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Financial Innovations Lab™Financial Innovations Lab
Incentivizing Private-SectorI t t i Af i A i ltInvestment in African Agriculture
October 8, 2010
1
The Financial Innovations LabFinancial Innovations Labs are miniature think tanks in action, designed to devise new business models, capital structures and financial technologies that can achieve Designand financial technologies that can achieve concrete goals.
By bringing together a diverse group of stakeholders, Labs encourage collaboration
Design
stakeholders, Labs encourage collaboration between parties who may not normally interact.
These intensive workshops explore the
Research Implement
p ppotential of financial tools to solve specific challenges.
2
Aflatoxin Financial Innovations Lab agendaOctober 8 2010October 8, 2010
• Welcome and Introductions
• Scope of the Problem• Scope of the Problem
• Development, Testing and Manufacturing of Aflasafe
• Using Pull Mechanisms to Expand Health Benefits
• Discussion: Intersections Along the Value Chain
3
• Next Steps, Action Items and Closing Thoughts
Aflatoxin Financial Innovations Lab October 8 2010October 8, 2010
Goal:
To identify financing mechanisms that will
incentivize smallholder farmers in sub-Saharanincentivize smallholder farmers in sub Saharan
Africa to use aflatoxin biocontrol.
4
Background:Background:Agriculture in
Sub-Saharan AfricaSub-Saharan Africa
5
Agriculture is an important part of sub-Saharan African economiessub-Saharan African economiesOn average, agriculture…
Employs 64% of the population
Contributes 34%of GDP
Other36% Agriculture
34%
of the population of GDP
Agriculture64% Other
66%
34%
6
Source: World Bank, “World Development Report 2008: Agriculture for Development” (2007).
More than half of the population in sub-Saharan Africa lives in extreme povertysub-Saharan Africa lives in extreme povertyPercent of people living on less than 2005 PPP $1.25 a day
50.9%50%
60%
40.3%
30%
40%
16.8%
8.2%3.7% 3.6%
0%
10%
20%
S b S h S th A i E t A i & L ti A i E & Middl E t&
Source: World Bank, “World Development Indicators” (2010).
7
Sub-Saharan Africa
South Asia East Asia & Pacific
Latin America & Caribbean
Europe & Central Asia
Middle East & North Africa
Almost three-quarters of the sub-Saharan African population survives on less than $2/dayAfrican population survives on less than $2/dayPercent of people living on less than 2005 PPP $2.00 a day
72.9% 73.9%70%
80%
38.7%
30%
40%
50%
60%
17.1% 16.9%8.9%
0%
10%
20%
30%
Source: World Bank, “World Development Indicators” (2010).
8
Sub-Saharan Africa
South Asia East Asia & Pacific
Latin America & Caribbean
Middle East & North Africa
Europe & Central Asia
Sub-Saharan Africa accounts for 26 percent of world hungerof world hunger…
Latin Americaand the Caribbean
Near East and North Africa
4%
Developed countries
2%and the Caribbean
6%
Asia and the Pacific
62%
Sub-Saharan Africa26%
Sources: Food and Agriculture Organization (FAO) of the United Nations (2010). Population Reference Bureau, “World Population Data Sheet” (2010).9
…but only 13 percent of world population.
Expected world population growth necessitates large increases in food productionnecessitates large increases in food productionPercent increase by 2050 Required increase to meet
population growth70%74%
70%
80%
34%43%
30%
40%
50%
60%
0%
10%
20%
30%
World population Food production Annual cereal Annual meat
Source: Food and Agriculture Organization (FAO) of the United Nations, "How to Feed the World in 2050" (2009).
10
World population Food production Annual cereal production
Annual meat production
Africa’s cereal yields are about one-fifth of those in the U Sof those in the U.S.Cereal yield (tons/acre)
2.93.0
3.5
2.2
1.5
2.0
2.5
0.6
1.0
0 0
0.5
1.0
1.5
Source: FAOSTAT.
11
0.0Africa India China U.S.
Official development assistance (ODA) for agriculture has decreased in recent decadesagriculture has decreased in recent decadesODA for agriculture as a percent of total ODA
13%
12%
14%
8%9%
12%
8%7%
8%
10%
12%
7%
5% 3%
2%
4%
6%
Source: Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD).Note: Data are commitments by DAC country donors. As agriculture did not become a separate category until 1995, data are ODA for Agriculture, Forestry, and Fishing.
12
0%1970 1975 1980 1985 1990 1995 2000 2005
Lack of private-sector investment in agricultural R&D in sub-Saharan Africaagricultural R&D in sub-Saharan Africa
Private sector
Private-sector investment made up just 1.7% of total agricultural R&D spending in sub-Saharan Africa in 2000.
1.7%
Source: Philip G. Pardey, Nienke Beintema, Steven Dehmer, and Stanley Wood, “Agricultural Research: A Growing Global Divide?” International Food Policy Research Institute (2006). 13
Public sector98.3%
Scope of the problem: Aflatoxin
14
AflatoxinDescriptionDescription
• Toxic substance emitted by the fungus Aspergillus flavus
• Affects maize, groundnuts and other cropsContaminates more than 25 percent of maize and groundnuts in Nigeria– Contaminates more than 25 percent of maize and groundnuts in Nigeria
– Maize accounts for 42 percent of the cereal crop in sub-Saharan Africa• Can grow on the field and in storage
C t i t d ft d b• Contaminated crops are often consumed because of high food insecurity in sub-Saharan Africa
• In Ghana, a study found that grain prices differed little despite widely varying levels of aflatoxin
15Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA, “Annual Report 2009/10.”
little despite widely varying levels of aflatoxin (providing little incentive for control)
AflatoxinImpactImpact
Health• Chronic exposure has been linked to:
Trade
• Annual trade losses due to aflatoxin contamination:
Health Trade
– Liver disease, liver cancer, stunting, malnutrition, immunosuppression, and abortion
• Also adversely affects health of
contamination: – $1.2 billion globally
– $450 million in African economies
A i lt l t f bAlso adversely affects health of livestock who eat contaminated feed
• Burden of disease from aflatoxin worldwide:
• Agricultural exports from sub-Saharan Africa have declined by up to 20% over the past 20 years due to non-compliance with E.U. standards
16
– Up to 36 million Disability-Adjusted Life Years (DALYs) every year
Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA, “Annual Report 2009/10.” African Agricultural Technology Foundation, “Mycotoxins in Food Grains” (2010).
