In collaboration with my partner organization, I have helped them develop a social enterprise focusing on combating malnutrition in my region. The objective of the project is the commercialization of enriched porridge flour, whose proceeds finance malnutrition trainings in small villages and via radio which both promote the product and educate the population on malnutrition. We are developing a local supply chain by purchasing locally grown ingredients, which encourages local agricultural development, and a whole-sale distribution model that promotes economic activities of women and small merchants and also allows us to increase our range of markets.
The Beginnings
I initially presented the idea of creating a social enterprise as a financing tool for my organization which is dependent on external donors, a challenge faced by many organizations on a local level. As a result of this dependence, local capacity building can go unfounded or worse, donor schedules or financing requirements can result in the poor implementation of projects. For example, my organization conducted a funded project educated villagers on woman's rights. The project funded the training for June which is when a significant portion of the population is working to prepare their fields. This conflict of schedules between the receipt of funding and trainee’s schedules reduced the effectiveness of the training because only a limited number of persons could attend. Recognizing that financing matters were a significant challenge for my organization, I proposed the idea of a social enterprise as a way to reduce financing requirements for some of their activities.
In addition to the financing objectives of the social enterprise, we wanted the product itself to address a social issue and so the product of choice is a nutrient rich porridge flour made from local ingredients. It was easy to commercialize and scale production as demand increases, it targets malnutrition and it would be reasonably profitable allowing it to finance various activities of my organization, specifically malnutrition trainings. I researched past work by volunteers including porridge flour recipes, financial information from similar projects, and reviewed a project write-up that detailed a volunteers experience starting a similar project. My counterpart and I identified the materials we would need, initial costs which were low enough, about $30USD, so I could provide a no-interest loan. Profits would reinvested to increase production, invest in production capacity, develop an inventory of ingredients whose price will rise in coming months and finance malnutrition trainings via radio and in villages.
We conducted market research that included listening to the experiences Community Malnutrition Agents, 50 women who conduct malnutrition and enriched porridge flour trainings in their villages. They discussed their work and the challenges they face in teaching villagers how to make enriched porridge flour and discuss malnutrition in general. While other projects have also taught villagers how to make the flour, because it requires transforming millet, peanuts and beans into flour, it requires a significant amount of time and work on an individual level since the milling is done by hand instead of using a mill. This has resulted in a population knowledgeable of enriched porridge flour and its benefits but a low implementation rate of people who incorporate it into their or their family’s diets. We also consulted the Red Cross who has a significant presence in malnutrition work in my region. We discussed porridge recipe types to identify taste and product preferences in the village setting which resulted in the elimination of recipes that included milk powder and dried fish because these were less likely to be accepted by villagers for taste and cost preferences. In the end, we selected a recipe made from 40% millet and 20% of the following: black eyed peas, peanuts and sugar with a small amount of salt. This particular recipe had been widely promoted and preferred for its taste, all ingredients were available locally, it was easy to produce, and we could keep prices low to encourage consumption while still being profitable enough to meet our funding objectives.
Within 60 days of my arrival in Djibo, we conducted market research, purchased necessary materials, and developed packaging, displaying ingredients and directions in three languages, and made our first production.
Production
In the first month, we made three productions totaling 453 packets, each containing 100g of flour which is enough to make about 1 liter of porridge. The first production consisted of 118 packets which was less than expected and resulted in a higher per unit cost. Without a scale, we are dependant on a volume measurement to approximate a weight measurement and since the flour was denser than when we originally measured, we packaged more flour per unit than we should have. We resolved this problem by reducing the size of our volume measurement and in the following two productions, the weight per packet stabilized. I developed and implemented a ratio of packets produced divided by the units of millet (measured by a large tomato paste can) which gives us a standard by which to verify the number of packets produced, producing on average 33 packets for every one unit of millet. In all, the unit cost for the first production was 60.14cfa and in subsequent productions, our average cost per unit has been 55cfa and 54cfa respectively with wholesale prices of 80cfa and retail prices of a 100cfa per packet.
