Hello. This is an interesting case study. Kano happens to be in the
groundnut producing zone and the company doesn't need to go through the
stress of importing from Argentina.
The solution is off taker/outgrower model in the medium term I.e over a few
years development. In the immediate period you can aggregate raw materials
from different parts of Nigeria through commodity associations.
If you need help, let me know.
Regards

Thank you, Francesca! È un grande piacere vederti su questa piattaforma

Ciao,

John

On Wed, Jan 18, 2023 at 7:16 PM [Hidden email] <
[Hidden email]

This is well said and I would like to add my voice to this thought.
Kind Regards

Thank you, Jo, Mike, and Karri!

Your inputs, questions, and comments will push my team and me even further.
They are helping us to sharpen our viewpoint and how we can approach this
challenge.

Thanks again!

John

John,
it would probably be worth talking to the West Africa Trade & Investment Hub
<https: westafricatradehub.com=""> (either as part of your market assessment
or separately). They currently have a APS out for innovations in RUTF
<https: 11="" 2022="" aps-watih-1736_promotion-of-catalytic-business-concepts-ready-to-use-therapeutic-food-rutf-in-nigeria.pdf="" uploads="" westafricatradehub.com="" wp-content="">,
and since they are focused on West Africa, I assume they would have some
interesting data (or at least perspectives!) on the questions you raise.

Personally, I think you are asking excellent questions... and while "there
are many paths to the top of the mountain" (and more questions along the
way!) I'm sure we are all interested to follow this story and see how it
turns out. Do let us know what happens in the next chapter!!

Karri Byrne

What a great conversation starter! I am reminded how useful the MiC community forum is.

Simon, thanks for incisively broadening the focus of the conversation to ’food systems / healthy diets’ and 'what kind of success should be the objective?'

John, assuming that the need for a low-cost nutrient-dense product (within a food system that supports healthy diets) is well grounded, I hope you generate some practical responses to your question. The offers / levers you’re considering seem very pertinent.

best wishes
Mike Albu
Programme Director | BEAM Exchange
beamexchange.org <http: www.beamexchange.org="">
W: +44 (0)7896 677064

Thank you for your email, Lakesh. Much appreciated

Dear John

This is a fascinating initiative, and I think that the research questions
you are asking are on the right track. A professional market-research
company should look both up and down-stream in the value chain to assess
market potential, as well as potential local supply-side benefits.

This reminds me of case studies I worked on while at Oxfam pre 2010, on
Plenty Foods, which had a similar aim and business model. I can't find
much on the web now, but DM me and I may be able to dig up some more
details. Here is a bit of background:

Plenty Foods (Pvt) Ltd. grew out of Plenty Canada, an NGO funded by the
Canadian International Development Agency (CIDA) that worked to promote
Soya as a cholesterol-free, high-protein food in available at affordable
prices to the public in Sri Lanka. The business model failed to work, and
the NGO was acquired by a private firm in 1996 and in 2006 became a wholly
owned subsidiary of Ceylon Biscuits Ltd. Plenty Foods (Pvt) Ltd. trades,
processes, and markets a range of fast-moving agricultural, products
including a popular high-protein breakfast cereal, Samaposha. It operates
through a network of 106 company-appointed distributors and retail market
outlets within Sri Lanka, selling a large proportion of its products back
into local communities.

https://www.sundaytimes.lk/101003/BusinessTimes/bt30.html

https://policy-practice.oxfam.org/resources/securing-a-sustainable-supply-base-how-plenty-foods-grew-30-on-year-and-improve-125725/

And check out 'Samaposha' on google!

Jo Zaremba

*Blue Lemur Consulting*
Environment, Humanitarian & Development

Email: [Hidden email]
Web: https://bluelemur.org/

Phone: + 44 7920 180047
*Please Note that I work Monday to Thursday.*

Hi,

Overall, the suggested strategy for addressing malnutrition in Nigeria includes funding a market analysis to determine the best route to market, co-investing in the project and focusing on scale-related risks, pursuing backward integration by sourcing raw materials locally, and pursuing forward integration by reducing waste. Although it addresses logistical, economic, and market difficulties, its performance will depend on a number of variables, including the competitive environment, the market's conditions, and the firm's capacity to carry out the plan and make necessary adjustments.

