Malo Traders: Making "hungry farmers" an oxymoron by increasing incomes of farmers and fortifying their rice

Malo Traders: Making "hungry farmers" an oxymoron by increasing incomes of farmers and fortifying their rice

Mali
Organization type: 
for profit
Budget: 
$10,000 - $50,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

In 2009, Mali wasted enough rice to feed 580K people (4% of its population) for an entire year due to the lack of proper storage and processing facilities. In a country where a child dies from malnutrition every 10 minutes and 4% of its GDP (World Bank) is lost due to malnutrition, such waste is unconscionable. This challenge presents a ripe opportunity for lasting social and economic change as well as innovation.

Our mission is to fight poverty and malnutrition by paying farmers a living price, minimizing post-harvest losses by at least 10% with high-efficiency processing equipment, fortifying rice with vital minerals and vitamins using GMO-free and culturally appropriate technology, and creating the first brand of Malian rice that adheres to international export quality standards.

About Project

Problem: What problem is this project trying to address?

Mali is one of the poorest countries in the world. In 2005, it was estimated that 36.1% of Malians lived on less than $1 a day. About 80% of Malians rely on farming to survive. 81% of children under 5 and 67% of women are anaemic. With a population size of 14 million growing at a rate of 2.61%, more than 47% of the population is under the age of 15. Ethnic and religious clashes are extremely rare and a democratically elected president and legislature has governed the country for the past 20 years. According to USAID, there are six channels in the rice value chain for Malian rice, the primary of which is the traditional smallholder rice trading. The greatest volumes flow through the “collector/semi-wholesaler/retailer” axis and there is virtually no specialization in terms of quality and variety. Approximately 267,000 metric tons flow through this channel, representing about 80% of the total trade in the region we are targeting. Quality is often poor but collectors accept all the rice farmers are willing to sell, purchasing the particularly low-quality rice at a steep discount. In September 2010, we completed a final report on the feasibility of introducing and producing rice fortified with Ultra Rice in Mali and Senegal. As a result of our findings, we decided it was imperative to incorporate fortification into our plan from the outset. The report was based mostly on interviews with 37 stakeholders (government agencies, international organizations, local and international NGOs, and businesses) in Bamako and Dakar.

Solution: What is the proposed solution? Please be specific!

Our venture is unique in Mali and the region because it is the first attempt to provide a total solution from the farmer's gate to the consumer's plate. Furthermore, no one has attempted to fortify rice—the staple food in Mali and many other developing countries without the support of subsidies. White rice is the staple food of 3.4 billion people so its high consumption rate and its limited nutritional value make it a natural candidate for fortification. Populations with micronutrient deficiencies have rely on iron drops during biannual campaigns by organizations such as Helen Keller International and UNICEF. In addition, governments with the aid of foreign partners, subsidize enriched flour but have yet to find appropriate solutions for rice. In Mali, 80% of rice grown is processed using inefficient mobile mills with an average efficiency rate of less than 55%. Larger mills are too costly for their owners to operate and have become “white elephants.” The current rice value chain is an inefficient web of collectors, wholesalers, and importers. By establishing the first brand of Malian rice that meets international quality standards, our ultimate goal is to export rice to other countries in the region and beyond and compete with Asian rice. Rice fortified with Ultra Rice® Technology offers our beneficiaries the following: 1) great tasting rice with similar features as local rice, 2) need-based micronutrient customization, 3) branded and tamper proof packaged rice according to international norms, and 4) fortified rice free of genetically modified organisms.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Our goal is to build a model for a rice processing facility that stores, processes, and fortifies rice. We will purchase paddy rice from local farmers at a 10% premium. Store the paddy in modular, hermetically sealed Mega Cocoons™ developed by GrainPro, Inc with a capacity of 1,000 MTs each. The Mega Cocoons maintain grain quality without the use of chemicals and pesticides Then we will process rice at a rate of 1 MTs per hour and a minimum efficiency rate of 65% in a fully automated plant that: a) dries the paddy, b) de-husks and separates kernels from the paddy, c) sorts and grades the grains, and d) polishes the rice. In addition to processing, the rice will be fortified with PATH’s Ultra Rice® award winning technology to help combat malnutrition. The fortified rice will include micronutrients (e.g. Vitamin A, iron, folic acid, and zinc) at a ratio of 1:100 or 1:200 to local rice. The technology allows the rice to maintain its original look, feel, and taste while improving on the nutritional value. The fortified rice will be sold in 50kg bags to consumers and relief agencies at 8.5% discount in comparison with current standard quality rice prices Our activities will also include promoting innovative farming techniques to smallholder rice farmers to increase the quality and yield of their harvests including: better rice planting, harvesting and threshing techniques. Capacity building workshops in entrepreneurship, financial literacy and agricultural marketing will also be made available.
About You
Organization:
Malo Traders
About You
First Name

