are higher, and there seems to be less of a problem in getting food in the developing world. So food security in the short term isn’t as bad as it was, let’s say, five, six, seven years ago, when we had shortages, very high prices, and very volatile prices that caused food riots in Tunisia, Egypt, and other places.
I’d say there are three parts to this problem. One involves anything we can do to build much greater agricultural self-sufficiency — no country is totally self-sufficient. We’re always going to need aid and trade. The extent that we can build agriculture systems, small-holder farmers being able to produce more, that’s a big part of the problem and it’s also a part of the solution. That’s what the US had been trying to do, and this Feed the Future Initiative is to help countries become more self-sufficient. The ability to produce more food, build infrastructure systems, storage, all the kinds of things that you need to deal with the thing. That’s one issue.
The second issue is aid. There’s no question that humanitarian assistance is still important and required, especially when there’s famine or drought — or in places like Syria or Yemen, where there are just political catastrophes. The U.S. had been the leader in that effort, but now you’re beginning to see more countries [offering assistance]. You got to have a system of humanitarian assistance as well.
But the main part of it, and number three, is to elevate food and food security issues higher on the multilateral political agenda. For the first time, food security is part of the G7, part of the G20. It’s an integral discussion of all the national leaders. Whereas 10 or 15 years ago, it just wasn’t viewed as important. It was viewed as farm issues, not that significant. “We’ll satisfy the problem with aid. We don’t really need to burden ourselves when we have to deal with issues like nuclear security and other kinds of things.” Now, these issues are getting a lot higher attention than they ever used to get so that’s very important.
Dave: Building on that, you said in terms of food not seen as a priority, especially food policy and agriculture and farming, that policymakers didn’t understand the interlinkages between food and other security challenges, but now it’s getting on the agenda. At the policy level, if you look at 100 years ago and the kinds of people who went into Congress, a lot of them came from farms and farming backgrounds. But if you look at the makeup of Congress now — and I’m not just talking the US Congress, but state legislatures as well — the number of farmers or people from farming backgrounds participating in the legislative process has waned substantially.
Even if you look at the age of farmers in America, the average age is close to 60. Europe is in the mid-60s. Farmers have just not been at the table when it comes to making these policy decisions. How do you think that can change, or needs to change? Because lot of the people who makes these policy decisions are completely disconnected from the farm.
Dan: There are a couple of issues here. We’re a much more urbanized society, so we have a significant movement of people moving from the farms into the cities all over the world at various rates. The US, China, India — and it’s true in the developing worlds, Africa and other places in South Asia — are just part of the trend.
One of the reasons for this is because agriculture is a lot more productive than it used to be. We get more bushels per hectare, per acre, so you haven’t needed to have all these people on farms like we had historically. But it’s a good question, because the clout of agriculture is not as great as it used to be. That’s why we need to look at these issues in a broader context: the relationship between agriculture and political stability, the relationship between agriculture, food, nutrition and health.
That’s what the Gates Foundation tends to focus on. How do you make people healthier so they can go to school? The relationship between food, health, and education, so that people don’t have to spend 24 hours a day trying to seek food; they can have a more comfortable, secure access to food so they can go take care of their health or take care of their educational needs.
That’s become the focus of the foundation world and, to some extent, government. Recognizing that food is more than just food security. It’s related to national security, health security, education security. Ministries around the world have started to talk to their agriculture ministers, saying, “The health of our nation is depending upon a stable food supply” or “The political stability of our nation is dependent upon a stable food supply.” Those are the kinds of issues that people are talking about now.
Dave: One key point you made connecting food security with national security: According to a group of retired U.S. military leaders, “unhealthy school lunches pose a threat to national security”. Since 1995, the proportion of U.S. recruits who failed their physical exams because they were overweight has risen by nearly 70 percent.
The latest nutritional science demonstrates that a calorie is not a calorie. A calorie consumed from a cola beverage is processed in the body differently from how a calorie is processed from, say, an avocado or an eggplant. How do you think nutrition policy needs to be changed at the school level to reflect these realities?
Dan: First of all, to a large extent over the past 50 years, we’ve concentrated much more on volume rather than on nutritional quality. That’s because if you had hungry people, you had to feed their bellies, and we didn’t pay as much attention to nutrition and health security, issues like obesity. One can be undernourished and be obese.
In the US, we see what the First Lady is doing with her school meals program and other things, which is tricky because it’s sometimes politically difficult. But nutrition is becoming a much bigger factor globally as well. What we can do is encourage a much more balanced diet in the context of local customs. Everybody’s not going to actually eat the same. We’re not going to force an American diet on people, say, in Tanzania. It doesn’t work. But how we can ensure a much more nutritionally balanced diet is part of national food policy.
The foundations — Gates, Ford, Rockefeller, Buffet — and organizations like DFID in the UK and USAID are pushing a nutrition message much more than they used to. Today we’re starting to realize that you are what you eat and it does make a difference. It’s not just the volume of food, but what the content of the food is.
Dave: You spoke of how things are politically charged, especially with the First Lady’s initiative Let’s Move! and now the labeling requirements on added sugars, for example, being politically charged. Even the agency you used to lead, the USDA, has been accused by its critics of regulatory capture, saying that the big food and beverage companies are driving food policy. What do you see as the role of government or foundations in driving sensible food policy while balancing the interest of, say, food companies? And/or how do you change the products of food companies to reflect health realities, and not follow the mistakes of the tobacco industry, which publicly denied their products were harmful.
Dan: I think that in this case, a lot of the drivers in the future are actually consumers. Consumers want to know what’s in their food, whether it’s GMOs or sugar, salt. And the more they demand that the food companies disclose certain kinds of nutritional content, the more the food companies will begin to get the message.
How is this happening? Right now, Walmart, the largest food company in the world, is beginning to source more product locally and more organic. McDonald’s is changing course, in terms of hormones and antibiotics, and chicken and meat. Why is this happening? It’s not really the government that’s doing this. It’s the consumers saying, “We don’t want this other stuff in our food.” I would say that, at least in the US and in Europe, these issues are largely driven by consumers and not by the government, although the government is a big part of the factor here.
There’s another factor about food companies, they’re adaptable — with the exception of the beverage companies that are basically selling sugar water in many cases, although they’re adapting, too, with water and low fat, low-calorie foods, and that kind of thing. Most of the food companies, they’re going to want to sell products that consumers will buy. But consumers are often very confused. They’re bombarded by massive marketing and advertising, especially in the US.
That’s why the government does get involved with issues like the dietary guidelines, the Food Guide, MyPlate, and all those things that try to give consumers the basic information to make wise choices when they buy their foods. But it’s hard if both spouses are working. People aren’t cooking at home, yet people tend to eat better nutritional meals when they cook their own meals at home. A lot of people can’t do that any longer.
I think we’re making progress in this area, though. I think that there is much more national recognition about understanding the relationship between what people eat and how healthy they are. Ultimately, the food companies, and I don’t necessarily view them as culprits, have to respond to consumer demand. Years ago there was a movie called Field of Dreams. I don’t know if you remember this.
Dave: Sure, with Kevin Costner, and set in Iowa.
Dan: In that movie they were talking about whether they’re going to build a stadium, and he says, “If we build it, they will come.” For years, production agriculture has said, if we grow it or if we raise it, they will buy it. That’s changing right before our eyes. Now it’s, if they want it, we will grow it. The paradigm of power is changing a lot in the whole issue of food and consumption of food.
Dave: Over the next 30 years, 2 billion people are going to be added to the world’s population. I mentioned earlier the increasing age of farmers around the world. There’s a huge amount of science and innovation, and lot of young talent that needs to get into agriculture to meet the increased food needs. But agriculture as a sector is still seen by many as backward, old-fashioned. As you said, with increasing urbanization around the world, a lot of people are abandoning rural areas. … In Africa, small rural farming on one acre, or growing commodity crops like maize, is not a money-making venture. How do we make agriculture sexy from a policy level to get more innovation and young minds into it?
Dan: Actually, the trends in the U.S. and Brazil are both pretty good because there you’re seeing, in fact, more profitability in agriculture. The land grant schools are seeing increases in enrollment, and that’s because the past few years have shown that agriculture can be extremely profitable. Now we have very good commodity prices, but much more high-value agriculture, fresh fruits and vegetables, a bigger part of our diet that’s much more profitable than the row crops.
Of course, there’s still consolidation agriculture in this country. I wish we had smaller farms so that people can be self-sufficient, but we’ve had consolidation in almost every industry in the world. In places like Africa, on plots one acre small, it’s not going to be very realistic, in terms of producing more profit for farmers. There will be some consolidations there. They’re not going to be like in the US, but use of cooperatives is becoming a big factor, particularly in Africa.
A lot of the techniques that we went through in the US, they’re going through now and such here in Africa. In Ethiopia, for example, they have an Ethiopian Agriculture Transformation Agency that’s doing its best to try to educate farmers, providing them an extension network like we have in the US, and to give them more information, and realizing that the one-acre and two-acre farm probably isn’t a good revenue stream for the long term.
Dave: That being said, you know there are a lot NGOs and other civil society groups who want to help small rural farmers.
Dan: When I say small rural farmers, the developing world will have small rural farmers for a long time to come. It’s just they’re going to be a little bit bigger than they were 50 years ago. It may be 5 acres or 10 acres, as opposed to one acre.
Dave: In that case it becomes more commercially viable.
Dan: If you look in the United States, the thing that we saw is that people have to band together to produce and market, and that requires some sort of legal arrangement. In the U.S., it was cooperatives. In Africa, cooperatives were often viewed as a tool of a corrupt state, but the truth of the matter is that individuals alone in agriculture have trouble making it because it’s so volatile … weather, pricing … that you need some sort of safety in numbers.
I suspect that one of the trends that you’re going to see in the developing world is the much greater use of cooperatives in terms of growing, producing, marketing, buying fertilizer, trying to share the risk a little better. It’s very hard for somebody who’s got one or two acres to cope in the event of famine or some sort of extreme weather crisis.
Dave: It seems like it’s not a question of whether you’re big or small, but of whether you’re networked into a cooperative or a group-buying scheme or not.
Dan: You also have something now that most of the developed world didn’t have. That is the use of handheld devices, the use of modern communications, the ability to get pricing information. I was in Mozambique about four years ago, and I was with a group of women, vegetable farmers. A cell phone rang and there were 11 women in there. All 11 picked up the phone. They didn’t know who it was for. We asked them how they use their cellphones — this was fairly early — to talk to their seed dealers about bringing the seeds there, how to plant, to find out more about pricing information from ports.
There are still a lot of problems there. Roads aren’t good. Electricity systems aren’t great. Waste and spoilage, because they can’t get storage very well. But notwithstanding, there’s a lot happening on the ground that in Africa through the help of the foundations like Gates, Ford, Rockefeller, through the help of NGOs, both US and African NGOs — and, well, there are NGOs all over the world. And the governments are doing a better job, but I wouldn’t stake my future in what the governments are doing. That’s why the foundations and the NGOs are so important.
The US, through this Feed the Future Initiative — and I assume you’ve followed it — has been really transformed how we have helped farmers overseas.
Dave: Earlier you mentioned that only now are people trying to integrate health, nutrition, food, agriculture. When it comes to food insecurity in Africa, a lot of it stems from energy insecurity. Now the Obama administration, through the Power Africa Initiative, is trying to facilitate deals to allow more access to utility scale grid power for Africa.
Dan: It’s absolutely critical. Again, I’ve got to go back to what we did back in the late 18th, late 19th, early 20th centuries. The building of an electric grid made all the difference in the world. You couldn’t transport crops without an electric grid. We electrified rural America. … Because of that, we created these rural electric cooperatives all over the country that provided power so they could operate grain elevators, do all these kinds of stuff. Without electric power, it’s almost impossible to do anything.
Dave: Historically in Africa, there have been US and European energy companies, extractive industry companies, especially for the past 50 years. And typically the NGO civil societies have opposed these investments, saying they’re despoiling the land, polluting groundwater, soils, displacing communities. But in many cases, the infrastructure that will be built by these companies can actually help small rural farmers, in terms of providing energy to store and process food. And on the environmental side, because of stable energy, it will reduce deforestation, reduce the need for firewood. How do you think the story needs to change for some of these companies to be seen as allies of the farmers and the environmentalists, instead of enemies?
Dan: That’s a very good question. The truth is, major American public companies that have shareholders are now subject to all sorts of public relations activities by their shareholders, including by environmental groups, to push American companies to be much more environmentally responsible. Take a company like Coca Cola, which has had problems with, for example, water utilization in India, Latin America. Now, Coke is all over the issue of water quality in East Africa, Central Africa.
You take a lot of the agriculture seed companies, Monsanto, DuPont, Syngenta. These companies, because of shareholder democracy, are no longer like the old colonial-type powers. I like to say the Chinese have begun to occupy that space. I was in Ethiopia last year in Addis Ababa. We met with a lot of agricultural officials, and they were saying that the Western companies had come to realize how important being sustainable stewards of the land was, but how the Chinese companies had come in and were occupying the old-time extractive space.
For this to work, you have two things. One is that US government has a big role to play to push this, but the more modern shareholders of democracy, are really forcing them to do the right thing here. That’s a big positive. The question is, “Is there enough investment opportunities to make it worthwhile for them to go into these countries and spend a lot of money?”
For Coca Cola, yes, because they’ve been there. … Coca Cola’s the largest employer in Africa. I mean, they’ve got distribution networks. But for a lot of the companies, I don’t know. It depends on whether they can secure some sort of return on their investment, or their shareholders won’t want them to do it. The foundations, Gates Foundation, particularly, is a seminal force in this area. Do you know Howard Buffet?
Dan: His foundation is not as big a player as Gates, but they’re also a very important force. The Rockefeller Foundation has been doing a lot of work in the area of finance. And financing water systems and technology are offering us opportunities where the systems don’t have to be as big as they used to be. You can have water purification systems that are much more local, for smaller communities and even for small, older farmers. Even energy technology, although you still need a grid, no matter what you do, but there are other new technologies.
I guess my answer to your question is, I think most major companies understand it and get it. But whether they’re willing to commit a lot of resources, I don’t know.
Dave: I’ll pick on two things you said. One is the role of Chinese and Chinese into Africa. Many people think it’s controversial, and that the types of things they’re doing, the extraction of resources, their policy towards human rights and environmental rights are very questionable. That being said, they are a force in Africa. The trade volume of China with Africa is three times what it is for the US with Africa. They’ve built a lot of infrastructure, which has improved lives of farmers because they can now get crops to market. Where do you see collaboration opportunities with US companies, US government, and some of the new players in Africa, the Chinese, Indians, and Brazilians?
Dan: One of them has to be in the environmental space, where there’s a lot of pressure in almost every country in the world, and in China, to deal with water, water rights, soil health, and forestry. Forestry’s a huge issue. That’s where multilateral institutions are so important. That’s where governments have a really big role. You’re starting to see now the Chinese recognizing that their people could choke to death unless they somehow deal with these issues. As long as we keep these high up on the multilateral agenda, then I think we’ll make progress.
I don’t view the Chinese as the enemy. I just think that their resources are so limited, and they’ve been on a growing spree. So sustainability hasn’t been historically at the top of their agenda, but it’s going to happen.
Dave: It’s similar to what happened to North America. If you look at the bison population in 1800 versus 1900, a 60 million bison population was reduced to less than a 1000. Now the bison population is about 500,000. U.S. forest cover now is much more than what it was a 100 years ago. In the 19th century, large areas of our forest were cut down for timber and energy. As countries get economically wealthy, they tend to get more environmentally conscious.
Dan: That’s right.
Dave: Civil society groups — especially in the U.S. and Europe — want Africa to leapfrog over how development happened in the US and Europe, by putting the human rights cart before the economic growth horse. When the US was developing through the 19th century and early 20th century, women, minorities – none of these groups had voting rights, very poor human rights, we had a destructive civil war. Yet the U.S. evolved past all of that towards a more perfect union. As we became richer, all these human rights and environmental rights issues came to the fore, and we had a chance and monetary resources to tackle them.