We sold our first production in a matter of days, 63% in bulk and 37% individually. In the second and third productions, the percentage of packets sold in bulk increased to 90% and 91% of sales as we focus more on wholesaling to encourage wider distribution through small merchants and increase the potential of the product to support the local economy.
The first experience marketing the porridge flour was very positive and done in collaboration with one of my volunteer neighbors 27km away. I brought 40 packets to her town on market day and we sold 25 to small boutiques and prepared one packet which we gave out as samples wandering around the market targeting women with small children. We spoke briefly about nutrition and the product itself and what was most encouraging was the discussion related to nutrition that quickly spread around the market. We sold out of the remaining packets and began directing people to boutiques which also sold out. Later that evening when I was back in my town, someone came 27km to purchase an additional 15 packets from me.
I left on vacation for Mali and Senegal and while I left all the materials needed with my counterpart, I wasn't sure if another production would be made in my absence. Upon my return however, my counterpart informed me that they had already made a second production of 132 packets, resolving the measurement problems we had originally, and that all the packages had sold out within a week so he had already purchased ingredients and begun on a third production. However, recognizing increased demand, he increased production by 50%, all of which was done without my assistance, which was probably the most rewarding part of it all.
In all, to date we have made three productions totaling 453 packets, generating total sales of 37,700cfa or about $82usd with a profit of 12,118cfa or about $27usd, a 32% profit margin.
Going Forward: Immediate Future
While our objective is to finance malnutrition trainings, we have to first address a series of upcoming challenges, the most critical of which is a significant rise in input costs. Because there is only one harvest season, agricultural commodities rise significantly throughout the year until the harvest. For example, in 2009, prices for millet, our primary ingredient, increased from a 176cfa/kilo in March to a high of 213cfa/kilo in July, a 21% increase. (See http://www.resimao.org/html/en/region/market_indicators). Generally, prices are lowest in October/November immediately following the harvests. Currently, pay 162.5cfa/kilo of millet but while prices remain lower than the months to come, we intend to develop an inventory of primary ingredients which maintain profitability by offsetting price increases.
Currently, we purchase our ingredients from merchants but our objective is purchase directly from farmers following the harvest. This is when prices are most depressed but traditionally when farmers sell a majority of their harvest. Our plan is to introduce a purchasing model based on fair trade paying pay higher than average prices at the time of harvest which economically benefits farmers while still allowing us to lower the cost of our inputs and put more money towards malnutrition trainings.
The storage of grain is our current financial priority however, should the level of demand increase, as we expect it to as we increase awareness and distribution of the porridge flour, we will experience production challenges. In our last production, the first time I measured times for the production process, a team of about six worked together, in a variety of tasks, to package the flour, add labeling and heat seal the bags. While it only took about 45 minutes to put the flour and labels into all 203 bags, it took an additional two and a half hours to adding labels and heat sealing them. On average, it takes 13 seconds to put the flour into a bag and 58 seconds to add a label and seal the bag. By investing in an additional sealer, we could reduce the total time it takes to package the flour by almost half.
Going Forward: Long Term
Ultimately, the porridge flour represents the first stage of developing malnutrition related income generating activities in my region. While the porridge flour was for my host organization, I recently began collaborating with another association to develop Moringa powder. Made from the leaves of the Moringa tree, the powder offers extensive nutritional benefits and more importantly, can be grown in my region of the Sahel which suffers from a rate of desertification of roughly 6% a year. My work with the association is developing a cross-sector project to promote individuals, families and farmer associations to plant Moringa trees by developing a profitable market for their leaves. This means an environmental benefit of planting trees can also prove to be an economic benefit. The association will purchase leaves and transform them into a powder who will sell it to generate an income to finance their activities, including nutritional awareness. Thus, this one project incorporates three critical fields of development with environmental, economic and health benefits for both the association and hopefully, if scaled to size, my region.
