Fortified soymilk for improved health in rural Orissa

by Hart Jansson | Jun 06, 2007
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Location

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Project Street Address

Project City

Project Province/State

Project Postal/Zip Code

Project Country

n/a

Your idea

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Focus of activity

Product/procedure

Year the initiative began (yyyy)

2006

Positioning of your initiative on the mosaic diagram

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Which of these barriers is the primary focus of your work?

Health care not consumer friendly

Which of the principles is the primary focus of your work?

Democratize access

If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic:

As our project is one that provides nutrition to those populations who are severely malnourished (typically groups where malnutrition affects more than 50% of the population), the barrier chosen was 'health care not consumer friendly'. A more accurate one, that may apply to any nutrition-oriented project, or that provides delievry of basic services, would be 'lack of basic health services or nutrition'.

Name Your Project

Fortified soymilk for improved health in rural Orissa

Describe Your Idea

Innovation

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Define the innovation

There are currently 25 VitaGoats in various African and Asian countries, serving an estimated total 10,00 beneficiaries. A new, highly scalable project has started in Orissa, with 20 VitaGoats to be installed within 2 years, to serve 15,000 students. Orissa has among the highest rates of malnutrition in the world, at over 50%, with rural areas even worse. The initial beneficiaries of this new project are primary school children. The children’s diet consists almost exclusively of rice and dhal (lentils, occasionally supplemented by potatoes and tomatoes); they receive no meat, eggs or milk so they are particularly deficient in protein and micro-nutrients. The addition of fortified soymilk, which provides a complete protein profile (complete and properly proportioned amino acid profile) like meat or dairy milk, provides a much-needed increase in protein and critical micronutrients, and will therefore yield a marked and measurable increase in health and development. Soy foods are the only complete protein not derived from animal products (as per WHO), also the least expensive and most environmentally friendly). This project will continue into the long-term because it is leveraged and self-sustaining: it uses ‘mini-credit’ financing from the Microfinance arm of the Partner NGO, BISWA, to finance the majority of the capital costs of the equipment and related apparatus. This credit, the salaries of the operators and the cost of the soybeans, sugar, etc. is paid for from revenue earned from the existing school-feeding program budget.

Most of South Asia has the following conditions:
- rural villages that have serious malnutrition,
- lack of (or unreliable) electricity and no running water,
- demand for jobs for unskilled women,
- school feeding programs with small budgets,
- micro or mini-credit available from NGOs or govt agencies

These are ideal conditions for deployment of thousands of VitaGoats to improve the health millions of beneficiaries.

Context for Disruption:

Providing equipment (VitaGoats) that can process large quantities of high-protein food, in the form of soymilk, in a hygienic manner without the need for electricity or running water, the project enables sustainable neighborhood production of this food for at least 750 beneficiaries per VitaGoat (primarily students 6-10) . Addition of low-cost soluble micro-nutrient formulations will, together with the increased protein and carbohydrates, yield improved health in the form of a marked decrease in disease and improved physical and mental development. The project is innovative in four key ways:

I. It uses a relatively new, but proven technology to efficiently make complete protein in the form of soymilk. Soy foods are the only complete protein not derived from animal products (as per WHO). The soymilk is made at a cost of Rs 7.5 (15 cents) / L, substantially lower than that of other available complete protein foods (lowest cost alternative complete protein available is low-grade – i.e., likely diluted and possibly unhygienic – cow’s milk at 11-13 Rs. / L; this cost does not include delivery).

II. It is leveraged and self-sustaining: it uses ‘mini-credit’ financing from the Microfinance arm of the Primary Partner, BISWA, to finance the majority of the capital costs of the equipment and related apparatus. This credit, the salaries of the operators and the cost of the soybeans, sugar, etc. is paid for from revenue earned from the existing school-feeding program budget (less than 5 cents / student /day).

III. It places the food-processing equipment in small rural non-electrified villages, close to schools, such that delivery is low-cost and quick (bicycle), and such that some of the least advantaged women living in these villages can earn extra income.

IV. It enables a simple, reliable, hygienic mechanism to deliver micronutrients to the beneficiaries on 6 days-a-week basis. Few programs exist in Africa or rural Asia to achieve this aim at the present time.

Delivery Model

The VitaGoat is currently manufactured in Faridibad, India. The VitaGoat systems are then bought through BISWA, the primary partner of Malnutrition Matters, and set up in the various rural villages where they are run by women's Self Help Groups (SHG's). Training is provided by the NGO staff (BISWA). The soymilk produced at each site is put into milk cans for delivery by bicycle. The delivery radius is about 10km, each VitaGoat serves about 40 one-room schools. The fully-loaded cost of producing and delivering 1 L of soymilk, containing about 35g of protein is about Rs. 7.5 (about $0.16). Mechanisms currently in place include one pilot site and many SHG's already established in the villages, which are monitored and supported by our partner BISWA. Market penetration is very low given that we are in the start-up phase of the project, however, the initial target is 15,000 primary school children out of a total of 2.8 million in Orissa alone.