Aflatoxin Intervention methodsIntervention methods
Intervention method Description
Aflatoxin-resistant Crops that are naturally resistant to aflatoxin are being crops developedBiocontrol Introduction of competing varieties of fungi that do not
produce aflatoxin (atoxigenic strains of A. flavus) prevents the growth of toxic strainsprevents the growth of toxic strains
Dietary supplements Enterosorbents, such as NovaSil, have been found to reduce aflatoxin levels in animals and humans
Post-harvest Control of temperature, moisture and pests in storage,
17
management among other efforts, can prevent mold growth
Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated).
Aflatoxin interventionBiocontrolBiocontrol
Experience with aflatoxin biocontrol to date:
United States
-Successfully used for cottonseed and peanutsStates
- Afla-Guard™ is currently being sold by Syngenta
Nigeria - aflasafe™ has been produced by the International Institute of Tropical Agriculture (IITA) and is provisionally registeredof Tropical Agriculture (IITA) and is provisionally registered
- Has reduced contamination on maize by about 80% in trials
Other - IITA is working to develop biocontrol for Burkina Faso and
18Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA website.
African countries
Senegal, among other countries
AflatoxinProblem statementProblem statement
Smallholder farmers in sub-Saharan Africa are
unlikely to purchase aflatoxin biocontrol because
they perceive the costs to be higher than thethey perceive the costs to be higher than the
benefits from using the product.
19
Key questions to be addressedScope of the ProblemScope of the Problem
• Who is likely to purchase aflasafe?
Wh h b i id d f fl f h h• What are the barriers to widespread use of aflasafe throughout Nigeria?
• Is there sufficient incentive for manufacturers to invest in production of aflasafe?
20
Using Pull Mechanisms to Expand Health Benefits
21
Pull vs. push mechanisms
Mechanism Description Best funding use
Pull mechanism
- Donors provide funding to private-sector firms only when
- Where there are informationasymmetries (between donors andmechanism private-sector firms only when
specified outcomes are delivered and adopted- Pay for results
asymmetries (between donors and researchers, researchers and consumers)- Where it is difficult to identify best R&D path to prod ct de elopment- Ex-post R&D path to product development
Push mechanism
- Donors provide funding to increase the supply of R&D
P b f lt
- Basic science to inform specific applications
Wh R&D h l il t- Pay before results- Ex-ante
- Where R&D has clear milestones
Source: Kimberly Ann Elliott, “Pulling Agricultural Innovation and the Market Together,” Center for Global Development (2010). 22
Pull mechanismsExamplesExamples
Mechanism DescriptionAdvance Market Commitment (AMC)
Donors agree to subsidize purchase of a product for a set number of units; requires manufacturers to continue supplying the product at a set price after donor funds dry updry up
Advance Purchase Guarantee (APG)
Donors agree to purchase a minimum volume of a product
Best-entry tournaments
Rewards given to whoever gets closest to a specific goal by a given date
Licensing Owner of technology agrees to allow another entity to use it for a fee
Patent buyout Donors purchase existing patentProportional prizes Overall award set at the beginning, then divided among applicants according to
their innovation's impacttheir innovation s impactWinner-take-all prizes
Rewards given to whoever achieves a specific goal
23
Pull mechanismsBest useBest use
Mechanism Best useAdvance Market Commitment (AMC)
Where characteristics of desired technology can be specifiedCommitment (AMC),
Advance Purchase Guarantee (APG)
can be specified
Licensing and Where there are potential spillovers from patent buyouts developed-country R&D
Prizes and best-entry tournaments
Where characteristics of desired technology are unknown, but general goal is identified
24
First Advance Market Commitment (AMC) Pneumococcal vaccinePneumococcal vaccine
• In June 2009, GAVI, the World Bank, WHO and UNICEF, five national governments and the Bill & Melinda Gates Foundation launched a pilot AMC to accelerate access to vaccines for
l dipneumococcal disease.• Price per dose:
– $3.50 paid by GAVI and developing-country governments that introduce the vaccines
$ $– $7 for the first 20% of doses; the additional $3.50 per dose paid for by donors to encourage manufacturers to make the initial investment to expand manufacturing capacity
• In March 2010, GlaxoSmithKline and Pfizer each made long-term commitments to supply 30 million doses of the vaccine per year for 10 years.
Source: GAVI Alliance website.
pp y p y y
• Estimated that it will prevent more than 7 million childhood deaths by 2030.
25
Structure of Advance Market Commitment Pneumococcal vaccinePneumococcal vaccine
Source: GAVI. 26
Key questions to be addressedUsing Pull Mechanisms to Expand Health BenefitsUsing Pull Mechanisms to Expand Health Benefits
• Will farmers have sufficient incentive to purchase/use aflasafe under the proposed options?
• How much funding is required under each of the proposed options?
• What barriers might be encountered?
• Are the proposed options sustainable?
• How do we minimize distortion if we use a pull subsidy?
27
Discussion:Discussion: Intersections Along
the Value Chainthe Value Chain
28
Key questions to be addressedIntersections Along the Value ChainIntersections Along the Value Chain
• At what stages in the value chain are pull mechanisms likely to be most effective?
• How can key players (e.g., the government, grain reserves, World Food Programme) be positioned to most effectively aid in the pull mechanism?
• Could similar mechanisms work in other countries in sub-Saharan Africa?
29
Creating incentives for aflatoxin risk reduction: Improving the outcomes for the poor
i Af i d l h in Africa and elsewhere
Devesh Roy, London October 8 y,
li f hOutline of the problemResearch questionsResearch questionsPoints to ponderFuture stepsp
Number of biological studies on control options; shows only limited adoption.Economic losses related to mycotoxins/aflatoxins –The large ones hog the limelight but need to ask questions on:g g q
Source of economic losses▪ Trade/regulation▪ Public healthMethods
Al b h fl i i bl f ▪ Always remember that aflatoxins is a problem out of many
Use of data▪ Zero trade is information – keep itp
Validation checks –Time for which predicted is long over – let’s check it
Market loss occurs when:
Health loss occurs when:Center for Disease Control has estimated that Food IS monitored for
aflatoxin: Buyers pay lower prices for or j t t i t d
occurs when:Food IS NOT monitored for aflatoxin:
Center for Disease Control has estimated that more than 4.5 billion people in developing countries are chronically exposed to aflatoxins in their dietsreject contaminated
food (developed nations, local or international trade)
Dangerous levels enter food supply (developing nations)
are chronically exposed to aflatoxins in their diets.
)Animals become sick from aflatoxin consumption
nations)
4
T id tif To identify pro‐poor cost‐effective aflatoxin risk‐reduction strategies in order to assess the uptake of these uptake of these strategies and to suggest interventions ggthat ensure high rates of adoption along value chainsvalue chains.