Mohamed Ali

Last Name

Niang

About Your Organization
Organization Name

Malo Traders

Organization Country

, IN, Tippecanoe County

Country where this project is creating social impact

, SG

How long has your organization been operating?

1‐5 years

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Innovation
What stage is your project in?

Operating for less than a year

Share the story of the founder and what inspired the founder to start this project

We are Malian citizens that grew up in Ethiopia, Cameroon, and Niger and attended university in France and the United States. Our dad worked for the UN as a food security expert so we had early exposure to the challenges and opportunities facing agriculture in Africa. We were fortunate enough to receive a quality education and our parents constantly reminded us at that giving back to the less fortunate members of our community should be second nature.

We have built strong grassroots knowledge and an appreciation for how local communities live and work through volunteering, interning, and working for organizations such United Nations Women’s Association in Ethiopia, the Food and Agriculture Organization in Niger, the Women Opportunity Resource Center in Philadelphia, and Tambaroua Business Farming (tambaroua.com), our family farm in Mali.

2008 will be remembered for profound financial crises and a historic election. However, from the West Indies to India, it will also be remembered for the riots fueled by surging food prices. During a field visit to one of Mali’s most fertile regions, we witnessed the wastage of thousands of tons of rice due to obsolete storage and processing facilities. Not only were farmers unable to consume the rice they harvested, they were in debt to individuals who provided them with seeds and fertilizer. Initially, we designed a plan to make rice a source of wealth for small-scale farmers. However, when we learned we could simultaneously make the world’s most consumed staple food a source of good health—we found our raison d’être.

Social Impact
Please describe how your project has been successful and how that success is measured

From Seattle to Bamako to Ixtapa, Mexico, the Malo Traders story has resonated and we've demonstrated an ability to work and cooperate with established organizations as well as student ventures to tackle some of the world's toughest problems. We’ve also had the privilege of meeting eminent and respected individuals such as Bill Gates Sr., Senator Arlen Spector, and the Prime Minister of Mali and strongly believe that a cross-cultural social venture such as Malo Traders can be a vehicle for positive social change anywhere in the world.

Benchmarking our paddy/rice efficiency rate is the guarantee that we are minimizing waste and maximizing value. Evaluating and improving our cost of production demonstrates our ability to achieve economies of scale, which will allow us to increase our net profit margin while maintaining affordable prices for customers. In our 5-year projections, we do not increase the sale price by a single dollar. We will also benchmark our capacity to grow our market share annually, measuring our ability to meet the needs of our customers. We will also monitor our brand equity and recognition to ensure that Malians view Malo Traders as a symbol of socially responsible and affordable quality rice. We will also conduct regular surveys to gauge how farmers are using their extra income and track improvements in standards of living and/or investments in production. Working in collaboration with local health officials and humanitarian organizations, we will also evaluate the impact of Ultra Rice consumption on micronutrient deficiency-related illnesses. Finally, we will track how many jobs we create. In Year 1, we expect to create 24 local jobs and pay them a total salary of $32k.