Dan: You’re very right, I understand. There certainly wasn’t perfection in the Western world that we exploited to build, but our political systems were, by and large, pretty stable. While there was corruption, it wasn’t everywhere. Things got too bad like they got during the … let’s say, right around the turn of the 1900s, and yet the progressive movement worked to clean things up.
Look, the cultures are so much different. The lack of profound education — I mean, education was a huge factor in the US. It was much more limited [elsewhere], I mean, because the colonial powers didn’t encourage it in Asia or Africa certainly. These things take a long time. The danger of Africa’s course is that it’s got all these minerals, forestry, and all these potential exploitable resources — and we don’t need it as much here, but the Chinese need it, and certainly India.
Brazil is a pretty good example of a country in the more modern era that’s developed its agricultural resources better and now has exploited the Amazon region to build soybean farms. Brazil now spends more on agriculture research than the US does. They learned it from us. Most of their scientists were trained in the US. Brazil is a pretty good example of some of these developing countries that have managed to develop a much stronger agriculture and food security environment.
Dave: Brazil has a lot to teach Africa in terms of tropical crop research.
Dan: That, and then you have the connection with the Portuguese language, so they have the relationships in Mozambique and Angola. There’s a more natural fit. … I mean, the U.S. relationship is more just the diaspora relationship of Africans in this country, but culturally, Brazilians are probably closer to Africa than we are.
Dave: That’s where you say more multilateral cooperation makes sense.
Dan: Absolutely, like keeping it on global agendas like the G20, G7. The power and role of the big foundations like the Gates Foundation. If you were to ask me who has more power and influence in the area we’re talking about, I’d say that Bill Gates and Walmart, just ironically. It’s not the US government — maybe a little bit — but all the players in the modern world are forces like them.
Dave: That raises the question of accountability. Elected legislators are accountable to voters every few years. Companies are accountable to shareholders. But it seems like some of the large foundations, because they have their large endowments, are pretty much not accountable. Or their accountability is substantially less than what you’d think. Especially in Africa, in countries like Ethiopia and other fast-growing countries, you’re starting to see this backlash against many NGOs, which are seen as not accountable to anybody and slowing down the pace of economic development.
Dan: Some are better than others, and you can’t generalize. My experience tells me that probably it’s because the amount of money. The Gates Foundation spends $5 billion a year, mostly in Africa. With those resources, and the fact that there’s a leader of the foundation who genuinely cares about this stuff, it’s made a big difference. Leadership is a big factor in both donor and recipient communities.
Developing leadership is a really important part of this effort. How you train young people to be different from their ancestors? To be more respectful of political systems, capitalism, freedom? It could take a long time. The American land grant system used to be really big in terms of relationships with African universities. They ran out of money or they ran out of interest, and that [relationship] has fallen way down. That’s something we’ve got to try to encourage because to develop agricultural technology in this field, it can carry forward on these things.
Dave: Now my question is about diet. Humans evolved in Africa, on the African savanna. Homo sapiens arose almost 200,000 years ago, and for most of human history, humans have been hunter-gatherers. Agricultural civilizations have been around for 10,000 years. Now when people look at modern diseases like diabetes, heart disease, or obesity, there’s this view that the agricultural diet, especially, the industrial agricultural diet, is responsible for a lot of these problems and we need to look back into our evolutionary past to address some of these health challenges.
In Africa, of course, there’s hunger and poverty, but there are some tribes in Africa like the Nuer, the Maasai, the Dinka who are some of the tallest humans on earth, with average height of 6-foot-2inches, and they have lean physiques, and nobody goes to the gym. What do indigenous cultures like those have to teach us with respect to diet?
Dan: I think, one, we have to respect that there’s no one size fits all. That’s for sure. Second, our particular dietary system is not necessarily suitable for the rest of the world, and we’re changing that ourselves. We’re finding that it leads to huge amounts of carbohydrate consumption and sugar and other kinds of things. It’s a very good point.
On the other hand, there are great nutritional deficiencies in the developing world. Micronutrients and diversity of foods, and part of that is because of poverty. Poverty has such a big role on these kinds of things. How do you get everybody in the world, developed and developing nations, to have a diet that’s much more in sync with, perhaps, what humans should be eating and what history should be guiding us to eat? It’s not easy to do. If you look historically, there’s not a lot of research in the relationship between agriculture programs, health, and nutrition.
The Council on Foreign Relations had a task force on non-communicable diseases in the developing world. What are they? The ones you just mentioned — diabetes, heart disease, cancers. … They did this report and it was composed of a lot of health people, and they focused on tobacco control, which was important; and they focused on pharmaceutical availability, which is important; and they had virtually nothing in there about diet and nutrition, school meals, you just name it.
I said, “I won’t sign the report.” In fact, I think this is the report. I’ll give it to you. The Emerging Global Health Crisis. If you look at the people on it, by the way, there was me. I’m the only guy who has anything [to say about nutrition]. … Sandy Berger was on the National Security Council. Mitch Daniels is president of Purdue University. Tom Donilon was National Security Advisor. Ezekiel Emanuel, Rahm Emanuel’s brother. Me. Donna Shalala and Tommy Thompson, former health secretaries in the U.S.
You look through this thing, and you’ll see there’s just virtually nothing about diet and nutrition as part of health strategy. I raised the issue. A French philosopher once said, “You are what you eat.” I said that building immune systems, making people so they’re not susceptible to disease, has as much to do with health as everything else. I put additional views here. You’ll see them. I said, basically the report doesn’t fully include diet and nutrition and other forms of preventive care as key strategies to help combat diabetes, cardiac disease, hypertension, cancer, and other non-communicable diseases.
In this country, we think if it’s exotic and technologically advanced, then it must be good. Telling somebody or devising systems to get more protein into the diet or micronutrients into the diet — that’s too simple of a solution [for people who prefer to hear about technology-related solutions].
Dave: Things like eating fermented foods.
Dan: Yeah. That’s why you’re supposed to eat sauerkraut —
Dave: Eat Sauerkraut and drink kombucha.
Dan: Even pickles. It doesn’t sound like it’s the greatest diet in the world, but fermented foods and, of course, the omega 3 fats, which are —
Dave: Good fats, as opposed to hydrogenated vegetable oils and trans-fats.
Dan: Some, like avocados, are pretty good. Anyway, it’s not viewed as exotic science.
Dave: Absolutely. It’s viewed as too simple.
Dan: It can’t be good because it doesn’t cost any money to solve the problem. On the other hand, the consumers of the world are really beginning to demand a lot more. “I want more control over my life. I don’t want you to tell me what to do.” Some of that’s not so good because a consumer will say, “I don’t want to get vaccinated,” and that’s not good either.
Dave: You raise a good point about how in our country we look down or are dismissive of solutions that are cheap or “old-fashioned,” and not technologically advanced. We also seem to ignore the environmental aspects around health.
I’ll give you an example. If you look at obesity rates in rural America, when compared to New York City or Washington, DC, they’re substantially higher. In cities you have walkable streets. People take public transportation and walk to the café or restaurant, while in many parts of rural America, people live in these suburban islands and they need a car to run even simple errands.
Dan: At the farm now, they have very expensive machinery. It used to be you had to actually walk with the horse. Modern technology has made a lot easier, but it’s true, some of the highest incidence of obesity is in small towns in rural America.
On the other hand, some of the highest longevity rates are in North Dakota, South Dakota, Minnesota, where you have very homogeneous populations, where maybe there’s a lot less stress. You’ve got friends. You don’t worry whether the Middle East is going to blow up or not, this kind of thing.
Dave: Sure, I agree. I know you mentioned food waste. There’s talk about climate-smart agriculture. There’s a lot of emphasis placed on increasing food yields and crop yields in Africa, and row crops and use of agrochemicals and fertilizers. But the fastest way to increase yield is to reduce waste. If you look at what happened in manufacturing with the Toyota Production System, “the machine that changed the world.” A key innovation there was reducing inventory and reducing waste in input materials. Who do you think are the companies designed to play the role of the “Toyota of agriculture,” in terms of reducing food waste?
Dan: I don’t know because there are a lot of new companies, but what are the problems to be solved? One problem is refrigeration. Much of the waste is just lost spoilage. A lot of that’s related to the grid and power, but can we devise storage systems and refrigeration systems that are more suitable and cheaper for smaller-scale agriculture.
Food waste is a big problem in Africa because of spoilage and no real transportation system. If you don’t have a railroad or a road, then you’ll lose your crop unless you can somehow consume it locally. For the developed world, it’s largely because we overproduce. We eat too much and food is cheap. Inventory management is not nearly as good. But you’re right, the 30% to 40% of food that’s either rotten or just thrown out could help feed another billion or 2 billion people, no question about it.
I still think that you’ll never stop the march toward technology, though. There are crops that are drought-resistant and pest-resistant, and basically dealing with this crisis of water, which is probably the biggest problem facing agriculture. That’s going to take some technological solutions, too. That can’t be done using prehistoric technology.
In a lot of small-scale agriculture, you don’t need that. You just need better production methods and more appropriate use of fertilizers. But you also need seeds for drought-resistant crops, too. There are ideological factors that play here. Some people are just against new technology. On the other hand, there are some people who say the only answer is new technology. It’s going to be somewhere in between.
Dave: 2015 is the International Year of Soils. And with respect to soils both in North America and Africa, if you look at the loss of topsoil per year for the past 50 years, it seems we’ve lost a lot of mineral content, a lot of organic matter. For example, a carrot grown in two different fields could have different nutritional content based on different soil mineral profiles.
Dan: By the way, research into soils has been a very low priority in our land grant schools, so we tend to research higher yields, productivity. There’s a guy at the Land Institute in central Kansas who has been doing work on perennials and cover crops, which are very important.
Dave: What are your two takeaways for a young person who wants to enter the African agriculture sector? What’s your advice?
Dan: One, you’ve got to learn the field just like everything else, which means either go to school formally or else find an extension-type network, where you can become skilled in the subject matter. You can’t do this without knowledge. That’s certainly one thing. Then, use modern technology to keep up to date, so you’ll know what’s happening with respect to prices, technology, trends in the weather, all those kinds of things. Do you remember the movie The Graduate?
Dave: Yeah. The key for career success was “plastics.”
Dan: Yes. I honestly do think that the future of the world is agriculture and food. Just look at the population, the demographics. … People can make a lot of money in this business in Africa, not just the US, but in Africa. In fact, there are probably more opportunities in Africa than there are in the US because you haven’t had this massive urbanization yet and everything else.
There are a lot of challenges, huge challenges, but leadership skills coupled with adaptability for changing technology — smart people can make money in this business if they know what they’re doing. That’s the big issue, if they know what they’re doing. You just can’t haphazardly go in and think you’re going to be a great farmer and necessarily survive. That’s why maybe you have to adapt and go into a cooperative or some sort of similar type of endeavor. Aspen does a lot of that. As I said, leadership training, there’s some done in the agriculture sector, but there’s a lot of stuff online now that wasn’t there a long time ago.
Dave: Thanks for your time.
Dan: You’re welcome.
Article by Alexander Hitzemann
“China’s engagement with African agriculture represents perhaps Africa’s biggest opportunity in history. China’s partnership with Africa has evolved from the donation-aid model of assistance to a more sustainable donor investment engagement.”
All across the African continent the effects of Chinese interests can be seen. Some journalist even jokingly refer to Africa as China’s second continent. In the last few years that seems to have become more true. This is mostly due to the large amount of money China has to invest in it’s own territories and across the world.
Dealing with Chinese businessmen was not first choice for most Africans, the United States was the investment partner Africa would have rather had. However, western investors have failed to see the long term strategic opportunity Africa presents or have the equity to place in such a plan. China has experienced the same losses as other investors, except they have continued to partner with Africans in order to execute a much longer plan which could take decades to reach fruition.
Right now, China’s main business in Africa is the extraction of valuable resources. They have invested nearly $10 billion in these operations so far and they will continue. What separates Chinese operations from other extractive institutions is their national interest in forming continueing partnerships, in industries like agribusiness. Additionally, they “pay back” African nations for their resources by building infrastructure such as roads, hospitals, and university campuses. So far China has been a very subsitive partner for Africa,
In order to learn more about how China’s involvement in Africa has affected African Agribusiness AAM met with scholar Donald Cassell. Cassell is a Senior Fellow at the Isoko Institute and directs the African portfolio of the Sagamore Institute, an Indianapolis based think tank. In recent years he has published on China’s Role in African Agriculture which analyzes the subject.
Cassell states, “China’s engagement with African agriculture represents perhaps Africa’s biggest opportunity in history. China’s partnership with Africa has evolved from the donation-aid model of assistance to a more sustainable donor investment engagement.” (Cassel 33) The Chinese, themselves being a rising world power, bring their own experience of rapid development and growth to the African continent. They are almost presenting their own development as a model for African nations to follow. A proven model to follow, since it has eradicated more poverty than any other in human history. The Chinese come from a very poor background, like Africans, and have built their economy from almost nothing very quickly. Additionally, China has successfully solved its major food security problems in the last thirty years.
However, how Africa manages how it does business with the Chinese is critical to maximizing the opportunities and minimizing the risks. This is the type of investment and involvement Africa has sought from other world leaders, but is now only receiving from China. Africa must be very careful dealing with the shrewd Chinese businessmen. Being the only region in the world that has seen no appreciable agribusiness development, Africa is in desperate need to reverse this decline. It’s hard to turn away Chinese investments in that agribusiness climate.
Seneglese and Chinese workers observe a ceremony at the national theater construction site financed by China on February 14, 2009 in Dakar, during a visit by Chinese president Hu Jintao and Senegalese president Abdoulaye Wade. AFP Photo
Cassell explained that the nature of Chinese involvement in African agribusiness has been complex. However, overall China views Africa as a strategic development partner. China already has a significant presence in trade and national development. According to Cassell much of this has been done in the framework of the One China policy, cooperation based on respect for national sovereignty, national interest, non-intervention, and non-imposition of conditionalities. At the core of this business philosophy is mutuality, trust, partnership, and win-win cooperation. China realizes that its relationship with it’s allies in Africa were weak, so they are build relationships.
Ghana is a good example of this Chinese model of cooperation. China sends excess skilled and unskilled laborers to Ghana for employment opportunities. Also, in Tanzania China has developed some of its most advanced agriculture experiments.
China’s relationship with Africa is just the early stages of it’s going global strategy, really it’s still trial and error. As the Chinese enter Africa they will learn that to do business in Africa they cannot easily separate politics, religion, and culture. In order to create these types of partnerships, at least the business cultures will have to meld. We can see some of this happening especially as Chinese migrate to Africa and intermarriages begin to happen. Since this is a relatively new partnership, overtime more people will have interest as it develops.
But China also has interest in its own food security needs. The FAO has determined that food production will have to increase by 70% to meet the worlds growing urbanized affluent population. At the moment china is meeting its own food demands by diminishing its own arable land. It sees Africa as a vast agricultural opportunity. China says that its interest is in global food security, not just to grow food and export it to China. However, there is already a high demand for African agricultural commodities in China.
Changing people changes history. If people do not change, little else changes in the long run. The only real revolution is in the enlightenment of the mind and the improvement of character.
China has done more to alleviate poverty in Africa than anything ever attempted by western colonialism or the initiatives of traditional partners. The Chinese engagement may be even more meaningful if the Africans do business carefully. So far China has really taken the lead, if the Africans can become more participatory it could become an even more lucrative relationship. Especially, if this could be done in the development framework.
Why is China so interested in Africa? They see investing in the African people as having the possibility of infinite returns.
Cassell, Donald L., Jr. “China’s Role in African Agriculture.” Marketplace: Liberia 2.1 (2013): 33-37.
“Chinese Involvement with African Agribusiness.” Personal interview. 05 May 2015.
For media and advertising inquired contact Alexander Hitzemann at firstname.lastname@example.org
By Dave Ramaswamy, Africa Agribusiness Magazine
Sunny Verghese is Co-Founder, Group Managing Director & CEO of Olam International, one of the world’s biggest agricultural commodity trading companies. Verghese established Olam in 1989 and leads the company’s strategy, planning, business development and management.
