Improving food security and access to nutritious food

Lessons from businesses supported by Innovations Against Poverty

Introduction

Our current food system is not providing all of us with enough affordable food for a sustainable and healthy diet. Unfortunately, in 2014 the declining global trend in the number of people facing hunger that had begun in 2005 came to a halt. Projections are that nearly 670 million people will still be facing hunger in 2030, the SDG 2 deadline. This is eight percent of the world population similar to the situation in 2015 when the 2030 SDG zero hunger target was set. Latest reports from 2022 show regional disparities. In Africa, approximately 20% of the population is facing hunger while in Europe and North America this is 2.5%.

Most of the food consumed globally is produced by farmers and supplied through agricultural value chains operated by the private sector. That makes both large and small agri-food businesses critical actors in transforming the global food system from farm to fork. This includes the seed industry, agricultural producers, and food and beverage processors, among others. Transforming food systems requires private sector action. This article specifically focuses on inclusive and innovative solutions introduced by enterprises supported under the IAP Challenge Fund. These solutions relate to farmer production and productivity, and availability, accessibility, and affordability of nutritious foods.

At the Farm

Many factors affecting food safety and security relate to farming methods, techniques, and inputs used. Soils are the foundation and need to be healthy, seeds need to thrive under an ever-changing climate, crops need to be protected from pests and diseases, and harvests need to be well stored before selling or consuming.

Better seeds for better yields in Cambodia

Increasing the quality of seeds is one of the most economical and efficient ways to increase crop production and productivity. East West Seed Cambodia (EWS) is promoting the use of improved agricultural inputs, such as high-quality seeds, and sustainable farming techniques to increase smallholder farming yields and income. Their approach centres around identifying key farmers to manage demonstration plots, providing in-field trainings and hosting field days, and digital outreach to share profitable approaches for growing vegetables. Further downstream, local consumers benefit from increased year-round supplies of locally grown, good quality, and safe-to-eat vegetables.

During 2022, an estimated 1,835 hectares of vegetables were cultivated by smallholder farmers using EWS seeds and attending trainings and farmer field days in four provinces. Yields from EWS’s cucumber seed varieties were more than 80% higher than the national average cucumber yields that year. More than 15 thousand tons of cucumbers were harvested in one province alone (Kampong Cham). That is nearly three times Cambodia’s annual production in 2019, when EWS was not yet active in the province.

A key challenge in the seed business is the rising input costs that reduce farmers’ profitability of growing vegetables. To follow such trends closely, EWS is monitoring the return on investment for its key farmers by tracking all costs and returns in a logbook. Again, taking cucumber cultivation as an example, the net benefit was 695 USD per 1,000 m2 in 2021 for a crop cycle of two months. This is more than four times the average monthly agricultural income for rural farmers in Cambodia. In 2022, the net benefit reduced by 14% to 599 USD per 1,000 m2 for the same crop. Although still a profitable proposition for smallholder farmers, it shows the effect of rapidly rising inputs costs. Moreover, it makes tracking farmers’ net returns essential for EWS to share evidence-based profitable approaches for growing vegetables.

The IAP portfolio consists of a number of other companies that have introduced innovations with a demonstrable positive impact on agricultural productivity and food security. These are briefly described in the next section.

Post-harvest loss prevention in Ethiopia

Achieving zero hunger by 2023 will require that no more food is lost or wasted. Farm level post-harvest loss is prevalent in many developing countries and directly results in reduced food supply and exacerbates food insecurity. A large part of post-harvest losses is due to insects, rodents, bacteria, and mould.  Shayashone, one of IAP’s Ethiopian investees, is tackling the issue of post-harvest losses by successfully introducing a simple yet effective and chemical-free solution that keeps out insects and rodents and regulates temperatures and humidity levels. The company sells hermetic grain storage bags called PICS (Purdue Improved Crop Storage) bags to smallholder farmers in Ethiopia. The company’s last-mile distribution model, consisting of a large deployment of youth resellers who promote and sell the PICS bags, has been very successful, resulting in a positive uptake among farmers as more than 5.2 million bags have been sold since 2017, accounting for an estimated 129 thousand tons of grain saved.

