Can Cassava Create Wealth in Local Communities?
For the past year I have been working with Universal Industries helping them understand the cassava value chain in the Southern Region of Malawi. Universal are on course to become the first processors of High Quality Cassava Flour (HQCF) in the region and to meet their processing requirements they will need to purchase 5MT of raw cassava per day for around 7 months of the year.
Universal have a central priority of making the necessary margins on the HQCF product line but they also understand the need to generate wealth in local communities.
To secure the required quantities and quality of raw cassava, Universal are buying cassava from commercial estates, the existing informal trading networks, but also from smallholder farmers.
Universal have experience in buying produce from smallholders, they already do this for potatoes through the INGO Concern Universal. Although it has been a significant process, Universal have built a partnership that is beginning to show success and it has built their confidence in taking the risk of working directly with smallholders.
I think the reason why Universal is achieving success, and progressing much further than other agro-processors in Malawi, in terms of purchasing from smallholders, is their approach to the task. Universal have understood a few critical elements of not only engaging with smallholders, but using an NGO as a conduit by which to reach these smallholders. These elements were covered the smallholder engagement plan produced by BIF to assist Universal and include:
- Time period of engagement. The work of Universal with Concern Universal is now in its 5 year. Only with a continuous time period of engagement can the NGO hope to pull out and the private company take over the full relationship with the smallholder.
- Communication. Communication between all parties is extremely important; it helps instil trust on the part of the farmers and helps improve the efficiency of the relationship between the company and the NGO.
- Management. Someone has to drive the engagement process with both the facilitator NGO and the farmers themselves. Universal are looking to employ an ‘out-grower manager’ to fulfil this role and to ensure the key activities and meetings take place to maintain the partnership.
- Building capacity. Rural subsistence farmers tend to have low levels of literacy and little or no business understanding. It is the role of the NGO, with input from Universal, to try and build this capacity with key members of the farming community.
- Pricing. Pricing is a key element for all parties involved in a company-farmer buying relationship. I think Universal have made it work by making sure their priorities are made clear from the onset. Under their potato programme they offer quality specifications that deliver premiums to farmer when met. Universal plan to follow a similar format for purchasing cassava.
Under the HQCF smallholder buying programme, Universal are initiating partnerships with three NGO’s to help facilitate their relationship with smallholder producers. The HQCF factory is nearly completed at which point purchasing will start. Time will tell if Universal have built partnerships that will enable them to secure the supply they need from smallholders.