Dave: What is your view on pricing natural capital? People have talked about the carbon tax. What option do you prefer, and what’s more economically and environmentally sound?
Sunny: It’s a catch-22 situation. No country wants to bell the cat, to perform the difficult task. They say that if they are the only country that applies the carbon tax, then their producers and exporters will get a disadvantage compared to another country. So while intellectually a lot of countries accept that in order to change behavior in terms of carbon emissions, we need to price carbon, nobody wants to bell the cat. So unless this will be something that all [UN] member countries will implement concurrently, I don’t think this will happen. Nothing’s going to change.
Dave: Okay. So based on your work in Africa and being vertically integrated in commodities from sourcing to branded products, why did you decide to fully integrate from being just a trader of commodities? Going up and down the value chain?
Sunny: The way we look at where to participate in the value chain is we do profitability analysis as to where the profit resides. Is it upstream of the grower/planter? Is it mid-stream at the processor? Then we ask ourselves how we can attract a slice of the profit.
If it is distributed upstream, do we have an ability? Can we really enter upstream and successfully capture the production economics in terms of farming and plantation management skills? If we believe that it’s doable, then we want to invest there. It is very nuanced, so there is no strategic orthodoxy as to where we will similarly invest.
We only invest when we know that we have a competitive cost to production, both capital cost of production and cash cost of production. That will allow us a cost position below the marginal cost producer’s cost of production.
Dave: Can you give an example with a particular commodity, like coffee?
Sunny: If you take coffee, you know Brazil produces coffee at about roughly $1.25 per pound for Arabica coffees.
So we know the commodity prices are cyclical. If you go upstream and become a producer/grower in a deep down cycle you start bleeding. You will not bleed, however, if your cost structure is below the marginal cost producer’s.
Therefore [we look at] the capital cost of producing in a particular country and the cash cost for producing. If your cost structure is below the marginal cost producer’s then even in a deep down cycle in coffee prices you are profitable. You can ride it out. In a normal cycle, and especially in an up cycle, you’ll be significantly more profitable.
These are long-term investments. To plant coffee, the first full maturity is in seven years. So you have to wait for seven years. You can’t make a speculative guess that coffee prices are going to be high seven years in the future. But, if you know that you’ve got a cost structure that is competitive and below the marginal cost producer you’ll be riding through every cycle.
Dave: That is impeccable logic.
Sunny: So, we invested in Laos, we invested in Tanzania and Zambia, Ethiopia, Brazil. Win 4 of those countries we have a high margin of safety between our total cost of production and the marginal cost producer’s cost of production. So in Laos we produce coffee at roughly 80 cents, in Zambia at about 85 cents, in Tanzania at about 90 cents, in Ethiopia at about a dollar, but all this is significantly lower than Brazil’s cost of coffee.
When coffee prices start going down, as they are now, it will still hold, we believe, above the marginal producer’s cost of production. And if it dips that way it can’t hurt anything. So that is the strategy.
In every commodity we look at that. We saw cashews were grown in 19 countries around the world, with millions of small owner/farmers and fragmented production. The farmer makes 6% to 7% of the profit.
When we looked at almonds, 75% of the profit was made by the grower. And almonds can really only can be grown in four countries because the crop is quite sensitive to the agro-climactic conditions.
Dave: For almonds, it is places like California in the U.S., Australia, Chile and South Africa.
Sunny: If you understand where the profit pools are, and you believe you have an ability to organize and capture the production of economics, then you invest on that basis. That’s what we do in 21 crops that we farm and produce ourselves across 26 countries.
Dave: Let us look at comparative advantage. You know China and India can be looking at consolidating farm holdings, and being self-sufficient in food. But sub-Saharan Africa has a comparative production advantage for key food commodities. So, how do you think Africa plays a role in supplying the food needs of India and China?
Sunny: Well, 55% to 60% of the world’s arable land is in Africa, but considerable investment needs to go in to build that infrastructure to make that arable land fully productive. You need to make long-term bets in farming, because it’s not something you can pull out and abandon a year after you invest it. You need the certainty of being able to make agriculture investments—whether it is governance or good infrastructure. For Africa to realize the potential is a long way off. And there have to be significant private/public partnerships to really exploit the potential.
Dave: Which countries in Africa—please name your top three preferences—are better producers compared to others in the next five years?
Sunny: Typically we look at a few factors. One is we want countries with low population density where land is not a big issue. So Gabon is a good example. It has 1.6 million people, a lot of land and not too much cultivation. So, one factor is population density, availability of land.
Second is labor, cost of labor and the trajectory of wage/price inflation. If you’re feeling wages are going to go up very fast in this country because of the developing economy, then you might be priced out. So, you need to understand not only what current wage costs are, but you also need to have a point of view on wage/price inflation.
Also, what is the capital cost of production? What does land cost? How are land prices increasing? Are the focus of government policies pro-business and pro-investment? Can you look at the communities and be equal partners to manage your supply chains? Because you will need them to support it. If they are against you, you have no hope of establishing assistance long term.
Dave: I know you mentioned Gabon, but what are two other countries?
Sunny: We have farm plantations in Nigeria. We’ve got a couple of [oil palm] plantations in Ghana and Liberia. We’ve got rice farming in Nigeria. We have forestry interest in Congo and in Gabon.
Dave: I know you would like most farms to consolidate into clusters or cooperatives. You have this outgrower model where you give input and you have buyback arrangements for the output.
Dave: In the last seven years there has been a huge issue made of these large land deals in Africa. And many of them have failed. Going forward, how do you think this land acquisition process will evolve?
Sunny: Many people made the mistake of believing that the [central] government confers the land to you. The government can transfer legal title to you, but in our view customary rights are more important. If a person’s forefather has cultivated that piece of land, then—according to human rights convention—that has precedence over any legal right. A lot of people come from overseas to invest there, they don’t understand this. They feel the government has given them the title and therefore the title is clear.
Dave: Sure, that has been the case in most instances.
Sunny: You have to go through a pretty intense farm consent process with the local population. You need to understand what the customary rights are and you want to respect those rights. So people make lots of mistakes in not going through a proper evaluation process. If you don’t recognize customary rights, things can blow up.
Dave: Based on your experience in African countries, what would be your message to regulators or policy makers?
Sunny: Clearly they have to make agriculture the priority sector and they have to ensure an environment that allows planning for long-term investments. It should not be ad hoc, but the law, a law of parliament so that investors have predictability when they are investing. It should not be the case that in four or five years, the government changes and a new administration might reverse all these policies. Foreign investors need the security of policy lasting for the lifetime of the project. That has to be through an act of parliament. It should not be politically partisan; it should be consensual and broad-based.
Second, is for them to facilitate upscaling in terms of agricultural training. Very few people in Africa want to do any agriculture. The average age of the African farmer is 64 years old.
Very few want to do farming by choice. It’s a tough job. So you have to make it more exciting and you have to have programs to encourage younger farmers wanting to come into the business. Unlike the U.S. or other places, in Africa land is not very expensive, so you won’t need an inter-generational transfer of wealth to enter the business. For a new entrant, land is relatively cheap. So even a young guy who has an entrepreneurial streak can contemplate getting into it.
Dave: I know you have to run now. Thanks for your time, Sunny.
Sunny: You are welcome.
By Alex Hitzemann
Although sub-Saharan Africa has the potential to produce more agricultural goods than the US and Europe combined, the economic and political structure have not allowed it to reach those levels… as of yet.
However, this week a shimmer of hope was discovered by an analyst pouring over 2013 ag data about sub-Saharan crop yields.
A 3 ton increase is a significant indicator of a green revolution. This data points to Côte D’Ivoire hitting a tipping point, where their agribusiness could go into overdrive. The Ivory Coast currently imports a vast majority of their food, which is detrimental to their economy. However, the hope lies in similar developing nations that have posted the similar figures before breaking into agricultural sustainability. One example of this is South Korea, which reached self-sustainability shortly meeting similar indicators. The data can be shown in the graph below;
After 1961, Korea’s grain yields began to rapidly grow until 2013. If this indicator holds true for Côte D’Ivoire, then we may have a full scale #GreenRevolution in Sub-Saharan Africa. The benefits would be outstanding. Since they would be able to share their practices and processes with neighboring sub-Saharan countries.
However, there are many other factors at play. So one would be wise to curb their enthusiasm. McArthur explains “Africa’s agricultural systems are extraordinarily diverse, so one country’s partial productivity measure provides cannot be overstated as captured trends across a vast continent’s diverse range of crop systems. Nonetheless, the recent Cote d’Ivoire yield observation is unprecedented, and thereby provides cautious grounds for broader hope. At least some African countries might well be entering a greenshoot revolution”in agriculture.” Of course, some of Côte D’Ivoire’s officials hit twitter with the exciting news today…
by Dave Ramaswamy, Africa Agribusiness Magazine
Dave: What is IFA’s mandate? Please give an overview of your work in Africa.
Esin: IFA is a trade association representing the global fertilizer industry with about 550 members in more than 80 countries, of which half hail from emerging economies.
IFA’s priority today is to promote the efficient and responsible production, distribution, and use of plant nutrients. Access to affordable fertilizers is a key issue in that respect, in particular in Africa.
For Africa, IFA is committed to facilitate reaching the Abuja target of 50 kilogram/ha in an environmentally responsible manner. In order to do so IFA as an association runs an Africa Forum.
In addition, IFA partners with various stakeholders on a series of programs and campaigns.
- In order to develop from the ground up, African agriculture requires better and more reliable data. In partnership with IFDC,AfricaFertilizer.org facilitates exchange of information about fertilizer markets and policies. It has quickly become a standard reference website for all of those interested and involved in agricultural markets.
- Recognizing the need to foster expertise on the continent, IFA and the African Fertilizer and Agribusiness Partnership (AFAP) run the Africa Fertilizer Volunteer Program. The AFVP places global fertilizer industry experts willing to volunteer their time and knowledge towards building the African fertilizer value chain, with the ultimate goal of increasing fertilizer users and usage in the continent on the field in countries. Experts from fields such as project development, financing, marketing, logistics, and safety, health and environment (SHE) in production. So Far the pilot countries have included Ghana, Tanzania and Mozambique.
Individual companies who are IFA members also undertake their own extension initiatives in countries across sub-Saharan Africa, training agro-dealers and farmers on soil testing and fertilizer best management practices.
As an Association IFA is very active in the multilateral arena. This year, IFA and 7 partners organizations ran a year-long campaign promoting smallholders’ access to fertilizer in Africa. The campaign included 3 side-events, a letter to African heads of state, a campaign video and numerous media articles aimed at raising awareness among policy-makers and business leaders alike.
Dave: What are the biggest growth markets in Africa? Which countries and even which regions? Please give a percentage breakdown of customers – governments, cooperatives/self-help groups, commercial farmers? What are your usual sales channels.
The African fertilizer market has been stagnating from the mid-80s till 2008, increasing by 15% only during that period. Since 2008, the region is witnessing robust growth. Between 2008 and our forecasts to 2015, we see the regional market growing by more than 40%. Most of the expansion would come from Sub-Saharan Africa. Fertilizer demand in Sub-Saharan Africa without the Republic of South Africa is projected to grow on average by 8% annually. Nigeria and Ethiopia are the leading countries in Sub-Saharan Africa. But demand is also increasing in Kenya, Tanzania and many other countries that are committed to increasing agricultural productivity. Today, Africa as whole accounts for slightly less than 3% of world consumption, but this share is expected to increase over time. With an average application rate of some 10 kg/ha, Sub-Saharan Africa consumes 10 times less fertilizer per unit area than the global average. This is one of the main reasons for the high yield gap and prevalence of hunger in the region. Working with partners, we are striving to increase fertilizer consumption in Sub-Saharan Africa to address both food insecurity and poverty in the region, and help realize the immense potential of the continent.
Dave: Given fertilizers are generally expensive to use in Africa – compared to other regions, with poor storage and transport infrastructure, how do you ensure smallholder access?
Esin: The elevated price of fertilizer in many regions of Africa is mainly due to high transaction costs and the lack of local production and blending facilities. IFA works towards enabling and enhancing smallholders access by engaging in innovative partnerships with other stakeholders. These partnerships aims to provide the following catalysts for African smallholders:
- access to credit, finance and insurance by retailers and farmers.
- facilitated imports and the distribution of diverse fertilizer products.
- Individual IFA members often invest in infrastructure: transport, handling, storage, and blending facilities.
- We are also keen on developing mobile technologies to provide information on markets, extension services and prices.
- IFA members also train extension workers to help farmers organize themselves.
- Last but not least we work to disseminate best practices based on the integration of organic and mineral nutrients, balanced fertilization, and other good soil and crop management practices.
Dave: Given recent talks at the UN about climate smart agriculture, how should lower nitrous oxide (N2)) emissions – a greenhouse gas, be implemented in fertilizer production? N2O is 300 times more potent than CO2. What financial commitments are required and within what implementation timeframe?
Esin: The fertilizer industry recognizes the importance of GHG emissions reductions and sees climate-smart agriculture as a vehicle for that. To this effect, IFA is a member of the Global Alliance for Climate Smart Agriculture.
Moreover, IFA encourages its members to minimize their direct emissions, to foster the reduction of emissions related to the use of fertilizers and, where possible, to contribute to the creation or expansion of carbon sinks. IFA encourage its members to act throughout the lifecycle of their products, from their production to their use by promoting industry best practices and supporting the development of innovative fertilizers and more efficient and effective application techniques in order to reduce nutrients losses to air, water, and soils to the minimum possible.
GHG are mostly produced from ammonia production processes. IFA encourages its members to adopt best available technologies (BAT) to reduce emissions. New technologies for nitrogen oxide (NOx) capture have been developed and adopted.
IFA members are reducing their carbon footprint by investing in energy efficiency and emission control technologies. Modern fertilizer plants are rapidly approaching the theoretical minimum energy consumption for ammonia production. Conversely, phosphate fertilizer production has become largely energy and greenhouse gas neutral, due to energy co-generation activities during sulfuric acid production.
Dave: The Green Revolution in India, in some places like the Punjab, has now reached the limits of crop yields with indiscriminate use of fertilizer, with its resulting harmful effects on soils and human life. How do you see the Green Revolution in Africa evolving differently? e.g. in many places of Africa where soils are degraded, use of fertilizers is not a magic bullet for increasing yields. Soil organic matter needs to be rebuilt first.
Esin: The Green Revolution in Punjab has not reached its limit. As far as fertilizers are concerned, the fertilizer subsidy policy currently in place in India encourages unbalanced fertilizer use. If the Indian policy is revised to rebalance the ratio between nitrogen fertilizers and phosphate, potash, sulphur and micronutrient fertilizers, the room for increasing productivity in a sustainable manner is still substantial.
Africa should of course learn from the mistakes and build on relevant success stories in other parts of the world. For instance, the model applied in the Brazilian Cerrados should be considered in the savanna areas of Africa, where soils are also acidic and often nutrient-poor. In these areas, applying fertilizers is not enough; fertilizer use must be combined with the application of lime to improve the soil pH and with the return of crop residues and livestock manure to progressively increase the soil organic matter content. But, without fertilizer, there is no hope of increasing agricultural production in Sub-Saharan Africa without undesirable large-scale land use changes and related greenhouse gas emissions and biodiversity loss.
Africa could also learn from initiatives in Asia in terms of distribution and outreach strategies. Models developed in India for knowledge transfer to the farmers, including the use of mobile phone technology to access agronomic and market information, are worth adapting for smallholder farmers in Africa.
Dave: What is the role of micronutrient additives/supplementation in fertilizer use?
Esin: The first role of adding micronutrients to fertilizers is to increase productivity. There are many areas in the world, both developed and developing, where micronutrients such as zinc and boron have become the limiting factors. In these cases, if the limiting micronutrients are not added, crops respond sub-optimally to fertilization with macronutrients. Adding micronutrients to traditional NPK blends can also address an array of human health conditions caused by micronutrient deficiencies. This is especially true for zinc and selenium. More than one-tenth of the total disease burden can be traced back to micronutrient deficiencies.
