Pran Agro Business Limited: Developing a cassava supply chain
This venture aims to introduce cassava cultivation to women producing ginger and turmeric in the Chittagong Hill Tracts, in order to create an abundant and high quality supply of glucose to produce a range of processed foods. PRAN plans to deliver training, sees and direct support to women farmers, and then collect and purchase the cassava through a local Hub (Krishi Hub).
The inclusive business initiative
PRAN is the established brand of agri-products produced by PABL, a large agro-processing, food, beverage, dairy and culinary company and a subsidiary of the PRAN-RFL Group. With a high demand for glucose in the market and local production of sugar being less than one-tenth of annual demand (Financial Express BD 2010), this venture aims to increase the PABL’s glucose production, reducing the need to import liquid glucose. With one glucose production factory already established at Habigang and another under construction, PRAN’s long-term aim is to source all its raw materials and finished products within Bangladesh.
This project will integrate glucose into the value chain and sell it through its existing Agri-product brand PRAN. In this model, PABL collects the raw cassava through the Krishi hub, which brings together thousands of contract farmers. With training, inputs and support from PRAN, these farmers will produce cassava toPRAN standards. PRAN will then collect the final product directly from the farmers and send it to the factory through other employees connected to the Krishi Hub. The Krishi Hub model has proved robust with dairy, fruit and other vegetables and can facilitate the introduction of cassava into PRAN’s value chain. This will ensure sufficient raw materials for PABL’s glucose production, while at the same time helping women in the Chittagong Hill Tracts diversify their product range and increase their incomes.
As one of the largest agro-food producers in Bangladesh, PRAN’s factories generate significant demand for glucose to manufacture its branded food products. The key commercial incentive driving this venture is, therefore, to generate a sufficient supply of high quality glucose, at a steady price, for use in its own products. The use of cassava will reduce costs of glucose production as compared with local alternatives like potato or corn, since it is not a staple food in Bangladesh and can grow on lands unsuitable for other crops. Cassava is not a staple food in Bangladesh and has not been locally grown for over twenty years. Recently however, it has generated new interest because of its high sugar content and its ability to grow easily on harsh soil and with little investment from farmers. Given the shortage of sugar in the form of dextrose or glucose (an essential ingredient for many processed foods such as juice, biscuits, jams etc) in Bangladesh, PRAN has traditionally imported most of the glucose it requires from abroad.
By supporting local women farmers diversify into cassava production, PRAN aims to ensure an abundant supply of glucose at an affordable price and high quality, which will feed into the production and sales of all its glucose-based processed foods.
By providing rural women with skills, improved infrastructure, increased awareness and a ready market for their cassava crops, PRAN aims to increase the livelihood opportunities and incomes of these farmers. The company estimates that the venture will initially benefit four hundred and thirty two poor farmers, with a view to quick scale-up to other Krishi Hubs. In addition to increased incomes from cultivable land, PRAN projects that the initiative will also benefit individual incomes within the local economy, which will in turn fund local infrastructure, health, improved school attendance and other associated benefits.
Innovation and scale
Cassava is easily grown and has high yield and profit potential at both ends of the value chain. It can be grown alongside ginger and turmeric, thus allowing the women farmers to diversify into more profitable products. A further benefit of the cassava-focussed support is that it will be possible to provide support for ginger and turmeric product improvements as well.
For business viability /break, scalability of production is important. Therefore, following successful feasibility trials and first year’s growth, we would quickly be looking to increase the number of growers exponentially.
Objectives of Facility engagement (December 2012)
Support from the Business Innovation Facility is primarily aimed:
- Undertaking a feasibility study to scope out the potential for growing cassava at a large enough scale for the glucose needed by PRAN;
- Designing an efficient supply chain;
- Developing a contract farming system that engages farmers and cooperatives;
- Delivering technical training in cassava cultivation, seeds, preservation and marketing for farmers.
The company estimates that 432 poor farmers are likely to benefit, with a view to rapidly scaling up to other Krishi Hubs.