How many people have been impacted by your project?

How many people could be impacted by your project in the next three years?

More than 10,000

How will your project evolve over the next three years?

We have two business models that are scalable. We are starting small (3,250 tons, 446 farms, 37k consumers) in order to develop standardized best practices, demonstrate our social impact, and prove financial viability without subsidies or grants. In the larger model, we will achieve higher economies of scales, with each facility directly impacting 7,515 farms and at least 600k local consumers by Year 5.

Rice is the fastest growing staple food in Africa. As such, our expansion plan not only encompasses other parts of Mali but Senegal, Guinea, Nigeria, Haiti, and India. Finally, We will be talking to a senior executive at Whole Foods this summer to get better sense for what it will take to get our product on their shelves as well as advice shipping/transport goods from Africa to the US.

Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?

According to the latest World Bank Enterprise Surveys, one of the top obstacles to doing business in Mali is the reliability of the electricity grid. We take into account the power shortage issue by incorporating a completely off-grid hybrid power generation system. By the 6th year of operations, our goal is to acquire a biomass generator fuelled by rice husks generated from our processing activities.
The availability of paddy can fluctuate due to unfavourable climate conditions. We will offset this risk by establishing our facilities in the biggest rice-producing region of Mali (Ségou). On average, Ségou produces between 600,000 and 800,000 tons of rice paddy each year. Our needs are between 3,500 and 9,000 tons. By locating ourselves in close proximity with farming communities, we will have access to paddy while it is fresh and easily transportable. Building goodwill with farmers is a top priority and we are confident that our incentives are attractive.
Most consumers have low purchasing power and are price sensitive. Due to our lower production costs, superior processing technology (efficiency rate of at least 65 % compared to 50-55% or less) and economies of scale, we are able to sell fortified rice 8.5% lower than the standard rice. We will also offset this risk by selling fortified rice to humanitarian relief agencies via fixed contract agreements so that the most vulnerable communities can be reached. In the summer of 2010, we had informal discussions with the regional leaders of organizations like the WFP, and they expressed strong interest in arranging such contracts.

Tell us about your partnerships

Program for Appropriate Technology in Health (PATH): we enjoy a strong relationship with PATH. We conducted a feasibility study on the introduction of fortified rice in Mali and Senegal and delivered a report in the fall of 2009. We are in the process of securing a license for Ultra Rice® in Mali.
Global Alliance for Improved Nutrition (GAIN): GAIN operates a micronutrient premix facility and we are working with them to obtain high quality, consistent micronutrient premix on favourable terms.

GrainPro: to store paddy we are using the MegaCocoonTM developed by GrainPro, Inc. They also helped develop the “SuperBag” with the International Rice Research Institute (IRRI). Not only is the MegaCocoonTM modular, it also maintains grain quality and safety without the use of chemicals and pesticides.
Echoing Green: As Echoing Green Fellows, we have access to a community of entrepreneurs, experts, public service leaders and investors that will provide financial and technical support as well pro bono service partnerships to help grow our organization. We will receive a stipend of $90,000, paid in four equal installments over the next two years to help advance our venture.

Explain your selections

Our family has provided a very important support structure both financially and morally. Before starting Malo Traders, we helped our parents launch Tambaroua Business Farming (http://www.tambaroua.com) and that gave us some great insights into dealing with government agencies, other firms, and understanding the needs of farmers and their families in Mali. So far the Minster of Agriculture, the Country Director for USAID have toured the farm and the President and Prime Minister are scheduled to visit.

We are also in discussions with the Netherlands-based Inter-Church Organisation for Development Cooperation (ICCO) to secure upwards of a $1 million dollars in loan guarantees and grants that will be used as working capital to purchase our entire annual need of paddy (unprocessed rice) from farmers during the harvest period (October to December).