Among all micronutrient deficiencies, zinc is one of the most common: 2 billion people worldwide are zinc deficient and 1.5 million children die each year from zinc deficiency induced diarrhea. The FAO estimates that 50% of the world’s agricultural soils are also zinc deficient. Micronutrient deficient soils reduce not only yields, but also the intake and bioavailability of minerals that are essential to humans who consume the crops cultivated on these deficient soils. Supplementing fertilizers with micronutrients addresses the deficiencies in the soils, in plants and in humans. As such, they contribute to increasing the quantity of food by raising yields but also the nutritional quality of the food. The added micronutrients have immediate and profound impacts. Chronic deficiencies affecting mostly women and children in the local population are quickly eliminated as a result and contribute to eradicating many micronutrient-related illnesses.
Dave: What does environmental sustainability mean to you? How do you define responsible fertilizer use?
Esin: For me personally, environmental sustainability is about making responsible business decisions that can foster economic growth and poverty alleviation while safeguarding the environment by limiting negative effects on the environment and on biodiversity. Responsible fertilizer use entails a balanced application of crop nutrients so as to maximize yields and maintain soil fertility, while reducing greenhouse gas emissions and nutrient run-off to the environment.
During my mandate as IFA president, I have focused on shifting application from areas of nutrient excess to areas of nutrient underuse. I also believe that farmer outreach is essential for responsible fertilizer use. Farmers must be made aware of how to apply the right nutrient source, at the right rate, at the right time, in the right place. This is what we call the 4R nutrient stewardship, a framework based on sound scientific principles that guides all IFA members in their outreach and extension programs.
Dave: Please tell us about some success stories
Esin: I would like to focus on a success story that is very personal to me. Because I believe that fertilizer have an important role to play in advancing food and nutrition security and that we must shift the conversation from enough calories to eating more nutritious food I will give en example from my home country – Turkey.
After scientific research revealed that soils in Turkey were severely deficient in zinc and wheat yields very low as a consequence, my company Toros Agri, dedicated itself to produce zinc-enhanced fertilizers. Our efforts have been repaid not just with higher yields, but also with a new generation growing up free of deficiencies. Since crops were able to absorb zinc from the soil, grain had a higher zinc content for the benefit of uthe humans who consumed the cereals grown on it. Nowadays over 300 000 tons of zinc enriched fertilizer is applied in Turkey and the economic benefits are at approximately $150 million as estimated by the Turkish Ministry of Agriculture.
The zinc success story is not limited to Turkey alone. In fact, half of the soils in the world are deficient in zinc. Important work and field trials are being conducted under the Zinc Nutrient Initiative in China, India, Brazil and Bangladesh.
I hope that this success story from Turkey can be adapted and implemented in other regions of the world where micronutrient deficiencies threaten the future of children in particular.
Dave: Thanks for your time
Esin: You’re welcome
By Dave Ramaswamy, Africa Agribusiness Magazine
Conducted during US-Africa Leaders’ Summit, Washington DC, 8/7/14
Dave: Martin, thanks for your time. Could you please describe AGCO’s lines of business? And, particularly, what lines of business you’re offering in Africa?
Martin: AGCO is a pure player in the area of agriculture. Our traditional product lines are farm equipment, so mainly we are a leader in tractors, in wheel tractors, but also in tractors on tracks, and we have everything, so to speak, a farmer needs: combine harvesters, self-propelled forage harvesters, balers, seeding equipment and so on. In our industry, we call this “full line of product.”
We’re in a way different from some of our competitors in that we are a multi-brand company. We own some of the finest brands in the industry, with long traditions, like 160 years for Massey Ferguson or more than 100 years for Fendt and so on.
Recently, about two years ago, we also acquired a company—GSI and that did broaden our product line. GSI specializes in grain logistics, which includes grain storage, grain drying, and grain transportation. They also do chicken and layer installation, and swine stables, called “swine houses.”
Dave: What is your current market share in Africa, and what are your projections over the next decade?
Martin: We’ve been a market leader in Africa for many, many years. The leading brand in Africa is Massey Ferguson. If you add all the volume our licensee TAFE from India is bringing to the continent, it’s even more so. Our market share varies a little bit across each country, but is fairly stable.
We’re optimistic about growing our Africa market share because we have a good brand image, we have a long tradition, and we also have a good dealer and distribution network.
Dave: At the recent US-Africa investment events in Washington [“Leading the Way in U.S.-Africa Investment” conference, which ended Aug. 8], we heard a lot of talk about food and nutrition security. With Africa having 60 percent of the world’s available land, it has the ability to feed itself. What does food security mean to AGCO? How do you intend to tackle it in Africa over the next two decades with your “full line of product”?
Martin: There are two completely different areas and two different businesses you can talk about. First, we have some big professional farmers in Africa who need the most modern, high-technology solutions, like we offer in South America, Europe or North America.
These are the state-of-the-art farmers. They’re huge. They are, let’s say, between 2,000 and 20,000 hectares. We have a customer who farms 30,000 hectares in Zambia. This is a business segment we’re used to serving. It’s not that difficult. We have the products these farmers need because this is our specialty: high-quality, high-tech solutions.
Then you have the smaller farmers, the subsistence farmers. What people outside Africa don’t understand so well is that their situation is not as romantic as one might think. The burden of work on this small farm, which may measure about one acre, falls mostly on the women. They don’t have a power source, they don’t have water, and they don’t have electrical grid connectivity.
The women farmers wake up early, usually at sunrise, they walk to get water. That takes quite a while since they have to walk two to five miles. They prepare breakfast for their kids, they make sure their kids go to school if there is one, and then they start to work on their farm. Between farm activities, they prepare lunch and dinner. Meanwhile, the men tend to gather at the marketplace and have a cup of tea and smoke.
It requires a groundbreaking change in thinking to help these women subsistence farmers become more professional. What does that mean? It means they need to produce more than they consume. This would put them into the position of selling some of their surplus product to generate income.
Individually, these farmers cannot invest in a tractor. Yet everybody knows that there are two major factors that improve productivity. The first is mechanization, and the second is using fertilizers. We talk to governments and to private institutions and tell them that what they need to do is to group these smallholder farmers together and to create co-operatives (co-ops).
You see that in some countries; Algeria has them, Morocco has them, and Nigeria has them. The co-op is the right way for small farmers to share equipment. If, for example, a hundred of the small farmers would come together, they could afford to buy one tractor.
What happened in the past often was a farmer would get a tractor as a gift from an aid program. Then after a short period, he would have sold the seat and replaced it with a wooden structure, then sold the hood, and the tires. And after a year, the tractor had disappeared and the engine is somewhere used as a generator. We need to avoid that. There are solutions, but it’s not easy.
Recently we had a meeting with Guy Scott, the vice president of Zambia, where we were talking about this. In Zambia, you have 1.4 million subsistence farmers and the government would like them to — they have co-ops already — mechanize, so this is a vast undertaking. There’s nothing much we can do as a company in this regard. It’s something that farmers have to do, and maybe they have to do it with the support of the national and local government.
It’s less about financial support and more about the structural support. Someone has to organize this farmer network, and then organize appropriate farmer training. We’re interested in supporting these efforts.
Dave: What you’re saying is smallholder rural farming is romanticized, but the reality is that it involves a huge daily struggle with little reward. Yet a lot of the donor agencies focus on promoting subsistence farming. So it may be the wrong focus. Smallholder farming is like candlelight dining, it’s only romantic if it’s by choice. Most African smallholders don’t have a choice.
Martin: Exactly. If you’re a journalist in Washington and have a small farm in Virginia, that’s fine. You go there over the weekend and enjoy it because you like to drive a tractor for two hours. Super, but if you have to subsist from it every day, it’s very tough.
Dave: Martin, you talked about concept of cooperatives, of creating a farming network where “the network is the farm” for providing sales and support. This responsibility lies more with the governments and civil society rather than AGCO.
I’d like to dwell a little deeper on that point, which is purchasing equipment as a cooperative. What are some of the financing tools available through AGCO? This could be standalone through AGCO or working in partnership with banks or governments.
Martin: We do financing of programs, like leasing or rental programs, through a finance institution. It’s a joint venture between AGCO and Rabobank that we created 20 years ago. It’s called AGCO Finance. It’s a 50-50 joint venture. We offer financial solutions and do the necessary financial engineering.
Now, this works all over the world. Of course, there are certain countries with high risk where it’s more difficult to come up with a solution. With the small holders, the additional problem is they don’t have collateral. That means, to stay with the example, we can’t take the risk of selling them 5,000 tractors. That’s the number the government identified being needed because this has to be then orchestrated and organized.
Therefore, this is where aid programs or other institutions normally come in. What we see is, they do get some traction, but sometimes we have countries that have too much donor money. Ghana is an example. Ghana’s problem is to find projects in order to digest all the money available. Other countries don’t have donor money at all. The donors are into big investments like power stations or roads and bridges, airports, railways. They’re not so much geared for a smaller investment in farming.
I think what it needs is a “proof of concept,” and we try to work on that. There is a demand, but then it is split into so many hundreds of thousands of individuals. That means in farming, typically, you don’t have the big investment as you have in power.
What we do offer, of course—and this helps us also to get closer to governments—is grain logistics. A lot of African countries have a problem with infrastructure. With the grain logistics business through GSI, we can now help there. Many countries face a problem in post-harvest losses in grain due to poor storage, and with factors such as humidity and pests. Here we can come in with a solution that actually makes us even a better partner for local governments.
Dave: That’s a great point. Post-harvest losses are as high as 40 percent to 50 percent in certain countries in Africa. Reducing that is an easy win. Before talking of fertilizers increasing yields, the easiest way to increase yield is by reducing crop waste.
Martin, that leads to the topic of sustainability and environmental sustainability. There’s debate now that the mainstream Western model of farming, industrial farming with intensive use of pesticides, chemicals, and fertilizers, leads to ecological death zones with agro-chemical runoff and pollution of groundwater systems. What’s your vision of sustainable agriculture for Africa and where do you see AGCO playing a role?
Martin: I think you can do sustainable farming much better in large-scale farming if you want to. Of course, you have to have the right ethical standards. I’ll give you some examples.
You can only achieve the reduction of soil pressure by using less cropland with modern technologies. You need the right tractors and you need to make sure you have the right equipment. The soil preparation with regard to minimal tillage can only be done through the right equipment.
When it comes to pesticides, certain solutions are, I think, kind of old-fashioned and antiquated, and therefore nobody invests much anymore in them. For example, the famous crop dusters: They might be efficient; but it’s a waste of pesticides because they’re not precise, it’s a waste of fuel because those planes use a lot of fuel, and, finally, you spray not only the farm, but also the village and farm surroundings.
It’s a problem that can be fixed easily, and this why we’ve developed very sophisticated self-propelled sprayers. With this equipment, you can really apply the amount of pesticides precisely to the area where you want to have it. Plus using our Fuse Technologies, which includes AGCO precision farming tools, you can track and measure the results.
Dave: You mean the yield?
Martin: Not only the yield. You can start from harvest and then say, “This is what I harvested so far.” You have recorded the whole process, and you know exactly how you did your soil preparation, how much you fertilized and where, with what fertilizer. Additionally, you know what kind of pesticides you used and in what amount.
From the result, you can then readjust the process the following year and fine-tune it. This is another high-tech solution, which is creating a financial and environmental return immediately, because you’re avoiding the environmental harm and health issues of crop dusting. By reducing the amount of pesticides you’re using, or the amount of fertilizers you’re using, you get a fast payback. The payback for this self-propelled equipment is within less than two years.
We work together with some of the big companies in that area like Pioneer, Monsanto, and so on in order to develop solutions. There’s a certain problem in Africa, which is that some big farming operations and foreign investors who go there think about using lower standards in Africa than they might use in Europe or in America. We would like to prevent that.
Dave: Martin, when it comes to buying equipment in Africa, we see a new class of investors who are not farmers, say, with backgrounds in real estate or hotels, who think agriculture is attractive, they’re entering the business.
Two things: A lot of these people (1) don’t really have an idea of what they want to buy, and (2) how different pieces of equipment work together. I know you have a demonstration farm in Zambia. Could you please speak to that?
Martin: Yes. The idea was that we need to train, or teach, or explain how modern mechanized farming is done, both for a small farmer and also for a big farmer. That’s why we bought 100 hectares of land in Zambia [in 2012] and started to farm there. We generated very good yields. The yields for corn in Africa are about 1.8 tons per hectare. We did 8 tons per hectare in the first year, so that means obviously we know how things work.
We invite dealers and customers, but we also invite politicians or those from the academic world in order to demonstrate what we call the “future farm.” We want to show them how that works, of course, with the idea in mind that they might also then buy product from us. We’re planning to have a second “future farm” in Nigeria because it’s also a very big market.
The problem is, there’s such a pull that we could come to Africa with thousands of those farms, but this morning the Prime Minister of Algeria said to me, “You are like a diesel engine. It’s difficult to start, but then once you get going, you never can stop.” Therefore, I think we want to do it in a way and in a speed that we can handle and manage.
Dave: Based on your model farm, have you thought about the possibility of having AGCO run a summit with the different countries and stakeholders coming in, not just Zambia? Also inviting investors with purchasing budgets? The idea would be bringing everyone together in one location, and pitching jointly to them.
Martin: Not only have we had the idea, we started to do that three years ago. We call it the AGCO Africa Summit. We do it in Berlin in January. http://agco-africa-summit.com/
The reason why we do it in Berlin is that they have a big farm show called “Green Week,” Grüne Woche, and a lot of the donor countries and agencies are there, as well as brands and farmers, and a lot of the producing countries and a lot of African decision-makers.
That’s why we decided to do the summit in Berlin, but we also joined forces for a similar event in Africa this year, but I wasn’t there.
Dave: Martin, having advised on some commercial farms in East Africa, what I’ve seen is, the decision-makers, especially this new class of investors who are financial investors, hedge funds, private equity types, they’re sitting in London or Singapore, and …
Martin: They have no idea about farming.
Dave: Yeah, they have no idea of farming, they’ve never set foot on a farm, and they’ve appointed some farm manager from South Africa or Zimbabwe to manage the farm. These people are purchasing farm equipment, and there’s a lot of turnover because this talent comes, and soon leaves. Every new farm project seems to be poaching and rotating through the same core group of people.
So one or two years after the start of a project, a “fruit salad” of equipment ends up on the farm from different manufacturers. Things don’t work together, and tractors are being stripped and cannibalized for parts. In three or four years, the farm is dysfunctional, at the verge of bankruptcy.
How do you see this situation improving? I give an example of the IT industry. IBM, from the 1960s to the early 1990s, used to make and sell its own hardware and software. Then in the mid -’90s, IBM decided to get into “system integration” – working with other hardware and software vendors.
Do you see a similar future in “farm systems integration?” I see a lot of disincentives on this front at the dealer level. Dealer incentives are to sell as much product, which is great for AGCO, but in terms of client success stories, it may or may not work.
I talked to the president of GSI, one of your five core brands, and he said, “Yes, we can do the client sales and service directly on some of these big-volume deals.”
Martin: Of course, we try to explain to the end user, to the farmer, that it’s very important to select the right product and the right hardware. It’s very important to have a dealer nearby who does support the product, and it’s very important to have a manufacturer who comes in with the right support for parts.
We not only think about selling product, we also make sure that the after-sales service is available. We do have parts in stock, and we also invest a lot in user/operator training.
That’s why we invested in a parts company called Sparex in South Africa. They’re doing non-original parts for all leading equipment brands. That means we can support this kind of multi-brand equipment. So we can offer all those guys with different equipment, a single source for parts. Our AGCO Massey Ferguson dealer can also help them to fix a Case, New Holland or John Deere product. That’s already a big advantage for us, and a key differentiator in our offering.
Now let’s talk about what you described as the future way of farming—connected intelligent and integrated systems. We call it Fuse, and we decided for a completely open architecture. We want our products, whether it’s a baler, tillage equipment or a combine harvester, to be in a position to communicate with every competitor’s product and the other way around.