Multi‐disciplinary research teamEconomic Impact –Obj 1
‐Health‐Household‐level analysis (income, gender)
Perceptions of Aflatoxin and WTP–Obj 4• KAPP (Knowledge Attitudes Perception Practices)•Contingent valuation (willingness to pay/ to
‐Trade accept)•Auctions (demand)
Risk Analysis‐Obj 3
•Risk maps
Disease Prevelance ‐Obj 2 ‐Collection of prevelance data along value chains (with and without control
Endpoints of interest: exposure
1) Market access/ •Risk assessment•Cost benefit/and cost effectiveness analysis
(measures) in different ecological zones
1) Market access/ income/ poverty reduction
2) Health
i i d d bjCommunication and Advocacy –Obj 5
Mali: Kita Kayes and Koulikoro Mali: Kita, Kayes, and Koulikoro districts
70 % of groundnuts produced in Western MaliComprise all groundnuts producing agro‐ecological zones
Kenya: Nyanza province (west) – transect from Kisi to Homabay (high low from Kisi to Homabay (high ‐ low elevations) Upper East – transect from Embu to Mbeere (high ‐ low lands) L E h i l d Lower East transect that includes Machakos and Makueni districts.
fEconomic impact:Health – (Liver cancer ‐Disability‐Adjusted Life
Perceptions of aflatoxin
Knowledge attitude Disability‐Adjusted Life Years ‐DALYs) Livelihoods (income and
Knowledge, attitude, perception and practices (KAPP)
wealth)Missing Trade
Willingness to pay and auctions (WTP)
Toxic
Acute aflatoxicosis
Carcinogenic
Liver cancer (HCC) Acute aflatoxicosis4 outbreaks since 1974
747 cases, 243 deathsLiver cirrhosis
Liver cancer (HCC)560,000 cases; 500,000 deaths/yr32X more prevalent Liver cirrhosis
772,000 deaths annuallyStunting and wasting in children
32X more prevalent in poor nationsOther risk factors: hepatitis B (HBV),
Immunomodulationp
hepatitis C (HCV), alcohol, tobacco
9
M i M i
District
Maize Aflatoxin (ppb)
Geom. Mean
Maize Aflatoxin (ppb)
Range
Mak eni 52 9 1 5 400Makueni 52.9 1 – 5,400Kitui 35.2 1 – 25,000Machakos 17.8 1 – 3,800
Thika 7.5 1 – 46,400TOTAL 20.520.5 1 – 46,400 Drought
Pl t t Food Scarcity
Poor storage
Plant stress
Hi h fl t i
Aflatoxicosis
High aflatoxin
Mycotoxins regulations impose costs on the producers that y g p pcould take the form of both variable and fixed costs.
Th f ff Three types of effects: Volume of trade effect –Already trading could trade less
Missing trade or lost trade effect – Producers/countries could be g ffscreened off the export market. The ones to be screened off the export markets would be the ones comparatively less productive
Market reallocation effect – Exporters could reallocate their ff psupplies across markets including towards domestic markets. Note that missing trade effect is not independent of market reallocation effect as:▪ Lost trade in a particular market can surface as new trade in some other
market.
U th d th t ll f t d Use methods that allow for zero trade
Also consider the trade among all countries
Apart from zero trade – look at relative trade across relative high and low standard markets for groundnuts and maize
Key finding:Mycotoxins regulations have significant effect on relative bilateral trade flows for groundnuts but no significant effect for maize. Moving from codex to EU will shift maximum up to 22 percent trade to low‐standard markets in groundnuts and much lower in maize.
How low value is low standard?How low value is low standard?
A b h d d/ f ill h h b idA better home standard/performance will shorten the bridgeBridges are long for many countriesDomestic markets Domestic markets
Raise the speed on the bridge
Cushion the fall
k L h k Markets Some market is missing here
Let us create the markets that are missingAfla‐control – Can it not be missing here
Let us understand the critical difference in
ISO/ GlobalGAPWhat is needed
Credible informationdeterminants of ATP and WTP
Credible information▪ Institutions protecting brand
Subsidy syndrome How to generate or preserve credibility?p y
iIncentives InfrastructureInstitutions Institutions
The three are not mutually exclusivey
Farmers:Generally aware of aflatoxin, but didn’t know what caused it;Wanted to know if it was safe to Wanted to know if it was safe to dry maize directly on the ground;Knew neighbors died because of Knew neighbors died because of aflatoxin; how could they know if they were exposed;Some farmers consumed moldy Some farmers consumed moldy maize produced on own farm, but would not consume moldy maize from storesmaize from stores
• How many know aflatoxins?How many know aflatoxins?• How many know its dangers?•Who could credibly convey the message?Who could credibly convey the message?• Increased valuation by consumers – how to translate into producer incentives?to p oduce ce t es
•Credible certification is the key• Product differentiation is another keyProduct differentiation is another key
• Small farmers will find it too costly to mitigate – no cost too big if rewarded with higher priceg g p
Stated preference methods (SPM, e.g., the contingent p , g , gvaluation method)
Let’s play in real markets — Is Nestle 10,000 farmers 4 ppb feat is for domestic markets or for western markets (mostly European)?
Let there be a gigantic information campaign – no piecemeal (Rotary International awareness campaigns)
Let there be real world intervention
A package worth trying
Aflatoxin levels (µg/kg) in maize grain collected from Kaiti Kenya
30 40 days
grain collected from Kaiti, Kenya
Maize variety Pre‐harvestPost‐harvest (15‐25 days after harvest)
30‐40 days after post‐harvest
Mean Range Mean Range Mean Range
DH 04 0 0‐0 206.10 0‐577.4 690.13 0‐2069DH 04 0 0 0 206.10 0 577.4 690.13 0 2069
Pioneer 3253 66.28 0‐273.8 31.54 0‐113.6 30.71 0‐294.70‐
Local 24.48 0‐174.4 344.58 0‐3180.7 185.910
2024.6
Panar 2.65 0‐10.6 33.83 0‐135.3 6.30 0‐23
DK 8031 29.67 0‐44.5 809.07 0‐1213.6 26.13 0‐39.2
bl ld h b bPossible interventions:
Breeding for aflatoxin i t
Could there be sub‐standards
resistance
Biocontrol
h
How will the payment mechanism work?