The potential for additional systems and greater market penetration in Orissa, other states in India and in other countries, is very high, as per 'context for disruption' above. We are in discussions with numerous additonal NGOs and Micro-Finance Institutions to deploy this program in additional areas in India and outher countries in South Asia and Latin America.

Key Operational Partnerships

Partnerships have been established with various NGOs in Africa and Asia to establish and support training centres, in order to economically support VitaGoat installations in many countries. A high-quality manfacturer in India produces the VitaGoats, with other technology transfers underway to China and Latin America. BISWA is the primary NGO partner in Orissa. BISWA is the largest NGO in western Orissa and has a substantial presence in three states. It has two principal divisions: its NGO division, and its Microfinance division. It will continue support throughout the project via financial as well as human resources. The Microfinance Division will provide 75% of capital required on a ‘mini-loan’ basis to the MicroEnterprise Unit of BISWA. The ownership of the VitaGoats will be transferred to each set of SHGs (that will collectively own and operate each VitaGoat) when production and revenue are stabilized to enable a better than break-even performance.

Large, efficient NGOs are critical to this initiative as they provide the bulk of the financial leverage (mini-credit) either directly or via MFIs, and the bulk of the human resources needed to carry out such projects. Start-up funds are required for such projects and key donors are:

- Alpro (N.V.), corporate donor
- Donner Canadian Foundation,
- World Bank (Development Marketplace).

Other donors will likely also paly a role in epxansion to other countries.

Impact

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Financial Model

The model described here shows the costs required for implementation of a program with 10 VitaGoats, with operations for two years (the project is sustainable on an indefinite basis, given the income earned). With micro-credit available for the capital costs, and income avilable from school-feeding budgets, only about 10% of the entire budget is required for start-up costs.

$26,000 for 10 VitaGoats (2/3 of the capital included here, as the remaining 1/3 of the
principal will be repaid out of earned income in year 3; includes $600 per VitaGoat
for taxes and custom fees)
$ 3,500 2/3 of shipping
$ 5,500 2/3 of supplies for first month's operation (soybeans, sugar, etc)

(above costs covered by micro-credit, credit is repaid through earned income)

$4,000 start-up costs, $400 per VitaGoat for site preparation, tables, buckets, utensils
$3,000 training costs
$6,000 supervisory costs

Operations Costs (paid out of earned income)
$18,000 labour costs (6 people per VitaGoat at Rs 6,000 / month)
$78,000 soybeans
$11,000 sugar
$ 4,000 micro-nutrients
$ 2,000 misc. supplies
$ 8,000 interest payable

TOTAL: $169,000

Earned Income:
$152,000 800 students / VitaGoat @ Rs 1.5 / day; 23 days /month

Net Income:

$137,000 (10% contingency factor for profit / lower revenue due to various reasons)

Therefore, net income covers more than 80% of the project costs. Such a project would therefore require about $20,000 per year of donor funds or in-kind contributions (e.g., soybeans). If measured over a 3-year term, then net income would cover 100% of the project costs, however most NGOs would have difficulty financing all costs for such a project over 3 years.

What is your annual operating budget?

85k

What are your current sources of revenue? (please list any sources that are foundation grants)

World Bank Development Marketplace

Effectiveness

The measurable impact to date globally has been providing supplementary feeding for an estimated 10,000 beneficiaries, including 1,000 in India, and the creation of about 100 jobs, primarily for the disadvantaged. The Ministry of Women and Child Development in Orissa has deemed soymilk acceptable as food for school children.

Which element of the program proved itself most effective?

Improving the health of beneficiaries by providing a meal for students in schools or institutional residents (e.g., hospitals, orphanages).

Number of clients in the last year?

10,000 world-wide

What is the potential demand?

We will first examine the situation in India: these projects can be readily scaled from a section of Western Orissa (20 machines & 15k beneficiaries), to all of Western Orissa (50-80 machines & 40-60k beneficiaries), and all of Orissa (250-400 machines & 200 to 300k beneficiaries). Even at this scale, only 10% of the entire potential beneficiary population would be served. This scalability is quite possible because VitaGoat-based school-feeding projects are self-sustaining and can be self-financed, as well as providing substantial benefits to the recipients and workers. The projects could also expand to nearby poor provinces of West Bengal, Bihar and Chhattisgarh, especially given the presence of BISWA in these areas. Great opportunities exist for replication by NGOs in most of rural India and any countries where dense population, school feeding programs, protein deficiency, mini-credit and low-cost labor exist(much of South, Central and SE Asia).

For North Korea, 5 VitaGoats are currently operate, serving about 3,000 beneficiaries, with 5 more systems enroute. This program is expected to quadruple in the next two years, to serve 24,000 beneficiaries.

The potential demand in just these two countries over the next few years is dozens of VitaGoats to serve tens of thousands of beneficiaries. Demand in other countries is not projected to be as robust in the near-term, however the VitaGoat population in Africa (currently about 15), is expected to double in the next year.

Projects are starting Latin America, and a technology transfer to build VitaGoat machines in that region is under discussion.