This is completely different from the approach John Deere is using. The idea of John Deere is pretty much to create a closed environment, a little bit like Apple or Microsoft, which forces you into only using their equipment.
This is what farmers hate. They want to be in a position to make their own decision, so our solution does get a lot of traction, and we’re just at the beginning of the development. I think in the future we’ll be much better off than some of our competitors.
Dave: What you’re saying is, your competitors are forcing this equipment lock-in for farmers, and they don’t like that. AGCO’s approach is more plug and play.
Martin: Imagine you want buy a car for yourself and then you are forced by your cellphone carrier to buy a BMW, not only for you but for your wife and your kids. I’m not sure you’d like that so much. I think it’s the wrong approach, and I think we took the right decision there.
Dave: Are you moving from a “tractor-centric” to an “implement-centric,” plug- and- play model?
Martin: Yes. That’s also a very important point to make here because, in history, the tractor was dominant. What we say is, in the future, the implement will control the tractor, and not the other way around. For example, in seeding, the speed requirement and the power requirements of the tractor are defined by the seed air drill.
Dave: Absolutely. Different implements are attached and the tractor adjusts, based on the implement spec.
Martin: The tractor has to be adjusted, not the other way around.
Dave: As you know, there’s a lot of specialty implement manufacturers whom buyers like to pick from, sort of and mix and match. Your approach seems it would make it easier.
Martin: Yes, and [the specialty implement manufacturers] are actually very, very good. They have certain skills that big companies normally are not very good at. I happen to know some of the guys very well.
They’re in niches. It’s either a regional niche, where you have very specific requirements—like rice farming in the north of Italy—or they have a product niche, perhaps a self-propelled grape harvester, which is only used in South Africa, California and France. Those products, normally, the big companies are not very good at.
We serve large volume and more global applications, than those specific niche manufacturers. Therefore, it’s very important that we can work with those guys. We have alliances with those smaller players, like car manufacturers in Germany or France or England and so on.
Dave: Speaking of implements, and especially tractor import, there’s a lot of used tractors being purchased, and also used implements from both Europe and the U.S. into Africa.
As a manufacturer, you only sell parts into this after-market, and you’d ideally want to upgrade the farmers to your new equipment. What is your take on these brokers or traders selling used equipment, and how does it affect your business, or how you partner with them?
Martin: We’re not in the business to regulate markets. That means this is a free market. What you can typically see in Europe is that the smaller equipment goes to Africa, the bigger equipment goes east, to Ukraine and Russia. In the Americas, used farm equipment is going from Canada and the U.S. into Mexico and further, into South America.
There’s nothing wrong with this. The farmer, the buyer, of course needs to make the right decision. There’s some very good used equipment available, and there’s a lot of very bad equipment out there as well. Used tractors are not the big problem, but used implements typically are. A customer might buy a big piece of used equipment that is not suited to a used tractor. Therefore, it doesn’t hurt for a customer to know a little bit about equipment.
The problem also for used, is that instead of buying it from a broker, you should buy it from a dealer close to you, who knows about your other equipment and who is also in a position to service it.
Dave: As you know, in most of Africa, 50 percent of the population is under 25, and there aren’t enough office jobs to go around. Given Africa’s arable land, many of these young people could become farmers or agribusiness entrepreneurs.
How do you see AGCO involved in training thousands of young people, using an apprenticeship system like that in Germany? This youth training could start in high school, teaching young people to work with tractors and farm equipment besides classroom study. Eventually young people could be set up so that they can be farming for themselves and self-sufficient when it comes to income generation.
Martin: Today we have apprentices or trainees on our farm. We have them also in our factory in Algeria but of course not enough to cover the continent. That’s something that has to be developed over time.
Schools can also be important here. When you think about the development of the farming sector in Africa, this is something which nobody really takes into consideration enough. For example, in Ghana or Nigeria, it would be ideal to start with a school program where young people learn proper farming.
Then these young people would be hired, let’s say, from farms, and then they would be making the right decisions because they’d know already that they shouldn’t buy this random pieces of equipment from China or whatsoever. They would make better decisions.
This is not our job. We already train more people than we hire later on. We train more than we hire because we know that they’re consumed by the labor market.
Dave: Where do you see potential partnerships with AGCO and some of the development agencies like USAID, GIZ [the German Society for International Cooperation] or banks? How do you see the stakeholder partnership working out?
Martin: We developed our Africa strategies six years ago, so when we talked about Africa at that time, everybody thought, “They’re crazy.”
Then last year President [Obama] came in and talked about Africa, but there was no action. Now all of a sudden, at the investment summit it does get increased traction. Therefore, I could imagine that we’ll see more of those strategic alliances in the area of education. What I also think is that in this very fragmented and dispersed rural environment, training via the Internet could be a solution.
For me, it’s amazing how slow the educational system all over the world, in schools and universities, adopts modern technologies. You don’t need schoolbooks anymore because the very same day you print it, it’s already dated. If kids want to know something, they go to the Internet.
Why don’t we have, instead of the schoolbook, content that you can access through the Internet? I think that’s what we’re doing already with our dealers. We do a lot of training through our website.
Dave: I have a question on water management. In Africa a lot of agriculture is still rain-fed. What’s your strategy or any moves to acquire a company in the irrigation space?
Martin: We looked into that, and we were always of the opinion that this doesn’t fit with our organization. There are very good companies that are specialized, like Valley Irrigation, or companies like that in this field. It’s a different distribution channel. It’s more like project management.
That was reconfirmed to me in a way after John Deere decided to sell its irrigation business. Therefore we don’t look into that. If some very interesting target would become available, we would of course analyze that again.
Dave: Finally, what’s your takeaway message for a government or a public policy official, either in a ministry of agriculture or, say, the president of any African country? What would be your message to nonprofits who have led the discussion on agriculture development in Africa?
Martin: I think the message is pretty much the same for both. They need to step down from the “jumbo-jet pilot’s point of view,” come down to earth where the farmers are. They need to come up with a pragmatic strategy that fits the requirement of their country, and then they need to think about a roadmap for implementation in steps.
Very often, projects fail because they’re completely theoretical. Not because they don’t have enough money or they’re not funded, but they’re completely theoretical, and nobody knows exactly how to implement that. Like we talked about, if you now say, “I have 1.5 million small holders and I want them to mechanize.” It doesn’t help if the government loudly says, “OK, let’s buy 5,000 tractors.”
You need a very precise plan for implementation, and what I learned in Africa is that you need to do it in steps. This is why we started with one demonstration farm, and not with 10. Then you also learn by doing, and can improve the process with each implementation.
We also said, “Let’s start with the tractor business in Algeria.” We didn’t start with 10,000 units. Last year we built 1,000, this year 2,000, and maybe next year 5,000. I’m not against being fast, but you have to also be reasonable.
When it comes to the question of localization, like in Eastern Europe, every president you meet makes the proposal that you should invest in a factory in his country. What they don’t understand is we don’t have steel supply in Africa because Africa doesn’t produce steel. We don’t have the supply chain for components like transmissions, exhausts, engines, hydraulics—everything you need to assemble tractors.
That means if you started now to manufacture on the Ivory Coast—4 million people, a small country—there would be no cost-savings. It would be more expensive than bringing a ready-made tractor in from Brazil or China. Therefore, they very often are not very realistic, and Africa needs to think more in broader structure.
That means African countries have to cooperate better. If the best of the African countries would come and say, “Actually, we have in this economic grouping, like ECOWAS or COMESA, 400 million people, and this market needs 20,000 tractors a year from you [AGCO],” then of course you can talk about a factory in one of the countries, but not in all of the member countries.
Currently each country comes individually to us. Even Ghana, which has 27 million people, doesn’t have enough volume to justify production. Therefore, they need to be reasonable. Just like in Europe, you don’t have car manufacturing in Portugal or Greece. Some of the countries need to allow imports because they don’t have that kind of domestic business.
There could be other reasons why it’s interesting to invest in a country. It can be wages, it can be infrastructure, it can be security, a legal environment and things like that, or taxes. Let’s say, in Europe, people go to Switzerland not because they’re so productive there, or wages are low, but because you pay only 3.5 percent or 4 percent of taxes. That’s the reason why some companies have decided to go there.
Dave: How do you share those success stories from the demo farm in Zambia with your network, meaning all over Africa? Do you use video distribution of farming techniques?
Martin: We do videos. We have also a lot of people visiting our factory in Bavaria, Germany. Typically we have about 20,000 people coming to the factory every year. Every two years we have what is called the Fendt Field Days. We do pretty much similar things like we want to do in Zambia in a different scale. We show them, demonstrate the latest equipment and explain to them what our new products look like.
Dave: Do you produce videos in the local African languages as well?
Dave: All right, Martin. Vielen Dank for your time.
Martin: You’re welcome. Thank you very much.
Tsonzo members proudly pose with their award for most improved Milk Collection Center
Story and pictures by Jennifer Hyman, Director of Communications
Land O’Lakes International Development
While the members of Tsonzo MCC struggled along with the rest of Zimbabwe during the 2008-2009 economic crisis, their history of poor governance and financial mismanagement was among their most difficult legacies when they first tried to restart though the USAID-funded Zimbabwe Dairy and Livestock Program.
But, as they proudly take turns posing for pictures with their recently-awarded prize of Most Improved MCC, which was given to them by Land O’Lakes and the Zimbabwe Association of Dairy Farmers (ZADF) at the East and Southern Africa Dairy Association (ESADA) conference in Harare, the MCC’s new volunteer leadership believes they’ve finally turned a corner and have created a viable, sustainable business.
Having initially started in 1986 with over 100 members, their 350 indigenous cows were producing about 2,000 liters a day, which they delivered to Dairibord. As a result of the hyperinflation crisis in 2008, farmers struggled to find food for their animals, and many of their cows died from malnourishment. They had no money to cover operating expenses, and the MCC was running at a loss. A few of the farmers continued to sell milk from local breeds at their farm gate, but membership dropped to 64 members.
“It was a very tough time, and the members who lost everything had no sources of livelihoods left. Some turned to growing staple crops like maize, or were looking for something they could sell,” remembered Justice Maluzika, secretary of Tsonzo MCC. Some of their farmers were able to access stock feed, revolving funds and an in-calf dairy cow though the EU-funded Stabex program administered by ZADF, and the program also helped them clear their debt and establish a processing room. But, despite the Stabex support, their membership continued to erode.
Tsonzo members proudly stand in front of their cooperative while their daily milk is being collected.
When Land O’Lakes came to Tsonzo MCC in August 2010, the MCC was on the verge of collapse, collecting 20 liters of milk a day. Member Augustin Marenji explained, “There had been poor management of revolving funds from the old committee, and many farmers feared they might be treated unfairly again.”
Land O’Lakes encouraged the group to start accounting, and trained administrators on how to handle financial statements and recordkeeping, along with three Community Livestock Workers in animal health. They held new elections to elect the leadership, who are all volunteering their time out of dedication.
The association is still small, and only includes 28 members, 19 of whom are delivering milk. However, they recently added 4 new members who were attracted by Tsonzo’s transparent posting of finances, and promise of a regular market. They are currently producing between 200-300 liters every other day, which the processor Dairibord picks up directly from the MCC.
“Some farmers were used to donors giving cows away, and so didn’t look after their animals well, because they always considered it the donor’s animal. But knowing it was theirs through a loan made them care more about their investment,” explained Justice, adding, “Only those who learned to farm as a business understood the significance of it all. Especially compared to previous assistance, where there was no real agreement for farmers to pay for their cattle.”
Among the most important things the members of Tsonzo learned was about fodder management; ensuring they had a budget for silage and haymaking; and preparing silage before the rains.
“In the past, we only did maize silage. But we learned about sugar graze, sun hemp, velvet beans and cowpeas from Land O’Lakes, which really helped us to improve our production,” explained 27-year-old Washington Sagonda, Tsonzo’s Vice Chair. “And this really worked to improve production. The farmers who ensiled saw great results, getting about 15 liters per day per cow even during the dry season, almost doubling their typical yields for that time of year.”
One thing they’re very proud of is the fact that they’re producing Grade A milk, which translates to 46 cents per farmer. Dairibord pays 56 cents, but the rest is deduced for the cooperative’s operating expenses, and ZADF also charges $25 a month for its services. Members like Augustin Marenji say they appreciate how transparent the finances are now.
“The quality bonuses are motivating us and morale is high. We are so proud to have been named the most improved center!” beamed Augustin, who says his monthly dairy income has risen from $100 to $400 a month, by milking 3 cows that produce a total of 30 liters a day. “My family is really enjoying the extra money, because we’re easily paying for school fees, I have more food for the family, and more money for maintaining my herd. But I also want to invest in building better shelters for my cows and saving money for a milking machine.”
Now that MCC is linked to Dairibord, Tsonzo’s members say they are pleased to have a reliable market for their milk, which they are confident will last beyond the ZDL program. They are also working to build their relationship with the processor independently, and are in discussions with them to provide inputs on credit after the program ends.
Justice concluded, “For those of us who embraced the idea of being a business partner, this program has made a world of difference in how we see ourselves and our futures. Things were really rough before, but we feel we’re well equipped to go on independently at this point.”
By Deborah B. Hamilton
Feed the Future Partnering for Innovation
Most companies want to “do well by doing good,” and Jose Jaar, president and founder of DelCampo Soluciones Agricolas, proves this is possible. Over the past two decades he has built an agribusiness that earns nearly $2 million per year selling drip irrigation supplies to smallholder farmers in Central America.
Jaar recently attended Feed the Future Partnering for Innovation’s AgBusiness Lab in Tanzania to discuss his business model with African drip distributors. The Lab was an interactive event featuring system design simulations, expert-led discussions, site visits, and farmer interviews all aimed at identifying profit-driven opportunities for African drip distributors to engage a largely untapped smallholder market potentially worth billions of dollars.
So, how did Jose Jaar build a profitable business in a smallholder market?
Business success depends on knowing the target market, creating products that fit the customers’ needs, providing excellent customer service, and pricing products to sell. Over the years, Jaar and his team of agronomist salesmen have cultivated customer relationships built on trust. They started by visiting the farms, listening to smallholders’ needs, and then providing training, advice, and support along with equipment sales. Today more than 60 percent of DelCampo’s sales are repeat business, and its sales representatives earn nearly 80 percent of their competitive salaries from commission.
In 2009, to build momentum, Jaar used funds from the Millennium Challenge Account-Honduras to offer credit to farmers to finance their purchases, which allowed many to access irrigation equipment for the first time. Today, DelCampo provides $250 in revolving credit to its regular customers, which they repay after the growing season.\
Approximately 40 percent of the world’s food producers are smallholder farmers, and estimates of potentially irrigable land in the developing world top 110 million hectares. So why do only 3 percent of the world’s one billion smallholder farmers have access to drip irrigation? Because, as Jaar notes, most irrigation systems are too large and too expensive for smallholder farmers.
Feed the Future Partnering for Innovation is a USAID program that helps to commercialize agricultural technologies and promote sustainable partnerships that benefit smallholders. Its sponsorship of the AgBusiness Lab included providing participating drip distributors with extension advice, and system design and cash flow tools, in addition to highlighting the Del Campo model as one that successfully adjusted in products to meet smallholder size and budget requirements – and made a good profit doing it.
Partnering for Innovation recognizes that drip irrigation is a critical piece in solving the food security puzzle, and projects that increased access will double yields and incomes for millions of African farmers. The program has additionally invested almost 20 percent of its total grant portfolio in companies that are scaling drip technologies to meet smallholder needs.
By Dave Ramaswamy
David Blumberg, CEO, Blumberg Grain -West Africa
AAM: Please give an overview of your company? Operating History? How/when did you decide to enter the grain storage business?