Postharvest intervention package
Not all of them ha e Not all of them have the same outcome
Creating the right markets
Foreign markets are good, but a lot can happen in domestic/regional markets
Public health issues might be the central driver of policymakers’ incentivesp y
That will however also be used for market creationcreation
Source: Environmental Health Perspectives
BiocontrolBiocontrolin Africa
BiocontrolRanajit BandyopadhyayRanajit Bandyopadhyay
Peter CottyPeter Cotty
www.iita.org
BiocontrolPeter CottyPeter CottyJacob MignounaJacob Mignouna
Margaret McDanielMargaret McDaniel
Aflatoxin, health and trade
Death (>200 people in Kenya)S i ti ith H titi B Vi (HBV) tSynergistic with Hepatitis B Virus (HBV) to cause liver cancer• 30 times more potent in HBV+ people• 5 60 times higher cancer risk• 5-60 times higher cancer risk
Impairs growth and development of childrenSuppress immune system – increased susceptibility to diseases (e g HIVsusceptibility to diseases (e.g., HIV, malaria)?Impedes uptake and utilization of micronutrients in human systemsyAnimal productivity reduced – growth rate, embryo toxicity, feed efficiency, cancer, death…
2 3 illi b i d i
www.iita.org
~2.3 million bags contaminated maize not tradable in 2010 in Kenya
Aflatoxin: What is it?
• Highly toxic metabolite produced by the ubiquitous Aspergillus flavus fungus
• The fungus infects crops and produces the toxin in the field and in stores
• Fungus carried from field to store• Contamination possible without p
visible signs of the fungus• Some predisposing factors:
pre harvest high temp and drought stress– pre-harvest high temp and drought stress– wet conditions at harvest and
post-harvest periodsinsect damage
www.iita.org
– insect damage
Prevalence of aflatoxins in food and feedin food and feed
• Several African staple commodities affected• Several African staple commodities affected• High human exposure in Africa – mother to baby• Levels and frequency of occurrence high
– >30% maize in stores with >20 ppb aflatoxin– ~90% stores are contaminated with Afla fungi– Up to 40% grain in households with aflatoxinUp to 40% grain in households with aflatoxin
• Concern for food and feed processors, government and emergency food reserve agenciesHi hl t i t i d i i t l• Highly toxic strains, conducive environmental conditions, traditional farming methods and improper grain drying and storage practices,
www.iita.org
unregulated markets
Aflatoxin contamination in W. Africa
Primary products Food products MTL = 20 ng/g
Maize: 4000 – BeninPeanut: 216 – Ghana
y p• Peanut paste: 3278 – Ghana• Peanut sauce: 943 – Ghana
p MTL 20 ng/g
Peanut: 216 – GhanaSorghum: 80 – GhanaMillet: 200 – Nigeria
• Leaf sauce: 775 – Gambia• Maize dough: 313 – GhanaMillet: 200 Nigeria
Tiger nuts: 120 – Nigeria• Kenkey: 524 – Ghana• Cashew paste: 366 – Ghana
P t il 500 Ni i• Peanut oil: 500 – Nigeria• Yam flour: 7600 – Nigeria• Local beer: 135 Nigeria
www.iita.org
• Local beer: 135 - Nigeria
Distribution (%) of aflatoxin (ng/g) in maize products in Kenya 2004in maize products in Kenya, 2004
District Products District Products (No.) < 20 21-99 100-1000 >1000
Makueni 91 35 13 40 12
Kitui 73 38 21 32 10Max 25,000 ppb
Machakos 102 49 25 23 3or 1200 times
MTLThika 76 66 17 13 4
TOTAL 342 47 19 27 7
International Institute of Tropical Agriculture – Institut international d’agriculture tropicale – www.iita.org
TOTAL 342 47 19 27 7
Nyamongo et al
Aflatoxin and poultry (broilers)
Aflatoxin Aflatoxin level (ppb) Samples (%)
<20 -- safe 38levels in feeds in Nigeria
>20 to 100 14
>100 to 500 41ge a>500 to 1,000 7
~40% reduction in live weight (8 weeks)
www.iita.orgAF-free diet 500 ppb AF diet
AflasafeAflaguard
BIOCONTROL WORKSWORKS
IN TENS OF IT WORKS IN AFRICA
THOUSANDS OF ACRES IN
www.iita.org
IN AFRICA TOO!
OF ACRES IN THE US!
Principles of aflatoxin Principles of aflatoxin biological controlbiological controlbiological controlbiological control
Fungal communities differ in aflatoxin-producing ability and this influences 100producing ability and this influences crop vulnerability to contaminationSome strains produce a lot (toxigenic), 75
100TOXI
AT
and others no aflatoxin (atoxigenic)Competitive exclusion (one strain competing to exclude another) is
50
ence
(%)
IGENI
OXIGcompeting to exclude another) is
biocontrol principle in practice in the US 25
Inci
de C ENIC
S Strain A. flavus L Strain or “typical” A. flavus
Shift strain profile from toxigenic to atoxigenicThus aflatoxin contamination reduced
0
Natural Biocontrol
www.iita.org
Thus, aflatoxin contamination reducedOn average, S strain isolates produce much
more aflatoxin than L strain isolates.
Aflatoxin biocontrol factsAflatoxin biocontrol facts
Crops are infected by complex Crops are infected by complex communities of diverse fungicommunities of diverse fungi
Treatments may have Treatments may have longlong--term influence term influence gg
Fungal communities differ in aflatoxin-producing ability, and this influences crop vulnerability to contamination. Atoxigenic
ggand cumulative and cumulative
benefitsbenefitsstrains can be used to reduce aflatoxin-producing ability.
There are many atoxigenicsThere are many atoxigenics
More than one crop More than one crop may benefit from the may benefit from the
li d t ili d t iThere are many atoxigenicsThere are many atoxigenicsSelect safe strains best adapted to cropping systems, ecosystems, and climates.
applied strainapplied strain
Atoxigenic strains can Atoxigenic strains can Atoxigenics are already Atoxigenics are already present on the croppresent on the cropJ t i th f f d i
ggbe applied without be applied without
increasing infectionincreasing infectionand without increasing the overall
www.iita.org
Just increase the frequency of endemic strains and natural interference with contamination.
and without increasing the overall quantity of A. flavus on the crop
and throughout the environment.
How does biocontrol work?How does biocontrol work?