The prize money we won over the last few months will cover the cost of the implementation project we are conducting this fall and our plan over the next 6 months, is to raise an additional $800,000 from patient capital investors so that we can purchase equipment and build our first rice processing facility.

Once we begin operations, 100% of our revenue will be driven by customer sales. However, we will always be open to other sources of income and support to speed up our expansion.

How do you plan to strengthen your project in the next three years?

Create Malo Traders Cooperatives: we plan to vertically integrate our value chain by incentivizing farmers to regroup in co-ops. Building goodwill with farmers is a top priority and we are confident that our incentives for farmers, such as higher purchase prices and capacity building workshops, will compel them to regroup under Malo Traders Cooperative. Boost the productivity of farmers and securing a steady supply of high quality rice paddy is in our mutual interests.

Lower our operating costs: we expect to acquire a biomass generator to generate electricity using the rice husks from our processing activities. Doing so will minimize our carbon footprint while decreasing operating costs.
In 3-5 years, our objective is to also export Malian grown organic rice to niche markets in the United States and Europe. As a Malian business, we will be exempt from customs taxes in the United States thanks of the Africa Growth Opportunity Act and in Europe, under the Everything but Arms Initiative. This will allow us to diversify our revenues and capture higher profit margins in markets that consume premium products. Higher profit margins in Europe and in the US will allow us to decrease the price of rice we sell locally; as we will use it as subsidy for local rice (this approach is also known as cross-product subsidization). We will be talking to a senior executive of Whole Foods this summer to get better sense for what it will take to get our product on their shelves.

Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.

PRIMARY

SECONDARY

Underemployment

TERTIARY

Lack of visibility and investment

Please describe how your innovation specifically tackles the barriers listed above.

80% of rice grown is processed using obsolete and polluting equipment. Storage facilities are inappropriate so thousands of tons of rice that could be sold or consumed are wasted. Our approach ensures that we get as much edible rice as possible out each of our farmer's harvest.

Increasing numbers of farmers abandon their land for the city because farming is no longer a rewarding endeavor. By paying them a living price (10% premium over current prices) for their harvest, they would able to reinvest in their land and/or spend more on necessities.

Farmers do a great job of growing rice but the quality of the final product is very poor due to improper technology. Our mission is to change that by adding value to their hard work and connecting them to national and international markets.

Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.

PRIMARY

SECONDARY

TERTIARY

Influenced other organizations and institutions through the spread of best practices

Please describe which of your growth activities are current or planned for the immediate future.

The model we are currently implementing is for a facility that produces enough fortified rice in to feed 90k people per year and creates 24 local jobs. Then we will adopt our 2nd business model where each subsequent facility achieves higher economies of scale and directly impacts 7,515 farms and at least 500,000 consumers annually.

The annual growth rate of the rice market in Mali is about 5-7%. Mali and its neighbors are part of a free trade and common currency zone so this will facilitate our expansion and help secure sustainable profit growth. The combined market size in Mali, Senegal, Cote d’Ivoire, and Burkina Faso is worth over $1b. Our goal is to have a network of facilities providing high quality, fortified rice and good paying jobs for communities across the region.

Do you collaborate with any of the following: (Check all that apply)

Government, Technology providers, NGOs/Nonprofits, Academia/universities.

If yes, how have these collaborations helped your innovation to succeed?

Several government agencies where very helpful during our study in Mali and Senegal. They facilitated access to key officials working in the health, nutrition, and agriculture sectors.

In addition to sharing information on Ultra Rice, PATH provided us with financial support to conduct our feasibility study. PATH is also providing expertise on nutrition and connecting us to potential equipment suppliers.

Sparkseed, GAIN, and the National Collegiate Inventors and Innovators Alliance provided financial and advisory support for our business plan and were instrumental in helping us secure a place at the 2011 Unreasonable Institute.

Temple University provided incubator space, travel grants, in-kind software donations and countless hours of pro-bono services on strategy and branding.