Best,
Lokesh

Thank you, Simon. Very helpful thought provoking questions.

Thanks again.

John

Hi John,

Interesting questions! Though my initial reaction is not to offer answers, but to ask other questions about what the best questions to pose might be.

I don’t know anything about the food systems of N Nigeria, so I don’t have the background to know why you think that the solution to malnutrition (i.e. not the therapeutic solution to SAM, but the ways of tackling moderate malnutrition) lies in a commercial product. Is this a case where the ‘nutrient dense food’ vs ‘healthy diets’ argument has a clear winner? Commercial (and some other vested) interests always frame malnutrition around the need for nutritious food, i.e. a product that they can supply (whether as commercial producers or aid agencies). Nutritionists would tend to focus more on the need for healthy diets, what people do for themselves and the conditions needed to enable them to do that. For therapeutic cases of SAM, the nutritious foods argument passes unchallenged, of course. I don’t know if it should for the kinds of malnutrition that you are worrying about – is that something that you have concluded (or which was concluded by others before you were brought in to solve ‘the problem’)? The answers to the nutrient dense food vs healthier diets question depend on what was concluded in your analyses of the causes of malnutrition, and also, judging from the solution that you are proposing, the food systems analysis explaining what kinds of food are available to people and why and thus why people eat the food that they do.

These kinds of questions won’t, of course, help you to “increase your chances of succeeding”, but rather ask about what kind of success should be the objective. (A commercially successfully operation producing a nutrient dense product? Sustainable reduction in malnutrition? More sustainable food system? Etc.)

Best of luck!

Simon

We are talking to Nigeria's largest manufacturer of RUTF. Let us call this
firm K. Our conversation is not on RUTF but rather to explore solutions for
addressing malnutrition before they reach treatment where RUTF is required.
We are looking for something the poor HH can access commercially, something
the market can accept or has accepted.

Our pitch: We challenged firm K on whether they could use their market
position, size, and leadership to disrupt the market with nutrient-dense
foods. We were welcomed with four product samples. Firm K says the market
has already accepted these products. Still, somehow, the orders/demands
from institutional buyers of RUTF, such as UNICEF, MSF, etc., disrupted
their desire to produce these products, and they found themselves not
pursuing the open market route.

Are there opportunities? Firm K is currently operating at 30% of its
installed but is increasing its operating capacity to 60%. Like other
manufacturers of RUTF, they also import their most critical raw materials,
groundnuts, from Argentina, Malaysia, and India. Unlike their competitors,
based in Lagos, firm K is in Kano, North of Nigeria, and does not enjoy a
seaport. We learned that K pays all taxes, something competitors based in
Lagos free trade zone don't have to worry about. Lagos to Kano is 1000km
(600 miles).

Their products have gone beyond proof of concept. The price points for
household consumers are USD 0.12 – 0.2, giving firm K a 50% margin. The
rise of these products has been from an organic trial, with no market
research done to back the growth, to determine the market size, or even to
determine what business model offers firm K the best returns. The products,
however, enjoy the same production process as RUTF. However, firm K is
currently not manufacturing but is happy to restart.

Our offer to Firm K: First, we want to fund the market study to determine
the market size and establish a route to market and business model that
offers the best return. Our focus is the commercial application of the
consulting output, not a typical market analysis but one with clear growth
drivers and all the financial models.

Second, we would understand the risk and right-size our co-investment
targeting risks associated with scale. The evidence from the market
analysis would also inform this. The market study will give us a better
understanding of the demand dynamics and which intermediaries are
necessary. We are still determining what and how that would look like.

Third, given that the pain points of importing raw materials (groundnuts)
from Argentina to Kano are biting for firm K, it's an opportunity to try
backward integration. Firm K is interested and wants to start sourcing
about 35% of their groundnuts locally in the next 6 to 9 months. This would
grow over time.

Are these the best levers/offers? We don't know! Will this work? I also
don't know. Share with me what your thoughts and experiences are. Anything
that would increase our chances of succeeding.

Warmest,

John