Sporulation on moist soil
3-20
Soilcolonization
Insects
3 20 days
Spores
Wind
30-33 grains m-2
Hyphal network in seed pericarp
www.iita.org
Broadcast @ 10 kg/ha 2-3 weeks before flowering
Inoculum on sorghum grain carrier
Technology development: Technology development: Atoxigenic strain identificationAtoxigenic strain identificationgg
Collection/characterization Toxin assay VCG/DNA characterization
cnx
Unknown 2
cnxnia-D
+
Field
Field
Lab Field efficacytest
Competition assays
Lab
www.iita.org
BB--aflatoxin in stored maize grains from aflatoxin in stored maize grains from untreated and atoxigenic treated plotsuntreated and atoxigenic treated plotsuntreated and atoxigenic treated plotsuntreated and atoxigenic treated plots
Stored Poorly storedLocation Treatment
yAflatoxin
(ppb)Reduction
(%)Aflatoxin
(ppb)Reduction
(%)Control 42 2 408
IbadanControl 42
732,408
96Treated 11* 105**
Control 54 956Ikene
Control 5491
95693
Treated 5* 62**
Z iControl 73
857,561
95Zaria 85 95Treated 11* 343**
MokwaControl 50
862,481
94
www.iita.org
Mokwa 86 94Treated 7* 149**
* P < 0.05, ** P < 0.01
Recovery of released strains from soil Recovery of released strains from soil and grain of control and treated plotsand grain of control and treated plots
90 Soil before inoculation
70
80
sed
s (%
)
Soil at harvestGrain at harvest
50
60
y of
rele
ac
stra
ins
30
40
Rec
over
yto
xige
nic
*Mean of0
10
20R at
www.iita.org
Mean of four sites
0
Control* Treated*
ExEx--ante impact assessment of ante impact assessment of aflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeria
• DALYs saved: 103,000 to 184,000• Cost-effectiveness ratio: 5.1 – 24.8Cost effectiveness ratio: 5.1 24.8 • Benefits are likely to be higher if all
health impacts from aflatoxin exposurehealth impacts from aflatoxin exposure are considered.
www.iita.orgWu & Khlangwiset (2010) Food Additives & Contaminants
ChallengesChallenges
• National regulatory systems for commercial release of bio-pesticidescommercial release of bio pesticides must be addressed for significant impact
• Market for biocontrol product
• The nurturing of local enterprises toThe nurturing of local enterprises to produce and market such biocontrol products is a significant challenge
Partnerships and institutions key for meeting these
www.iita.org
key for meeting these challenges
Building partnerships for Building partnerships for aflatoxin biocontrolaflatoxin biocontrolaflatoxin biocontrolaflatoxin biocontrol
• Registration of the atoxigenic strains as biopesticidesp
• Sensitisation of growers, consumers, regulatory agencies and policymakers b t t ti l f bi t labout potential of biocontrol
• Upscaling and outscaling to wider areas (Nigeria and Kenya AATF MycoRed)Kenya – AATF, MycoRed)
www.iita.org
OutlineOutline
aflasafe™For displacing aflatoxin-producing fungip g p g g
aflasafe™is a mixture of four atoxigenic strains of Aspergillus flavus that occur naturally on the maize crop and field soils in Nigeria. When broadcast in maize fields 2-3 weeks prior to flowering @ 10-20 kg per hectare, the four strains in aflasafe™ compete with strains of Aspergillus flavus that produce large amounts of aflatoxin and in so doing limit the amount of these high aflatoxin producers that become associated with the crop.
Active ingredient: Four Aspergillus flavus strains*……...………… 0.0005% Other ingredients: Sorghum seeds (sterilized colonized) 99 9995%Other ingredients: Sorghum seeds (sterilized, colonized)………..99.9995%Total: ………………………..…….……………..…………………….….. 100%
*Contains a mixture of four strains that cannot produce aflatoxins: La3279, Og0222,
La3304, and Ka16127. A minimum of 3,000 Colony Forming Units are present in each gram of aflasafe™.
KEEP OUT OF REACH OF CHILDREN
THIS IS NOT A FOOD GRAIN
PRECAUTIONARY STATEMENTSCAUTION: Harmful if inhaled. Avoid breathing dust. Causes moderate eye irritation. Avoid contact with eyes, skin or clothing. Prolonged or frequently repeated skin contact may cause allergic reaction in some individuals Wash hands thoroughly with soap and water after
NAFDAC NAFDAC provisionalprovisional
allergic reaction in some individuals. Wash hands thoroughly with soap and water after handling and before eating, drinking, chewing gum, or using tobacco, or using the toilet.
SEE ADDITIONAL PRECAUTIONARY STATEMENTS INSIDE THE CONTAINER
NAFDAC Registration Number:
Manufacturer: IITA, Oyo Road, Ibadan 200001, Nigeria
Phone: 08034035281, 08055055954 Manufacturing Date:
www.iita.org
provisional provisional registration registration
approval letterapproval letter
Fax: INMARSAT: 873761798636 Expiry Date:
Email: [email protected] Batch Number:
NET CONTENTS: 10 kg
10-kg boxes of AflaSafe ready for deployment
www.iita.org
www.iita.orgExplaining aflatoxin and biological
control to farmers in their fields
NAFDAC officials inspecting maize fields treated with AflaSafe
www.iita.org
Farmers treating maize and groundnut fields with AflaSafe
Aflatoxin reduction: Aflatoxin reduction: 80% at harvest80% at harvest
56 to 73% carry56 to 73% carry--over of over of
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inoculum one year after inoculum one year after application application
Different levels of aflatoxin in Different levels of aflatoxin in Afl S f ™ t t d dAfl S f ™ t t d dAflaSafe™ treated and AflaSafe™ treated and
untreated fields at harvestuntreated fields at harvest
94100
100
120
)
Treated
C t l75 73
60
80
field
s (%
) Control
3927
20
40
Farm
ers'
030
<4 <10 <20 >20Nestlé/EU WFP/Nigeria US Unsafe
F
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Nestlé/EU WFP/Nigeria US Unsafe
Maximum allowable aflatoxin level (ng g-1)
Aflatoxin reduction in 4 zones Aflatoxin reduction in 4 zones 4 th ft t i Ni i4 th ft t i Ni i4 months after poor storage in Nigeria4 months after poor storage in Nigeria
800646
85% 82% 99% 95%% reduction in aflatoxin reduction in treated fields over control
Mean
400
600
xin
(ppb
) ControlTreated
646 Mean reduction
90%
200
400
Afla
tox
96
271171
0Birnin Gwari Lere Maigana Pampaida
9614
4917 9
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BB--aflatoxin concentration (ng/g) aflatoxin concentration (ng/g) in groundnut after poor storagein groundnut after poor storagein groundnut after poor storagein groundnut after poor storage
Treatment B aflatoxin* Reduction (%)Treatment B-aflatoxin* Reduction (%)
AflasafeTM 0.3 ± 0.4 96Control 8.2 ± 2.5
*Mean of 4 samples ± SE
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KENYAKENYA
www.iita.org
The S Strain of A. flavus Caused the Kenyan Maize Contamination Episodes that Led to Hundreds of Deaths through Acute Aflatoxicosis
95 CFU/AP Aflatoxin Machakos District
85
(%)
5.90933301 to 1,00041.901001Over 1,000
mg(%)S (%)n(ppb)
75
S st
rain
1 326630 5 t 20.136732 to 195.013701021 to 300 5.90933301 to 1,000
65Makueni District
Matchokos District
Kit i Di t i tposnegposTrend5.577520Overall 1.326630.5 to 2
550 500 1000 1500
Kitui District
0.9320.7410.975Quadratic R2,
0.8970.014
0.2290.415
0.8900.016
Linear R2,Linear P
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Aflatoxin (ppb)0.0680.2590.024Quadratic P
Probst, Njapau, & Cotty. 2007. Applied & Environmental Microbiology 73:2762-2764.