Blumberg: Several generations ago my father’s side of the family immigrated to America. They settled in Dothan, Alabama, the “peanut capital” of the United States. That’s when our family got into farming, growing cotton and pecans. Our family later dispersed across the U.S. but kept that farming backbone to some extent. In South Florida, we grew mangoes, tomatoes and other crops. From that history, we knew that storage and control over supply chains, from farm to retail, were the key to ensuring agricultural profitability
A couple of generations later, my grandfather, David Blumberg, became a developer in the city of Miami, where he was responsible for some of the largest residential and commercial real estate projects outside downtown. My father, Philip Blumberg, after graduating from Harvard Business School, started a construction company, Southern Projects, the origination of what was to become Blumberg Capital Partners. Starting in the early 1990s, as the youngest investment manager in institutional real-estate, he was able to raise money from family foundations, pension funds and other institutional investors. This he invested in Class-A commercial office space.
Through an approach that was both conservative and disciplined, he was able to build the leading investment fund in that sector. It delivered average annual returns of 18 percent through the ’90s and 2000s. One method he used for tracking and forecasting pricing was through analyzing the inflation component of the commodities that served as construction materials. A building is nothing but a bundle of commodities, an assembly of copper, nickel, glass, steel and concrete. So his company had a team that tracked those underlying commodity prices.
In 2006 my father saw a cliff on the real estate horizon and started divesting his real estate assets. The company returned 22 percent to its investors in 2007 – the highest-performing fund of its kind that year. The company was sitting on some sizable cash reserves at the end of the process. Looking to diversify the business, my father decided to focus on commodities. He decided to set up a fund, not focused on virtual assets, but to invest in actual brick-and-mortar projects.
For the commodities fund, the company looked at investments across the globe – wind farms in west Texas, rare earth deposits in Greenland, solar fields in India, etc. On a trip to India in 2010, to check on a solar field investment, our team traveled into a thriving agricultural area. It was the end of a bumper harvest season, and people were packing wheat into small warehouses called “godowns.” Due to a big harvest, and lack of fixed storage capacity, the wheat spilled over onto the area outside the godowns. The nightly rains had then started in earnest and would wash this wheat away onto the streets. The next morning cows and other animals were feasting on this rotting wheat. That year India lost a large part of its wheat crop to post-harvest losses, while hunger persisted across the country.
My father decided that food security was an area where someone needed to step in and play a role. Our company did research into post-harvest losses in grains, into agricultural value chains and into different emerging markets across the globe. And what became clear was that while India has problems with post-harvest losses, it is in a much better position relative to countries in Africa and some countries in Southeast Asia and South America.
So it was the trip to India in 2010 that made clear to us the opportunity in grain storage. My father found that it was an opportunity to use our expertise in real estate in combination with the latest technology from the United States. The company set up an R&D center in Ames, Iowa, a scientific hub in U.S. agriculture. And we started working with Iowa State University to develop our products and systems. We formed a team to come up with an offering for emerging markets to solve the issue of post-harvest losses.
The key was to develop a storage system that was simple to maintain and that also utilized the highest levels of technology. This included things like aeration fans, dehumidification systems and inventory management systems. The storage system would have built-in security with keypad entry and security cameras that could be monitored with an iPad. It could even be equipped with sonar guns, which blast sound waves at a person’s inner ear, and that would force any intruder to leave the warehouse.
Even though the name of the company is Blumberg Grain, we also knew that the issue of post-harvest losses affected the perishables (fruits/vegetables) area. So our Applied Engineering team developed systems that not only use refrigeration technology but also build in a controlled atmosphere capability. In the storage room, this displaces oxygen with nitrogen, unlike other systems that use lethal carbon dioxide. It’s the technologies we use in the warehouses that make us a market leader in food security.
AAM: Could you give us an overview about your range of storage systems?
Blumberg: We have our Grain Vault, which is a warehouse that can accommodate 1500 metric tons of grain, in a 600-square-meter facility, which we can put up in three days. We target this at smaller trading operations, farmers etc. It can also serve as the foundation for a larger network of disparate warehouses.
We also have huge systems that can accommodate 60,000 metric tons of grain or more. These compete with silos and surpass them on many levels. They have inflow/outflow rates of 200 metric tons per hour using pits, screening systems and drying systems. We use a new technology, designed with experts in the plastics industry, where we can fill 1.5-metric-ton FIBC jumbo bags. We’ve put them through a process where we vacuum seal them, and by doing that we extract the oxygen from the environment. This also allows for natural fumigation of the crop in the package. We don’t have to apply any hazardous chemicals, and because we are able to bring the oxygen levels in that bag to almost zero, grain can stay preserved for decades. This is game-changing technology.
We have the Blumberg Arctic Vaults which are refrigerated storage warehouses. Take a mango, for example. If you’re able to use controlled atmosphere technology with a mango, you can extend the shelf life of the mango to six months.
The Blumberg Grain warehouse is only one part of the equation. In order to maximize gains for our clients, Blumberg Grain offers a proprietary network management system that helps form the backbone of a country or company’s food supply and crop management program.
AAM: American companies perceive Nigeria as a difficult place to do business. Would you tell us about your work there?
Blumberg: Right now, there are many agriculture initiatives in Nigeria under the leadership of Minister [Dr. Akinwumi] Adesina. At the Nigerian Economic Summit in 2013, the focus of the summit was agribusiness in Nigeria. I spoke there about the issue of post-harvest losses. At the end of my talk, the farmers in the audience stood up and said, “We need Blumberg Grain Warehouses.” Minister Adesina, whom we had been in discussions with previously, spoke at the conference the following day and said he was going to buy 800 Blumberg Grain units, one for each district across Nigeria. Fast forward, and Nigeria is now receiving a large order of Blumberg Grain systems, for development across many states. The systems are mostly cold storage. In fact, the split is 75 percent versus 25 percent between cold storage and grain storage. Some of them are controlled atmosphere, and it’s the first time that this technology is going to be used in Nigeria. The minister is excited about this project. Our products catapult Nigeria into the 21st century when it comes to agricultural value chains, particularly in the crop storage space.
AAM: What is your business model? Who pays for the warehousing system, the government or private sector? What is the investment required for a standalone system? What is the payback period?
Blumberg: Blumberg Grain provides food security systems to both private- and public-sector clients. The main model by which customers use our technology is on a rental/leasing basis. In Nigeria our products are used in this way. Nine different states are receiving our technology. They’re going up now, but the government is renting them out to the private sector at subsidized rates. This is because the private sector has a problem with accessing financing, accessing land, accessing civil works etc. to get these storage facilities up. So the government is putting them up for the private sector to rent later.
What our storage system does in a country like Nigeria or many of the countries where we work is that it enables the farmer or trader to (1) cut down on the post-harvest losses that they suffer (in essence, doubling their true output); and (2) realize a sales price difference between the harvest season and that lean season that could be 400 or 500 percent higher. It puts a lot more money into the farmer’s or trader’s pocket.
As a result, the payback period on our technology is quite short. This is especially true, if you’re able to take advantage of this market timing arbitrage opportunity. In many instances, with our systems customers can recover their investment within one year.
AAM: Do your systems run on a variety of power inputs? Grid power is not always available or reliable, with voltage fluctuations, in these markets.
Blumberg: Good point. When designing our systems, we told our R&D team that they should plan for poor infrastructure as well as harsh climates. The Applied Engineering division designed our units so that a 600-square-meter facility (with 1500 metric tons of storage) can pack up into just one 40-foot cargo container. Our engineers designed our units for fast installation – as little as three days. They designed them for flexible use. Our units are modular when it comes to adding capacity and are upgradable when it comes to adding our technology options.
Speaking to your point about energy – it was clear that the units would have to be able to handle different kinds of energy supply. So we offer solar power, wind power, etc. as a supplementary power source for these systems. Our Grain Vault can run completely on solar power.
AAM: Is it solar PV? How exactly does it work? How do you handle power failure and redundancy?
Blumberg: That’s correct, Solar PV on top of the warehouse roof. You can get quite a bit of power out of those panels. What we’ve done is leverage technologies on the inside of our warehouse that are energy-efficient. The only issue is the cold storage component for which the power needs are quite high. Our cold storage could run on 100 percent solar power, but it then becomes inefficient from an economic perspective.
For our refrigerated storage, what we suggest to our clients is to locate these close to the existing grid. If that isn’t possible, we need to have generators in place to run the system. Even if we’re on the grid, we have the option to hook into different independent power solutions.
Our video on the technology describes this flexibility and some other features of our systems: http://www.blumberggrain.com/video/
AAM: What is the secret of your success in these demanding markets?
That is because of two things: first, the success that we have realized in the market vis-à-vis the application of our product; and second, for some reason, there haven’t been companies that emerged to play a role in this storage space in these emerging markets.
When you look at these developing countries, our competition is, for the most part, local concrete contractors. These contractors put up a concrete warehouse that has only a tangential application to food security. The warehouse offers no specialized ancillary options or specialized components. They don’t provide the safety and security needed to keep the crop preserved in-condition. So you continue to see high post-harvest loss rates.
We designed our warehouses with coatings and primers that reflect about 65 percent of the sun’s heat. We have seals that create foam closures between each panel. This means you don’t have leakage and you don’t have water coming into the facility. We’ve designed our warehouse to be basic nuts-and-bolts assembly, so any skilled labor can put it up fast. So there are no problematic issues with construction, and we can be sure the facility works as intended.
In agriculture, the harvest season dictates the timeline for construction projects. If you miss the harvest season deadline, you lose that year’s benefit. It is critical to be fast and timely. We hold the record in the industry for the ability to get 600 square meters of covered storage up, in three days.
AAM: If a private party approaches you interested to buy, what are the different options – and what are your price points?
Blumberg: Our systems are customizable. Though we have different product lines, they are all systems that come out tailor-made for the customer. We like to work them through a process where we identify what their needs are, and we come up with the solutions that meet them. When it comes to the private sector, the solutions are the same as what we would do for the public sector. I talked about our Grain Vault and Arctic Vault. We also offer our Self-Contained Bulk System that competes with silos. This system beats silos on cost, quality, natural fumigation, safety etc.
Every silo project that I’ve seen in Sub-Saharan Africa has failed because silos are difficult to maintain. Also, suppliers of silos are coming not from Africa, but from Asia, Turkey, North America and Brazil. For example, to fix a panel that breaks is difficult. You have to first evacuate the silo when you do maintenance, and then it takes too long to get spare parts to the site.
We designed our systems to be easy to manage and maintain. All our systems come with our export and repair kit. With our shipment you get a full kit of spare parts, to enable easy swap-out of a broken panel, or cracked gear – as the case may be. Because our structures are horizontal, it is easy to do that maintenance.
We designed our systems to be cost-effective – that’s the key variable that people use to compare in Egypt, Nigeria, D.R.C., etc. Cost is a bottom-line factor when making procurement decisions.
As an example, we can compare our Self-Contained Bulk System to a silo system that is 15,000 metric tons in capacity. The silo system with turnkey installation will set you back about $235 to $240 per ton. Compared to that, our system will cost you about $200 per ton. We include costs for the site prep (because foundations are a factor that we have to consider). So you see an almost 20 percent price difference between our systems and systems available in vertical silo form.
AAM: How did you target countries like Nigeria, D.R.C, Egypt? Could you speak about the sociopolitical implications of your work?
Blumberg: Blumberg Grain works across the globe. We’re in South America. We’re in the Middle East. We’re in Southeast Asia. And as you pointed out, we’re active in Africa. The common thread across the countries we target is a huge incidence of post-harvest losses. That is the main reason we are there, and the governments there have set an agenda for tackling food, water, and energy shortfalls.
Ministers and government officials now realize that the fastest way to increase farm productivity is to reduce post-harvest losses. In comparison, putting more acreage under plough requires considerably more expenditure and time commitments. They discuss the topic of food security among themselves, and the Blumberg name comes up. That’s how it happened in Nigeria and the D.R.C.
Policymakers now understand that losing large amounts of food grains is not just bad economics. The resulting food inflation could be a social tinderbox, resulting in riots – or a political tinderbox, resulting in the overthrow of a government.
The children of farmers in Sub-Saharan Africa see their parents lose almost half of their produce. They also see traders/middlemen take advantage by offering rock bottom prices at the peak of harvest. Farmers don’t have two dimes to rub together. And the children say, “We’re not going to do this. We’ll get out of farming, go to the city, where there’s more opportunity.” But in the city they face terrible living conditions. With few employment options, they sometimes have to turn to the underground economy to scrape a living. There’s also violence. You see what is going on with the Boko Haram [abducting children]. A hungry belly is vulnerable to extremist influence and propaganda.
In Egypt, Mubarak’s overthrow was set in motion the day he decided to raise bread prices. He was running out of reserves to import wheat. Egypt is the world’s No. 1 wheat importer. I am visiting Egypt now to put in place systems to stabilize wheat prices, and replace the shounas (open-air cages) in Egypt. 400 of the shounas store most of the harvested wheat – and see about 30 percent losses, based on conservative estimates.
The product that flows in to the Egyptian Ministry of Supply is “out of condition” for the most part. So they lose billions of dollars a year on this wastage. The Ministry of Supply plans to upgrade shouna facilities into a modern Blumberg Grain infrastructure. That’s one of the projects we are working on right now.
Through our work in food storage, we would like to prevent unnecessary rural-to-urban migration. This in turn maintains social harmony and encourages political stability. The countries where we work can then have a stable environment for economic growth and development.
AAM: American companies typically think that doing business with African governments is a nightmare, e.g., the possible need for hush payments and kickbacks to win contracts, and officials making promises they can’t keep. What has been the difference between that perception and your reality?
Blumberg: As an American company, we don’t play those games. And in the past, we’ve had to abandon projects when such talk has come up.
One of our primary conduits into these countries has been the U.S. government. Our embassies and commercial officers help with introductions into the private sector. When they introduce us to counter-parties, they know that we abide by the Foreign Corrupt Practices Act (FCPA). So we get to build on relationships that are available through them while using the shield that they provide. We also go straight to the agriculture or trade minister, or the heads of state, who are progressive in their thinking.
AAM: What is your near-term company outlook, in the next one to three years? Are you considering opportunities beyond storage?
Blumberg Grain wants to solidify our position in Africa as leaders in food security. Meanwhile Blumberg Capital Partners, our holding company, wants to make other investments in these countries, in sectors like real estate, steel, etc.
We are looking to set up Blumberg Grain Food Security Fabrication facilities all across the globe. We plan to produce Blumberg Grain’s steel warehouses and components in the countries that matter most to us. This is a huge investment for the countries we’re in discussions with. We are close to finalizing our selection process in in West Africa.
KPMG has done studies on our Food Security Fabrication facilities. They would provide employment to 1000 people, produce 1200 units every year, and increase trade and industry. The estimated economic impact would be over $1 billion in the first year of operation, and reaching $10 billion over five years. So these projects are something governments are fighting over.
Blumberg Capital Partners is on track to expand investments across the agricultural value chain as well. They’re analyzing investments in different countries across the globe. We’re looking at $250 million investment opportunities that touch the entire value chain.
Beyond storage, investments in high-yield, high-efficiency farming will be the next step. Investments in logistics infrastructure will follow, going downstream. Then we’ll look at processing facilities, packaging facilities.
For example, in Nigeria they’re importing plastics. They’re bringing plastic bags from Lagos in the south all the way up to Kano in the North – about 500 miles – and it might as well be “transporting air.” That packaging can happen close to the final destination, and for significant cost savings. There is lot of opportunity like that, and there’s a strong emphasis within our company to look at agriculture in these emerging markets.
AAM: Some say that vested interests – like speculators, traders, local politicians – allow food wastage. So they can keep farmers at their mercy and/or be a source of patronage. How do you respond to that?
Blumberg: I don’t see anyone opposing improved storage. Even the players who control the grain trade still benefit if they can keep their product “in condition” for a longer period of time. As technology providers, we provide solutions to anyone willing to work with us. We also organize the financing to capture that value.
Many of the governments we work with are offering this technology as a rental to the private sector. This way a trader or logistics player can get access to more capacity. The local communities benefit because more crop volume is able to reach the market and more money stays in the community. The farmer can sell more crops and increase her income.