Scaling up Strategy

To provide context for the 'scaling up ' strategy, we will first review the outputs expected of the Orissa project:

A) To increase awareness of benefits of micronutrient consumption and protein ‘sufficiency’ among school principals, teachers in 10 districts with a catchment of 50,000 students; to increase awareness of the suitability of locally produced soy products among NGOs in India; among Ministry of Women and Child Development staff, politicians (e.g., PRI leaders), school officials and other leaders in society.
B) outcomes specific to health and nutrition: 200 ml of fortified soymilk served to at least 15,000 by the end of the first 3 years, with a decrease in malnutrition in the beneficiary population, due to increase in protein, caloric and micronutrient intake, measured by decreased illness, improved growth and improved academic performance.
C) Publication of an 18-month study of 800 beneficiaries and 800 control group students which will demonstrate the significant health benefit of this program. This publication is expected to stimulate the scaling up of this project with primarily local financing, throughout India and SE Asia.
D) Substantial increase in income for 200 families.

The priority for the next 3 years will be on empowering numerous partners to implement programs with the VitaGoat technology, eventually without the need for assistance from Malnutrition Matters, as follows:

- development of additional NGO partnerships in India and other countries,
- facilitating high-quality manufacture of the VitaGoats by additional manufacturers,
- production of collateral material, including videos, which will outline the benefits and sustainability of such a program,
- and establishment and support of additional centres of expertise capable of providing installation, training and support services for the SHGs operating the soymilk equipment.

Stage of the initiative:

Expansion plan:

- establish additional NGO partnerships with capable, mature organizations in SE Asia, South Asia, Africa and Latin America; focus on those NGOs with experience and capability with micro-enterprise and projects which have a high probability of being sustainable
- also seek out entrepreneurial partners or 'social enterpreneurs' who can build or add to sustainable businesses with the VitaGoat
- establish linakges with MFIs in these areas to finance required capital costs
- transfer the technology required for manufacturing to additional manufacturers to provide diversity of supply and lower cost VitaGoats and new options and technologies
- continue to develop innovative food technology solutions which can operate in rural areas and/or provide new capabilities for Self-Help Groups or entrepreneurs; current innovations related to the VitaGoat that will soon undergo field trials are the Fruit and Vegetable Dryer (a cabinet that provides 35 sq m of drying space, runs on passive solar and/or steam from the VitaGoat boiler through a car radiator to act as a heat exchanger), a Canning System (to preserve quantities of processed food in sterile jars) and a Steam Engine (produces 3 kw of continuous power with steam from a reinforced boiler)
- hire additional key staff as required, with a view to maintaining very low operating costs; continue to rely on local partners for primary implementation and monitoring resources
- identify additional donors with compatible objectives

Origin of the Initiative

This innovation originated with the design of the first 'cottage-industry' soymilk machine in the late 80's. The first project to deploy these 'SoyCows' in the developing world,was carried out in India from 1989 to 1992. These early systems, which require electricity and running water, were also sold commercially in the 1990's primarily in the former Soviet-bloc countries (a total of over 1,000 SoyCows). Two of the executives involved with the company that originated the SoyCow, in 2000 to formed Malnutrition Matters to make this innovative technology widely available to the developing world. In 2004, the 'VitaGoat' model was designed, specifically for rural villages that did not have electricity. After a predictably slow 'start-up' phase, more than 20 VitaGoats have been installed in 13 countries, and demand is accelerating with more than 30 currently on order. Innovations continue.

This Entry is about (Issues)

Sustainability

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What are your two main challenges to finance the growth of your initiative

The main challenge is to find suitable sites or projects for the VitaGoat which will be successful both in terms of a large numer of beneficiaries and sustainability. Some larger NGOs do not have the entrepreneurial attitude required to properly supervise a VitaGoat-based project. There are many smaller, potentially worthy sites that have little or no experience with micro-enterprise and untested management capability. Identifying mature, capable NGO partners willing to finance and/or properly supervise pilot projects is a challenge. The proper niche for the VitaGoat is a community-oriented micro-enterprise intiative. When NGOs look at it as merely a food-provider, and not as a sustainable endeavor, then funding issues often arise.

Finding MFIs which are eager to finance most, if not all, of the capital cost of the VitaGoat systems is difficult. The VitaGoats, with a unit cost of about $3,300 are efficient and potentially profitable, but require more financing than a typical micro-loan.

Additional capacity-building funds, in the amount of $50,000- 80,000 per year, would be sufficient to materially increase the scale of operation and the number of beneficiaries.

How did you hear about this contest and what is your main incentive to participate?

Via the World Bank Development Marketplace (Malnutrition Matters was one of the 22 winners in 2007). Primary motivation to participate is to increase exposure among the 'social enterprise' community, to identify potential partners and garner feedback and suggestions.

The Story

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Do you have an annual financial statement?

Yes, Malnutrition Matters is a registered non-profit corporation in Canada.

Do you currently have an annual financial statement that tracks profit/loss?

$50,000 required for the next 12 months, additional to current funding, to ensure stability and enhance scaling. $350,000 is the total funding projected for year 5. The objective of Malnutrition Matters is to empower partners to implement and replicate projects with little or no direct involvement from Malnutrition Matters.

Please describe the amount (and/or type) of funding you need to implement your initiative, at year 1 and at year 5.

This field has not been completed