Aflatoxin in maize coAflatoxin in maize co--inoculated inoculated ithith t i it i i t i d ft i d fwith a with a toxigenictoxigenic strain and a few strain and a few
Kenyan atoxigenic strainsKenyan atoxigenic strains
Isolate co inoculated
Aflatoxin B1 (µg g-1) Average reduction
(%)Test 1 Test 2co-inoculated (%)Test 1 Test 2Toxigenic alone 105 109
C6-E 9 19 87C6 E 9 19 87
C8-F 13 21 82
E62-L 8 23 87E62-L 8 23 87
E63-I 12 25 82
R1 N 12 25 83
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R1-N 12 25 83
NRRL-21882 9 27 86
Current status and future Current status and future l f bi t l i Kl f bi t l i Kplans for biocontrol in Kenyaplans for biocontrol in Kenya
• Current status– High-level support from Kenyan
government– Funding from USDA and AATF
KARI: lead Kenyan institution– KARI: lead Kenyan institution – Partnership with IITA/USDA-ARS/AATF– Application for repatriation of strains
submitted• Future plans
– Potential funding: Bill and Melinda Gates FoundationO i i l O 2010 F b 2011– On-station trials: Oct 2010 to Feb 2011
– EUP from PCPB: Jul to Sep 2011– On-farm & safety trials: Oct 2011 to
Feb 2012
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Feb 2012– Apply for full registration with PCPB:
Aug 2012
Steps in aflatoxin biocontrol RSteps in aflatoxin biocontrol R--44--DD1. Strain id and optimization
• Sample collection2.Building partnerships
• Sensitizing stakeholders• Strain characterization
• Atoxigenic strain identification (lab)
Sensitizing stakeholders
• Training of regulators for biopesticide registration
( )
• Genetic and molecular characterization
• Detection and monitoring
• Harmonization of biopesticide regulations
• Experimental Use Permit or• Detection and monitoring methods
• On-station field efficacy
• Experimental Use Permit or provisional registration
• On-farm efficacy testing• Optimizing treatment
protocols
• Cost-effective formulations
• Cost-effectiveness analysis
• Farmer-market linkages in l h i i l di
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• Create African strain libraryvalue chain, including catalyzing farmer groups
Steps for promoting biocontrol Steps for promoting biocontrol for wide adoptionfor wide adoptionfor wide adoptionfor wide adoption
3.Commercialization 4.Capacity developmentBill d M li d G t F d ti
• IP issues• Farmer training in integrated
aflatoxin management
Bill and Melinda Gates FoundationDoreo Partners
• Identification of potential manufacturer
• Full registration
• Industry and regulatory agencies for aflatoxin monitoringg
• Business plan
• Manufacturing plant
g
• Students and national program staff in product development deployment
• Product stewardship
• Technical backstopping
development, deployment and monitoring
• Regulatory agencies and
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• Monitoring and evaluation commercial manufacturer for quality control
Focus countries and Focus countries and t f d l tt f d l tstages of developmentstages of development
Country Strain identification Partnerships
Commercial-ization
Capacity development
Nigeria
Senegal
Burkina FasoBurkina Faso
Ghana
Cote d’Ivoire
Kenya
Malawi
Mozambique
Tanzania
Ethiopia
Mali
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Mali
Yet to startPartially startedCompleted
Partnerships are Key:Partnerships are Key:Ni iNi iNigeriaNigeria
• USDA-ARS, Universities of Ibadan d B T h l d l t
• Millennium Village Program: and Bonn: Technology development
• GTZ/AATF/EU/BMGF: Funds• AATF: Intellectual propriety• USDA-FAS: Registration
Testing/awareness
• Nestle: Market
• Animal Care: MarketUSDA FAS: Registration• NAFDAC: Regulation, monitoring• Ag Dev Program (extension):
Testing/promotion/awareness
• Livestock Feed Plc: Market
• UNIDO: Promotion/investor forum
• Nigerian Export Promotion Council: • Maize Association of Nigeria:
Promotion/awareness• Ministry of Health:
Promotion/awareness
Promotion/investor forum
• NEPAD Business Group: Promotion/investor forum
• Nigerian Mycotoxin Society: Awareness
• Commercial Ag Development Program: Testing/awareness
• Nigerian Economic Summit Group: Promotion/investor forum
• Bill and Melinda Gates Foundation:
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Program: Testing/awareness Promotion/commercialization
CommercializationProduction Room Atoxigenic Strain Manufacturing FacilityArizona Cotton Research & Protection Council
www.iita.org
Summary• Aflatoxins in food and feed pervasive
in Africa
y
in Africa• Biological control in conjunction with
other management practices can dramatically reduce aflatoxin contamination
• Large-scale manufacturing and commercialization of biocontrol agents a prerequisite for adoptionagents a prerequisite for adoption.
• Aflatoxin mitigation plan developed• Linkage being developed with other
i ti f d torganizations for downstream dissemination activities for biocontrol
• Support and partnership needed from national governments
Africa-wide initiativeon Aflatoxin biocontrol could i h l h d i f
www.iita.org
from national governments, donors/investors, private food sector, farmer groups, and regulators
improve health and income of African people
IITA Campus, Ibadan
www.iita.org
Aflasafe Strategic Roadmap Optiong p pImproving the Health and Securing the Income of Nigeria’s Small Holder Farmers
Creating Companies | Creating Wealth | Creating Jobs
October 2010
CONFIDENTIAL
Outline
Sector Overview
Strategic Road Map
Overview maize sector in Nigeria
Integration of strategic efforts into a strategic roadmap
2
S t O iSector Overview
3
Maize production in Nigeria has grown dramatically with a sevenfold increase from 1960-2008. Growth has been driven primarily by increased hectarage, with recent increase driven by improved yields.