Our storage systems lay the groundwork for establishing commodities exchanges. The first step to develop a grain commodities exchange in a country is to have warehouse infrastructure on the ground. This is one way to move toward a market-oriented system where ALL participants stand to benefit. In the interim, stakeholders can still use and monetize our storage systems in their interests.
AAM: Finally, any lessons for American businesses considering working in Africa?
Blumberg: First, for market entry, I would suggest using the resources of the U.S. government. One can leverage U.S. government officials for market data and meeting facilitation. This can happen through the commercial offices of the embassy, the Trade Department, or other on-the-ground resources. Additionally, the U.S. government assists the private sector in financing activities abroad. Organizations like the EXIM bank, OPIC, and USAID-DCA provide low cost debt in countries, where financial markets are not that developed.
Second, I would tell American business not to be afraid of the Chinese competition. To a large degree American businesses are wary of facing off against Chinese businesses. Some American companies think Chinese companies, either state-owned or private, have a stranglehold over business in Africa. The truth is that governments in Africa are looking for American companies to step in and play a role in their economies. Customers and officials all over Africa recognize U.S. products as having superior technology, and we compete on that basis. Leveraging that strength of innovation and quality can overcome any issue arising from Chinese influence.
Third, there is a need to be realistic about timelines when viewing investment cycles. It’s not a novel revelation, but the speed of doing business in Africa is quite slow. So American companies need to internalize thorough preparation and focus on the long-term, as part of their business development strategy. Of course, there will be ups and downs in realizing any corporate goal in Africa. But if there is patience in the ethos of the company and a desire to look forward, there are enormous opportunities waiting to be engaged.
Story by Bobby David Gboyor
In May 2013, Africa Agribusiness Magazine’s (AAM) Washington-based journalist Bobby David Gboyor visited Sierra Leone and had the opportunity to tour the FINIC Industries Factory at Kissy, in Freetown. FINIC Industries is an agro-based national industrialization center that specializes in manufacturing of machinery and equipment used in processing a variety of agricultural products. The machinery includes Biomass Gasifiers, Cassava Grating Machines, Coffee and Rice Mills, Multi Juice Extraction Machines, Palm Fruit Threshers and Rice Destoners. FINIC has even manufactured its own Condom Vending Machines that are intended to be used at various entertainment centers around the country. The following is an exclusive interview with Mr. Foday Melvin Kamara, the quiet, unassuming but versatile Founder and Managing Director of FINIC Industries, SL Ltd.
AAM: Hello Mr. Kamara and welcome to Africa Agribusiness Magazine (AAM). Please give us a brief background of yourself.
Melvin Kamara – My name is Foday Melvin Kamara. I am the Managing Director of Fomel Industries and National Industrialization Center (FINIC). Fomel is the blending of two names, Foday and Melvin. These are my names that I blended to form the enterprise FINIC. I had my initial schooling here in Sierra Leone and continued my education in the Federal Republic of Germany where I did a further training in automobile engineering. When I completed my training, I came back to Sierra Leone and worked as a Training Manager at the Sierra Leone Road Transport Corporation (SLRTC). I headed a technical training school. I was tasked with the responsibility to train young people in the area of automobile engineering so as to have personnel that would take over the management of the fleet we had at the time. Before going to the SLRTC, I worked as a technical teacher at the Government Technical Institute at Kissy Dockyard. I am a person that is passionate about mechanical things, I really do have a passion for mechanics and this is what makes me happy.
AAM: Thank you, Mr. Kamara. As Founder and Managing Director of FINIC Industries in Sierra Leone, how did you conceive the idea of establishing an agro-based technology enterprise in your home country?
Melvin Kamara – When I was training manager at the SLRTC, I had the opportunity to interact and work with young people, the youths. And there I discovered how versatile young people are, how much talent they have, but they did not have the opportunity to put their talents into good use. Then I said to myself that we have to do something about it. I saw that after a period of training, we found youths engaged in doing things that were diametrically opposed to what they had learnt at training school. So I made a plan and contacted management to find an institution sponsored by diplomatic missions where the youths could go after training or graduation and explore their talents. The idea was not embraced but then as a trainer I thought it was a waste of money to just get people trained and let them go without engaging them into a productive activity so I decided to help in my own way. That is how I came to establish FINIC Industries. I started with six trainees. The first difficulty we had was where we could find the equipment. Money was a big problem for us. However, for me, I thought that money should not be the stumbling block to impede our progress. I said to them that if we have this talent, why don’t we use that talent to establish something where we could have a beginning? That’s how we came to build the vises. We went out and got scrap metals to build the vises. We build the engineer vise and I think we build over twenty of those vises.
AAM: Please go back to that point again. What did you build?
Melvin Kamara – We built the vises. A vise is a mechanical devise that we refer to as the “third hand of the engineer.” It is basically a devise that holds the job in place while the engineer works on it. It is a form of equipment. It holds the job into place while work is performed on it. For example, if we want to cut a piece of metal or do a filing, the vise is what we use to hold that job into place while we work on it. At that time it was sold for six hundred thousand Leones a piece. Our main aim was to just start somewhere so our logical point of departure was to build a devise to help us work on a piece of equipment. Our goal was to do something to minimize our endless importation of everything we need for our daily use in this country. We believe that if we have to import everything we need for our use into this country without a plan to start making things ourselves, then we are the enemies of ourselves by not making efforts to utilize our brains for the economic development of our country. And by relying solely on imports, we set in motion an “economic flight” by wasting our hard earned foreign exchange overseas and creating unemployment or underemployment in our own country. At all times we have had to depend on others for our own basic needs, so we thought it was time to begin to address the malaise of our perceived lack of creativity and ingenuity. As a result, we started this project sixteen years ago. Looking back on what we started with and what we now have, one can clearly see how much we have developed and how far we have come.
AAM: So you actually started this journey sixteen years ago?
Melvin Kamara – Yes, we started sixteen years ago in 1997. It was in that year that we established FINIC Industries in Sierra Leone.
AAM: How big is FINIC Industries in terms of numbers of employees, departments, sectors or branches around the country? What are your plans for expansion?
Melvin Kamara – We have a total of eighteen employees at the moment but we have a plan to hire more people as we grow. We also have what we call FINIC 1, FINIC 2, FINIC 3 and FINIC 4. These are not departments but, call them branches if you like, that we have established at various locations around the country. We started here in Freetown with FINIC 1 and then we expanded to FINIC 2 which is where we are presently seated, and we moved to the Koya Chiefdom in the Port-Loko District where we established FINIC 3. The FINIC 3 location is along the main highway between Waterloo and Masiaka, and here we established the Rural Technology Innovation Center (RTIC). The idea behind establishing this center was to have our technology tested there and also innovate into technologies that improve on the living standards of the people when it relates to their work or involvement in agriculture. We are convinced that if technology is to be sustained, it has to be owned by the people. So coming close to the people to design a piece of equipment with their input and giving it to them to use, it would help in enabling them to own the technology and at the same time it will help us to be providing them with spare parts at very close range. This is what gave us the motivation to establish the center. We have another branch in Bo and that is our FINIC 4. However, we are struggling at the moment to maintain real heavyweight presence in Bo District but we are still there trying to raise head above water.
AAM: What are the components of FINIC 1, 2, 3 and 4 in terms of machinery or the produce that are processed at the different branches or units? Is there a difference in terms of the output or is it one and the same thing?
Melvin Kamara – They are different in a way because FINIC 1 is where we started the production of the agro-processing equipment. And then we also have the showroom here at FINIC 1 where we showcase our machinery or put them on display. Now we have moved the production activities and concentrated those at FINIC 2. We still continue to maintain the showroom at FINIC 1 but, instead of using the location to manufacture equipment, we are now using it to produce processed food for would-be customers. For example, if we have customers who wish to process rice into powder for use as whatever form of cereal they like to have, we can now do that for them at FINIC 1. We can also process palm kennels into palm oil or fruits into fruit juice.
At FINIC 2, we do mainly production of equipment but we also have our demo house to showcase our work. The demonstration house is going to be a real house where we can put our machines into use. These are machines we use to produce various foodstuffs such as pap (a foodstuff that is widely consumed during the Ramadan period), powdered pepper, peanut butter and a wide range of products. The reason for the establishment of such a demo house is to give us an idea of what strength and weaknesses our machines have so it can help us to improve on the machines. And secondly, this is also a means for us to display our machines. It is very difficult to be producing machines in Sierra Leone and convince people that what you are producing is functional and durable to an acceptable standard, and the best way to do that is to showcase or demonstrate the equipment to prove that it works. This is what motivated us to establish this demo house at FINIC 2 where we are producing a wide range of food to showcase the equipment we have.
FINIC 3: We have always said it is better for us to make use of what we have until we get what we want. And if you look around in terms of what we have, you will see that we have a lot of palm trees and palm nuts in this country especially in the areas that we operate. In addition to that, we also have an abundant supply of elephant grass and the elephant grass becomes a menace for causing wild fires during the dry season. So FINIC 3 is a concept that we developed for researching into technologies with the aim of developing what we have, I mean the raw materials that are freely available to us in our country. For example, we are converting palm nuts into vegetable oil which we in turn process to get bio diesel. As a result, all our energy needs are met by the fuel that we produce. And then we are also researching into simple technologies that would help rural settings to engage in dignified labor. This is important because if we want to attract people to the agricultural sector, we have to find a way to reduce intensive manual labor by making available to them basic equipment that would mitigate the pain of manual labor. In other words we have to gradually mechanize the process of agriculture to get people more attracted to the sector.
At FINIC 4 also, we plan to establish a workshop there in Bo because we feel obligated that if we are supplying machines in the Bo District, we should have a presence there that would be close enough for us to adequately serve the people using our equipment when they need repairs that they are unable to handle on their own. This is the reason why we established FINIC 4 to serve the needs of the people. Although we are struggling at the moment to get it going the way we would like to do, yet we are there and serving the purpose as we intended. We are helping to service the machines used by our customers and we are also doing sales of the machines we produce at the workshop. So it serves both as a sales center and a place where our customers come for service when they have problems with their machines.
AAM: Tell us about the various machines that you have manufactured in your factory and explain the functionality of each machine.
Melvin Kamara – Let me start with the palm oil processing machine. Palm oil processing in Sierra Leone especially and in Africa generally is so labor-intensive that people who are engaged in the cultivation of oil palm are finding it very difficult to break even because of the drudgery associated with it. So we manufactured a machine, a mini plant that we call Palm Oil Processing Plant, with a capacity to produce 400 liters of palm oil per day; that is the equivalent of 2 barrels of 200 liters each. It is a mini plant comprising of four main components: one is the digester. The digester performs the function of crushing cooked, boiled or sterilized palm fruits, breaking the oil bearing cells so as to increase the chances of recovering oil from the fruits. The same digester does washing and separation of nuts from the sludge that contains the oil. Then we have the clarifier. The clarifier is equipment that removes oil from water, and that follows a process by which heat is being applied. We have the palm fruit thresher. The thresher is very important in this mini plant because threshing traditionally requires one to have an axe or a machete to cut the spikelet that holds the fruits together in order to separate the fruits from the bunch. With the thresher we can put 4 or 5 of these bunches of palm fruits into the machine and in less than two minutes, all the fruits would have been struck off and separated from the bunch. The bunch would flow from one end and then the fruits flow to the other end. Then we have the sterilizer. The sterilizer is where the boiling actually takes place. We call it sterilizer because it is during that process that all pathogens are killed, that is disease causing organisms are killed so that the palm oil would be sterile for human consumption. The main function of the sterilizer is boiling but there is a big difference between our own sterilizer and the one traditionally used by local farmers for palm oil production.
The traditional mechanism involves putting a lot of water into a barrel and then they fill the barrel with the palm fruits. It would take the whole night doing the boiling. What we have done with our sterilizer is to make use of steam. We constructed the sterilizer to have a cavity where water is boiled and turned into steam and this steam rises to facilitate the boiling of the fruits within a short time. This method is far better than the traditional method.
Let me now come to rice processing. Five years ago or prior to that, all rice mills in this country were imported; but today, we thank God we are now producing rice mills in Sierra Leone.
AAM: Are there any other competitors in the area of manufacturing rice mills in Sierra Leone?
Melvin Kamara – Yes, absolutely there are other competitors. However, these competitors are not indigenous companies. These are representatives of manufacturers mainly from China and other Asian countries generally. But the advantage we have is that we know our people and the technology has to be owned. If we know our people and we know what they want, then in designing machines, we would be better placed than the Asians who are not in touch with our people. This is the advantage we are utilizing to try and win over the market.
AAM: Are you saying that people are coming from Asia to set up their plants or factories in Sierra Leone and they are also involved in manufacturing these rice mills locally?
Melvin Kamara – No. Absolutely not! They are not involved in any manufacturing locally. They are bringing in prefabricated components and assembling them here. In fact in some cases they are not even doing any assembling at all. They are bringing in ready-made machines from abroad loaded in containers and then take them out and put them on display. In actual fact they are doing distribution for Chinese or Indian manufacturers and not assembling the machines here locally. So far we have two Chinese business people doing that. We also have other nationals of Lebanese origin engaged in the same business of bringing in the equipment and distributing them. But the unfortunate thing is that for some of them, they do not have a presence here by way of having a place where people can go and buy the spare parts for their machines. Also, they do not have any technicians that they could dispatch to areas where their machines are being used to do repairs on their machines when needed by their customers. That is a big difference from our own company, and the fact that we are an indigenous company owned, operated and managed by a Sierra Leonean.
AAM: So what more do you have on the rice mill?
Melvin Kamara – The rice meal is multi-modal in the sense that it does coffee as well. All what you need is to change the seeds from rice to coffee and it will get the job done. It works even better for coffee than for rice. We have the Rice Destoner. You know the rice locally produced here in Sierra Leone is contaminated with a lot of stones. This contamination takes place mainly during post harvesting activities when farmers are drying their rice products. The drying takes place on the bare floor on street corners and road sides or on mats and, farmers also use stones to scare creatures away from the rice. During this process, the rice is contaminated with a lot of stones. So the machine we have manufactured that we call Destoner is capable of removing every tiny bit of stone from the rice. The good thing about the Destoner is that it is not electrically operated so it does not need electrical power to run it. It has a simple gasoline engine that operates the machine which means it can be used anywhere in the country, even in the remote villages and it works very well.
I am moving now to cassava processing. We have designed a cassava grating machine. You know the cassava tubers have to be grated, that is crushed into small plates so as to facilitate the garification of the cassava.
AAM: Mr. Kamara, that word “garification.” Was that a word you coined yourself? Because frankly speaking this is the first time I have heard that word. It appears to be something like a coinage, is that so?
Melvin Kamara – Well, sort of. You know if one is in this business for as long as I have been, one tends to be creative with certain usages. Garification simply means the process of converting cassava into gari which is now the second staple food in Sierra Leone after rice. So to garify the cassava we need to turn the tubers into flakes and then we press the flakes through the water to remove the starch and then we begin the garification process by applying heat. We have been able to design a machine that does the grating with the capacity to grate two tons of flakes per hour and the machine is made of purely stainless steel. Stainless steel is expensive but when it has to do with hygiene, it is the best option for us. We have also designed the hydraulic press which has the capacity to do 200 kilograms of cassava flakes in one hour. This means that a batch of cassava flakes is 200 kilos and for every one hour, the hydraulic press will remove water from one batch. We also have the roasting plant as a component of the cassava processing machine. The roasting plant has a central revolving unit which ensures that each portion of the bowl that holds the cassava flakes is torched and stirred, and in the process the cassava flakes would be evenly heated to facilitate the garification process.