Maize Production **Measure: Millions of Metric Tons
Population****Measure: Millions of People
145
Young population with medianage of 19 years old.Urban population currently approximately 50% of population
Key Takeaways
4.2% 2.6%
DriversGrowth
1961 1970 1980 2000 2008
50 5275
125 145
1961 1970 1980 2000 2008
growing at 4.4% annually.Rural population currently approximately 50% of population growing at 1.3% annually.
A h d i fMaize consumed as staple food in NorthernArea Harvested ** Measure : Millions of Hectares
1 38 1 45
3.163.85
Area harvested growing at a faster rate than rural population.Average area cultivated by individual farmers has increased.2.2%
Maize consumed as staple food in Northern Nigeria, accounting for 59% of energy intake.*
1.38 1.450.465
1961 1970 1980 2000 2008
Crop Yield**Measure : Metric Tons per Hectares
Yields have significantly increased primarily due to increased fertilizer
tili ti d d ti f i dp
0.8 1 1.3 1.32
2%
*Akinleye S, J Soc Sci, (2009). Food Demand in Northern Nigeria: Implications for Food Policy18(3): 209-215
utilization and adoption of improved seeds.
4
1961 1970 1980 2000 2008
g p y ( )** FAO**** World Bank
Majority of maize in Nigeria is consumed at farm level, with the balance consumed by relatively concentrated industry sectors, primarily located in Southern Nigeria.
Industry LevelMarket Level Farm Level
Percent of Famer Production Sold vs. Consumed*Measure: %
Sales to Players from Markets*Measure: %
Sales to Industry Players from Markets*Measure: %
30%70%Consumed by Farmer
Sold inMarket
40% 60%
10%40%
20%
Consumer
Industrial Poultry
Branded Maize Flour
Breweries
30%Other
Average farmer produces 3 – 4 MT on 2Ha.Consumes 1.5 – 2.5 MT annually.
Sales to Regions from Markets*Measure: %
Poultry industry dominant consumer of grains amongst industry players.60% f lt i d t l di t t
15%
35%NorthernNigeria
Export
60% of poultry industry sales are direct to poultry farmers with the balance to a concentrated group of feed millers.Branded maize flour highly concentrated with Grand Cereals accounting for over 60% of the market.B i l t t d ith NBC
50%Southern Nigeria
Breweries also concentrated with NBC and Guinness over 60% of the market.
* Doreo primary research
5
Doreo primary research
Aflasafe would primarily be utilized in the months of July and August during the same period as urea fertilizer.
Land PrepLand Prep
Seasonal Maize Calendar*Measure: Months
Planting
NPK
Planting
Fertilizer
Aflasafe Aflasafe
Urea
DecNov Jan Feb Mar Apr May Jun Jul Aug OctSept
HarvestHarvest Harvest
* Doreo primary research
6
Doreo primary research
D l St t i R d MDevelop a Strategic Road Map
7
Analyzed five strategic efforts that integrate into a strategic road map
DescriptionStrategic Efforts
Leverage current market incentive structures for increased farmer profitability.
DescriptionStrategic Efforts
Market Forces
Leverage influence of regulatory authorities to drive market behavior (e.g., adoption of a FDA Action Levels Model; i.e., 20ppb of aflatoxin – for humans, immature animals and all dairy).
Policy
Develop public/private sector direct incentive structures for farmers to utilize Aflasafe (e.g., product bundling – discount of fertilizer with purchase of Aflasafe).
Bundle
A i l t th h lth i k f fl t i t i ti iHealth
Develop model analogous to disease immunization programs Provide
Aggressively promote the health risks of aflatoxin to incentivize farmers to utilize Aflasafe to protect their families’ health.
HealthAwareness
(e.g. polio vaccination) where product is provided for free or spread directly on farms free of charge.
Free
88
Bundle effort - Urea fertilizer is the most appropriate incentive for Aflasafe
Effective Incentive
Not appropriate, demand low Seed
AnalysisOptionDriver
Sample 2KG Bag of Combined Aflasafe and Urea
Incentive
Characteristics1. Agro input 2. High farmer demand 3 Utilized at similar
Herbicide
Insecticide
Not appropriate, not used at the same time
Not appropriate, demand low Potential benefit as insects are key carrier of A flavus3. Utilized at similar
time and in similar manner. Fertilizer Best alternative, Urea fertilizer
High demandUsed at the same timeCan be packaged with AflasafeCustomarily dispersed the same
carrier of A. flavus
Customarily dispersed the same way as AflasafeIncreases the volume of Aflasafe-free grainsCustomarily utilized at approximately the same rate as Aflasafe 10kg/haAflasafe 10kg/ha In donor-supported model, profit from fertilizer sales will lower amount of support requiredEstimated cost saving of 30%
9
Potential Strategic Road Map: Four Focus Areas
Options 1: Bundle Generate Supply of Cost-Effective Low
Aflatoxin Grains Option 2: Provide Free
1
Enforce Regulatory Policy
Policy: Build
regulators’
Policy: Develop
regulatory Policy: Phased-in regulatory enforcement mechanism
2
Regulatory Policy
Enable Market
regulators capacity
regulatory framework
Market Forces3
Enable Market Forces to Drive Sustainability
Market Forces
Health Awareness: Farmer Focus4Promote Health
Awareness to Value Chain Actors
Health Awareness: Farmer Focus
Health Awareness: Industry Focus Health Awareness: End Consumer
10
1Year
2 3 4 5
Appendix: Firm OverviewAppendix: Firm OverviewCreating Companies | Creating Wealth | Creating Jobs
11
Creating Companies | Creating Wealth | Creating Jobs
Our Strategy At Doreo Partners, we build on the core philosophy of
General Georges Doriot, the pioneer of modern Venture g , p
Capital, that is to help great people build great
companies.
Our Team… Creating Value We bring deep sector expertise and operational
excellence to the companies we back. We have
structured our investment approach and organization tostructured our investment approach and organization to
provide entrepreneurs and their management teams with
access to the combined resources of the entire firm and
our advisors In addition Doreo provides consultingour advisors. In addition, Doreo provides consulting
services to select clients in the agriculture and
development sectors.
CONFIDENTIAL 1212
Creating Companies | Creating Wealth | Creating Jobs
Our team focuses on providing effective strategic
guidance, hands-on leadership, deep industry expertise Creating Companies
and access to capital to assist entrepreneurs and their
teams to become market-leading companies.