We have a machine for palm nut cracking. Palm nut cracking traditionally is a very labor intensive work. For example, 180 kilograms of palm nuts would require seven working days for somebody to sit down and crack those nuts one after the other. We saw this as a need that we should address to alleviate the pains of nut cracking by farmers. As engineers and technicians, we designed a machine for palm nut cracking that can do the work that a farmer does at nut cracking for seven days in only four minutes, and it has the capacity to crack two tons of palm nuts per hour. This machine is really very effective. We have also developed a system which had been in use before although not well established, and that is the separation process. The separator is a mechanism that separates the nut shells from the kennels. We have not yet made a mechanical separator but we have so far adopted the clay back method using scientific principles of density. Density of water if not mixed would be higher than the density of the kennel. So, if you just put the kennel into the water, it will sink; but if you mix the water with clay, you make the density of the water and the kennel to be the same. And then when you pour the kennels and shells into that mixture, the shells which are heavier will sink to the bottom and leave the kennels to float to the top so that we are able to scoop out the kennels using a basket. We have propagated this method in many villages in the Koya Chiefdom where we have a presence.
AAM: Do you have a method of processing these kennels into some form of oil such as nut oil?
Melvin Kamara – Yes, we use the “wet method” to process palm kennel into palm kennel oil. There is also the “dry method” which functions like an expeller. We put the palm kennel into the expeller and it presses the oil out and expels the cake on the other side. However, the expeller is very difficult to manufacture simply because the kennels are not friendly to metal. There are usually some shells mixed with the kennels and these are very abrasive to metal so we find it very difficult to manufacture one that can be durable. As a result, we prefer to use the “wet method.” With the wet method, we use the hammer mill to crush the kennels into powder and we put the powder in a mixture of water and bring to boil. After 30 or 40 minutes of boiling in intense heat, the oil will float and then we take the oil out and discard the chaff which is the byproduct. So in sum, we have the palm nut cracker which cracks the palm nuts, and we have the separator which separates the nuts from the shells, and after separating then we do the oil processing which requires us to do crushing of the kennels with the hammer mill which is a separate machine. And thereafter, we bring the crushed kennels to boil and then the oil will float. We are using two sets of machinery here. The palm oil processing mini plant is different from the machine we use to process palm kennel oil.
AAM: We are still on machinery, so do you have any others?
Melvin Kamara – Yes we do. I was talking earlier on about the processing of foodstuff. For example, in the processing of palm kennel oil, we need to dry the kennels after separating using the clay back method. We have to dry them sufficiently enough to make the oil bearing shells to be ruptured through the application of heat. This is what helps us to recover more oil from the kennels, so that at least we are able to recover 40% of oil to the weight of the kennel. To be able to get that level of oil, we need to dry the kennels sufficiently. This drying was a real problem for us. However, at FINIC 3, our Rural Technology Innovation Center, we realized that a lot of heat was being wasted by the generator that we used to power the hammer mills. What we did was to use a combining system. We tapped the exhaust waste through a heat exchanger system which exchanges heat with forced air or cool air, and by the time the cool air leaves the heat exchanger, it would have been heated and then it goes into the cabin containing the kennels where the drying process takes place. This means that we are effectively using the generator to improvise a method of drying the kennels. That technology is what we are using at FINIC 3.
We are extending that technology to the drying of other foodstuff, for example, the production of pap. Drying also is a problem for other foodstuffs especially in the raining season. During the rains the sun is unpredictable. The sun shines and in less than thirty minutes you see something totally different. So what we have done here is that we have built a small glasshouse and it is going to be powered by the same system although it will be different. This time we are making use of a small dedicated engine that will be powering the fan, and this fan will be forcing air through a heat exchanger which will cause hot air to be generated into the glasshouse. So if you put pap in the glass house for example, or other wet foodstuffs meant to be dried, the entire content would have been dried in less than 2 hours. This is another mechanism that we are using for drying. The use of the glass is deliberate because we want to use the equipment during the dry season also. Because the dry season here is very hot, and when we expose the glass to the hot burning sun, the scientific principle is the greenhouse effect whereby the sun would flash into the glasshouse and the hot gamma rays would be trapped and would remain there. This will keep the cabinet very hot for an extended period of time. This means that during the dry season, we have no need to use a machine or a generator for drying foodstuff because the sun would be enough to provide heat in the glasshouse and the glass will protect the foodstuff against dust or disease causing organisms.
Another machine we have manufactured is the Condom Vending Machine. I think we are the first in Africa to have designed and manufactured a condom vending machine. Sierra Leone should be awarded a prize for that venture.
AAM: So you mean one can put the local Sierra Leone currency, the Leone, into the Condom Vending Machine and it would vend a condom out?
Melvin Kamara – Yes, exactly; and the good thing is that the machine is not electrically operated but a purely mechanical system. It operates without the need for battery or other forms of power and so it is always functional, blackout or no blackout. You know buying a condom is stigmatizing so a lot of people still shy away from going to the stores to buy a condom. We were contacted by the United Nations Population Fund (UNFPA) in 2002 and they asked us to design a machine that can sell condoms. Three months later we presented them with a prototype. That prototype was designed to dispense one condom at a time. They were very happy about it and they thought we should also be able to do a machine that would dispense a whole packet of condom at a time and they asked us to design such a machine. In two months we came out with the design that dispenses a packet containing 3 condoms. It works by inserting two coins of 100 Leones and press the lever and a packet of condom will pop out.
AAM: So where have you installed all these Condom Vending Machines?
Melvin Kamara – These machines were intended to be installed in guest houses, hotels and all entertainment centers frequented by young people. We had a project with the HIV and AIDS Secretariat for these machines to be installed in all those entertainment centers in the country. However, the project did not go well with the type of management the Secretariat then had, but we are planning to revitalize the project because they now have a new management system. We also plan to work with CARE Sierra Leone because they are also engaged in the campaign to reduce sexually transmitted diseases in the country. We have written to them and we are waiting for their response on that. So at the moment the machines have not yet been deployed to those centers where we intended to use them.
We have the Fruit Juice Extraction Machine. In Sierra Leone in a given season, we have plenty of mangoes that we cannot really add value to because they just grow fast and most is wasted. So we thought we should design an extraction machine and we successfully produced one which can extract juice from 1 ton of mangoes in 1 hour. And the machine does not only do mangoes, but it does pineapples too. And the beauty is that we do not have to peal the pineapples or the mangoes. For the pineapples we just chop off the crown and the stalk, cut into slices and then throw them into the machine and it will extract the juice from the pineapples and expel the chaff at one end and the juice at the other end. We believe this machine will revolutionize fruit processing in Sierra Leone. At the moment, fruit juice in this country is mainly imported because people do not have a means of extracting the juice from the fruit in a hygienic way. And added to that also, we produced a pasteurizer. A pasteurizer is a machine that fights pathogens, disease
causing organisms or germs in the juice before bottling it so as to make it safe, taste better and last longer.
AAM: Which of your machines or set of machines that is more popular or widely used by the farmers around the country?
Melvin Kamara – The cassava processing machine is very popular and the rice milling machine is also becoming popular. The simple reason is that these machines are very strong and durable. They may not look shiny, fashionable, elegant or aesthetic but the most important thing for the people is that they can perform well and they are durable. As for the aesthetics and for those who are concerned about looks, I would say to them that the beautiful ones are not yet born. However, with time, we are always striving to improve on our products and we have seen significant improvements in our machinery over the past sixteen years we have been involved in manufacturing.
AAM: What type of relationship does FINIC have with its customers in terms of technical advice or support, equipment maintenance and usage?
Melvin Kamara – The relationship is very good. First of all, when we are designing the machine, we involve our would-be customers to have a say in the design. The machine is not only for it to function, but for it also to be user friendly. And so when we make it user friendly involving those that are going to be using it, it would be eventually owned by them. This is where we are relating very well to our users because we make them feel as being part of the process. So when we design these machines, we take them to different communities and allow the people to use them for a period of time. And each community will provide us with feedback as to the functionality of the machine and whether it is user friendly. From these tests we obtain a data and then finally manufacture a machine that the people are happy with and like to use. This is how we find our relationship with the people very strong. Secondly, we make spare parts available. Like I said before, customers who buy their machines from merchants who don’t have a presence in the community have problems getting spare parts and technical support. But for us, we have a presence and we have trained technicians. If something happens to a machine that they cannot take care of at the field level, they give us a call and we dispatch a technician immediately. We have a motorbike ready for that. If they need spare parts they come to us. Whatever spare parts they need we always have it to sell to them. That has cemented our relationship with our customers and this is where we are winning over our competitors from Asia.
AAM: You have indicated your intention to expand into biomass energy production in Sierra Leone. How did you conceive this idea?
Melvin Kamara – Yes, to make use of what we have to get what we want, we need to add value to what we have. Looking at what Sierra Leone has in terms of biomass, it is a lot. We have abundant supply of elephant grass all over Sierra Leone. And this elephant grass, instead of helping us, instead of us making good use of it, we allow it to destroy us. This dry season that we have just seen this year alone witnessed a lot of destruction and loss of life caused by fire that is propagated by dry elephant grass. I think that if we are talking about energy, we should not be limited to fossil oil alone. As a matter of fact fossil oil is causing us damage because it is causing changes in the climate that is creating a lot of problems for farmers. By fossil fuel of course I mean diesel, petrol, etc.
Elephant grass on the other hand is a major source of energy and it will not harm us if we make use of the heat it generates while it is burning. But if we allow it to burn widely, it destroys the farms, houses, forests and even lives. But if we can burn the elephant grass in a controlled fashion or using a controlled methodology, then it becomes beneficial because the energy it releases can be utilized. And then at the same time, if it releases any carbon dioxide into the atmosphere, it would be re-absolved again when the elephant grass grows. The elephant grass is burnt down, then it grows, and in the growing process it adsorbs the carbon dioxide and becomes carbon neutral. This concept is what brought us to what we call the Biomass Gasifier. The gasifier is a plant that controls burning of biomass in a fashion that would allow the explosive gases like hydrogen and methane to be extracted then channeled for either running an engine or to power a generator or for the drying of foodstuff. We are given the impetus for this project by the availability of elephant grass and we are supported by the United Nations Industrial Development Organization (UNIDO). UNIDO sent me to India for one month to participate in a training program for the operation of the biomass gasifier. When I came back home, I shared the knowledge and experience with my managers and they said we too can take up the challenge. This is what led us to the construction of the Biomass Gasifier that we now have here. It is designed to be using elephant grass to produce energy.
This is how it works. We need to harvest the elephant grass, crush and briquette or pelletize them. The briquettes or pellets are put into the machine for the extraction of gases. The gasifier would also strongly help in the rural electrification drive of the country. If we are talking about increasing agricultural productivity, the first thing that should come to mind is energy. Energy should be the first thing to think about even before food security.
Energy security should at least precede food security otherwise we would be missing the point. So the biomass gasifier can provide an excellent opportunity for young people to use it for agricultural productivity. For example, in the production of vegetables like pepper, you need to use irrigation system if you are to do it all year round. We need energy for irrigation, so if the youths have a biomass gasifier where they can just go into the bush, cut some elephant grass, put it into the machine and the machine converts it to gas, the gas then is utilized by a generator and this helps to power a small scale irrigation system. This system will help us to increase agricultural productivity and would be very instrumental in the electrification of the rural communities.
AAM: Are you saying that the biomass gasifier is also a source of electricity? If so, what kind of power are we talking about? I mean what kind of kilowatts or electrical power that can be generated from a biomass gasifier?
Melvin Kamara – The one we have targeted has a 32 kilowatts power capacity, and that is able to give electricity to at least 400 households just for lighting. However, the biomass gasifier can be designed to generate as much as 1 megawatt of electricity. It all depends on size and the ability to have the equipment that would be able to extract and cool that magnitude of gas. But it is possible.
AAM: Give us some details of what entails the process of biomass gas production and its uses. I believe you have covered this to some extent but how does it compare to other sources of energy such as petrol, diesel or ethanol?
Melvin Kamara – For ethanol, you will require a great deal of energy to process it because we need to crush the sugarcane for example, press it and apply a heating process to get the ethanol produced. But for the biomass gasifier, we use energy to do harvesting and crushing, but the raw material is readily available for free and we do not need to grow a sugarcane plantation before we can produce that form of energy. This is a big difference. The other important difference between biomass gasification and other forms of fuel is its carbon neutrality. When we burn elephant grass, it releases carbon dioxide into the atmosphere, but it also reabsorbs it again by the same elephant grass when it grows. With regards to petrol and diesel, when once they release carbon into the atmosphere, they do not have the capacity to reabsorb the carbon. In that sense they are non-carbon neutral. Once released, the carbon goes into the environment and helps create environmental damage. For that reason alone we would prefer the biomass gas for our source of fuel even if it entails a higher cost of production. However, the good thing is that biomass gas is actually cheaper than the other forms of fuel we mentioned. At least every 15 kilograms of biomass or elephant grass would be equivalent to a gallon of diesel fuel, which is 4.5 liters. This means that it is better to use elephant grass in terms of cost than to use diesel or petrol. The biomass technology is a system that we can also install in vehicles and it would run the vehicles very well just like the fuel that is now widely used. As a country, we have to develop a method of using biomass technology for fuel production in order to address the energy problems we have in Sierra Leone. If there is fuel crisis in the world, we would be better off using our elephant grass for fuel than waiting for imported crude oil from overseas. As a matter of fact, we have appealed to the government to support us to develop this technology. We intend, before the end of this year, to start a rural transportation system that would be making use of three-wheel vehicles purely powered by elephant grass. The youths would go to a collection point, pay and collect a bag of briquetted or pelletized elephant grass which they will put into the tank and drive off. It would be that simple. Our hope is that this project will kick off in the not too distant future.
AAM: Given the fact that the majority of your customers live in low income farming communities, what plans does your company have to make its products more affordable?
Melvin Kamara – Affordability is really a very big problem for us. We have to try and strike a balance between affordability and the strength and durability of the machines we produce. Sometimes it is very difficult to get this balance because when we try to make the machines affordable, we would be tempted to use inferior material in its production and at the end of the day we have to take the blame for it. But if we make our machines sturdy and robust, we spend more money at the backend in cost of production and we have to consider appropriate pricing to recover that cost. So it is very difficult to strike the balance between the two. Take for example the stainless steel cassava grating machine. Stainless steel is very expensive but we prefer to use it to eliminate disease causing pathogens from our finished food products. If we use stainless steel to produce a cassava grating machine, the average Sierra Leonean would not afford it. So in order to strike a balance, we make use of galvanized steel plates. It is not stainless but it would take some time to become stained and that affects the durability of the machine. But any how the machine with the galvanized steel plates would be cheaper than the one made from stainless steel. This is how we try to strike a balance. However, it is very important that our machines are affordable to make them competitive with those imported from Asia.
AAM: Is there anything else you wish Africa Agribusiness Magazine and global venture capitalists interested in investing in the agricultural sector to know about the operations of FINIC Industries and your plans for expansion?
Melvin Kamara – I want the venture capitalists out there to know that this is a country with an abundant supply of biomass elephant grass. We all talk about diamonds and iron ore. When we talk about the economic development of Sierra Leone today, the first companies people will think about are African Minerals and London Mining. But it is also very refreshing to know that elephant grass can bring us a lot of money just as gold, diamond or iron ore. A ton of elephant grass can be sold for as much as $100 in Europe or America. So my message is that I want to team up with potential investors that would be ready to do this business with us. Harvesting of elephant grass, briquetting it and putting it in containers bound for energy production plants overseas is a huge business. It can be processed into many forms of energy for use in the homes for heating, for use by industries to power equipment such as boilers, and for many other uses and applications. I would like to have investors join with me in this business.
Here at home, biomass gas can be utilized very effectively for replacement of charcoal in our kitchens. Charcoal is causing huge environmental damage in this country. So if we can briquette elephant grass, it can also be used in our stove for cooking. So the biomass elephant grass business has a huge market not only for exporting, but also for local consumption here at home. We also like to welcome investors to come and invest in biomass gasification in Sierra Leone which we can use to engage in a wide range of agricultural activities such as irrigation, tilapia fish farming, cat fish farming and vegetable gardening for marketing to the United States and other countries in Europe. Rural transportation and electrification system is another huge potential. We have a plan to design three-wheel vehicles using biomass gas as its energy source to assist farmers to get their products to market centers around the country. These are the areas where we would like to team up with potential investors to help us expand and improve on the technology that we have.
Prev1...234Next Page 3 of 4