Creating WealthOur investments in high-growthh industries with limited
threat from imports ensures superior returns to our
investors. We do not limit our potential; we invest
Creating Jobs
investors. We do not limit our potential; we invest
across the agriculture value chain in Africa.
Our industry focus enables us to be a significant Creating Jobs
contributor to the reduction of Nigeria’s spiraling
unemployment rate and associated social unrest, by
providing a significant number of semi-skilled to lower-
1313
skilled job opportunities.
Our TeamKola Masha MBA (Honors) Harvard Titi Odunfa MBA HarvardKola MashaManaging Director
Over 10 years leadership experience in Venture Capital, Business Over 10 years leadership experience in Investment Management,
MBA (Honors) Harvard
MS Egr. (Highest Distinction) Mass. Inst, of Tech. - MIT
Titi OdunfaAdvisory Partner
MBA Harvard
y p p p ,Development, Corporate Finance, Operations and Marketing acrossEurope, North America, Asia and Africa. Experience with GeneralElectric, Abiomed , Notore and Doreo Partners. Kola brings deepexperience in building businesses particularly in the Agricultureindustry as a former Managing Director/CEO of Notore Foods a
y p p g ,Accounting and Consulting, across North America and Africa.Experience with Goldman Sachs, Zenith Bank, PWC, KPMG andSankoré. Titi brings deep experience in Investment Managementboth Globally and Africa specific, with her experience managing over$1 Billion USD for organization including Goldman Sachs and Zenithindustry as a former Managing Director/CEO of Notore Foods, a
member of the Notore Group, one of Sub Saharan Africa's largestagro allied companies.
$1 Billion USD for organization including Goldman Sachs and ZenithBank, a leading Nigerian Bank.
Ladell Robbins MBA Harvard Tope St. Mathew Daniels MS Egr. Stanford
Over 10 years leadership experience in Investment Banking, RealEstate, Corporate Strategy, Business Development, across NorthAmerica, Europe and Africa. Experience with JP Morgan, Credit
Over 10 years leadership experience in Engineering, Operations,Consulting and Venture Capital across North America and Africa.Experience with McKinsey & Company, Palladium Partners and IBM.
Advisory Partner Advisory Partner
, p p g ,Suisse, Alcatel - Lucent, Renaissance Group and Bluesky Partners.Ladell brings deep experience in Emerging Market/AfricanInvestment Banking as a former Director of Investment banking withthe Renaissance Group, a leading global emerging marketInvestment Bank
p y p y,Tope brings deep experience in Strategic thinking both Globally andAfrica specific, as a former Associate Partner at McKinsey &Company leading their activity in the Nigerian Market.
14
Investment Bank.
A di B dl Eff t Fi i lAppendix: Bundle Effort Financials
15
Bundle effort – Fertilizer input support system significantly reduces the level of supportneeded to make the product successful
Utilize, lower cost, more effective input support system.Provide manufacturer discounted sorghum, urea and inoculum.Estimated reduction in cost to donor/government of 30%.
D t l k f d d
AnalysisPartnerDriver
Partner Incentive
Manufacturing and Distribution
Partner More sustainable as it enables the development of effective distribution systems and ensures farmers begin to appreciate value of Aflasafe.In addition, promotes the use of fertilizer to further improve the incomes and health of farmers.
Due to lack of demand of Aflasafe, partner would need an incentive to invest in equipment and distribution channel for combined product.
Comparison of Input Subsidy Support vs. Purchase Support * Measure : Naira per 1kg of Aflasafecombined product.
Direct Sales Revenue 125Operating Cost
Purchase Support 195Operating Cost
Fertilizer Incentive System (1kg Aflasafe + 1 kg Urea)
Total Support: N130/kg
Purchase Support System(1kg Aflasafe ONLY)
Total Support: N195/kg
Measure : Naira per 1kg of Aflasafe
Operating CostSorghum RM Cost (Support :N50) 0Urea Cost (Support: N70) 10Inoculum Cost (Support: N10) 0Production Cost 40Packaging 10
Operating CostSorghum RM Cost 50Inoculum Cost 10Production Cost 40
Packaging 10
Target support to specific partners (e.g., govt , donors etc.)
g gTotal Operating Cost 60
SG&A 30
EBITDA 35
Packaging 10Total Operating Cost 110
SG&A 30
EBITDA 55
16
EBITDA Margin 28%EBITDA 55EBITDA Margin 28%*Adapted from IITA analysis
Contact Details
Lagos3B Baajiki Close
Lekki Phase I
London11 Mount Pleasant
London, England
Lagos, Nigeria SE27 9PU
Kola Masha Managing DirectorManaging Director
+234-(0)-805-5000-350
www doreopartners comwww.doreopartners.com
17
Structure of Pull Mechanism Pros Cons
fl f d l llh ld f f f• Easiest way to clearly • Distribution difficult to do
1. Buy Aflasafe directly, give to smallholder farmers for free OR highly subsidize and bundle with other inputs such as fertilizer
incentivize manufacturing
and verify
• No monetary incentive for farmer (fully reliant on health education effort)
• Creates precedent of Manufacturer Purchase Subsidy
Distributor (Government? Farmer p
giving Aflasafe away for free, distorting market
2. Pay for performance: survey maize fields and reward contractor (& farmer?) for prevalence of Aflasafe strains OR
• Ensures money is provided for successful adoption by farmers,
• Need for costly surveys, both baseline and results, with results potentially
Subsidy Bundle?)
contractor (& farmer?) for prevalence of Aflasafe strains OR reduction in overall aflatoxin contamination in an area
aligning subsidy with ultimate objective
questioned
• As above precedent of Aflasafe given free/below cost is established
• No clear partner to takeManufacturer Distribution
Contractor FarmerSurvey of Aflasafe
Prevalence
Subsidy to Contractor (&
Farmer?) No clear partner to take on contracting role
3. Buy aflatoxin‐free ag products (like maize), creating a ‘premium’ value‐chain
• Establishes precedentfor farmers buying Aflasafe
C t
• Requires careful coordination among a number of additional players• Creates new
commodity category of aflatoxin‐free maize with price premium
• Introduces aflatoxintesting at many points
p y
• More difficult to explain to manufacturer when trying to incentivize investment
• Involves all the tricky
Manufacturer Distributor Farmer Aggregator Grain Reserve
Purchase Subsidy
School Feeding Program
testing at many points of the value chain
Involves all the tricky aspects of a maize purchasing subsidy
Other ideas?