Carbon-based fertilizers in Cambodia

Healthy soils are the foundation for sustainable food production. Husk Ventures’ newly established plant in Kampong Thom province produces biochar from rice husk. Biochar that locks in carbon from the original source of biomass is perfect for improving fertilizer efficiency. When used in agriculture, the carbon in the biochar is absorbed by the growing crops and fixed in the soil where it remains in a stable state for at least 100 years. When farmers put this carbon back in the soil, it creates a breeding ground for microbes, improving the soil’s microbiology. Due to its biochar content, HUSK’s carbon-based fertilizer products allow for greater water retention, helping farmers produce better crops with less water and chemical fertilizers, even during the usually low-yielding dry season. This is especially important for degraded soils, which are often created as a result of incorrect application (dose and frequency) of chemical fertilizers.

Solar-driven irrigation for smallholder farmers in Cambodia and Ethiopia

The IAP portfolio has two different innovations related to providing year-round access to water for irrigation purposes. This has the potential to double production. Solar Green Energy (SOGE), based in Cambodia, established a number of irrigation schemes in rice producing area in the country. Using solar pumps (powered by sun tracking solar panels), the company is able to ensure the water level in the main canal is always sufficiently high so that smallholder farmers in the vicinity of the canal have year-round access to enough water for irrigating their rice fields and can enjoy the benefits of two harvest per year (as opposed to one when relying on rain only). Farmers pay a fee to SOGE per hectare of land under irrigation.

Mesafint Alebel, based in Ethiopia, manufactures small but sturdy water pumps that can be used to draw water from rivers, small streams, ponds, and shallow wells. The pumps are powered by solar charged batteries and can be used for irrigating smallholder farms. No other water pumps are manufactured locally in Ethiopia. The cost of Mesafint’s pumps compares favourably with imported pumps.

Reaching the consumer’s table

Among the major inequities that can be found along the food system is the variable accessibility of nutritious foods across the world. In this context, accessibility refers to the stable availability of nutritious, affordable, and healthy foods. Food security can only be reached if food is available and affordable for consumers. In terms of nutrition, people living in poverty, in every region of the world, are often unable to afford healthy diets. For example, vegetables, fruits, and nuts that are high in essential nutrients are often less affordable, especially in low-income countries. Businesses play an important role in providing physical access and economic access, benefitting consumers directly.

In IAP’s portfolio of inclusive businesses, there are two examples of companies that make healthy food available and affordable for low-income households. The first example showcases Nutridense Agroprocessing, an Ethiopian company making oat-based products for the low-income market. The second case describes the work that Yellow Star is doing in Uganda to sell nutritious foods at an affordable price where no one reached before with these types of products.

Oats for all in Ethiopia

Oats-based food products are widely consumed globally. However, Ethiopia has been an exception to this trend. Even though oats have been grown for thousands of years in the country, it has been mainly used as an animal feed crop. There has been a taboo around the use of oats for human consumption, as people believe it to cause infertility. The production and human consumption of oats was therefore limited and occurred largely unofficially, as it was discouraged by government extension services.

Nutridense Agroprocessing started pioneering the popularisation of oats-based products across Ethiopia in 2016. Since then, the company has been working in collaboration with the Ethiopian Institute for Agricultural Research (EIAR) on introducing an improved variety that provides better yields and nutrition. As a fruit of this effort, an agriculture extension service for the production and consumption of oats was recently launched by the Ministry of Agriculture. This is a big leap considering it was a grain whose production used to be discouraged. Oats are a gluten-free whole grain and an excellent source of important vitamins, minerals, fibre, and antioxidants. They can play an important role in addressing the issues of food security and nutrition. IAP and Nutridense partnered in 2021 to implement the first oats value chain development initiative for human consumption in Ethiopia. It includes smallholder farmers as oats suppliers and people living in poverty as consumers of oatmeal, granola, and oats-based cookies.

Before the IAP partnership, Nutridense was processing oats on a limited scale: 10 kg of oats per batch, due to manual cleaning and drying. With support from IAP, the company is currently scaling up production through the mechanisation of their facilities with cleaning, steaming, drying, and rolling machines. The steamer, for instance, has increased the production capacity of the company by fivefold. Once the remaining machines are put in place, production will be boosted further.

The collaboration between IAP and Nutridense goes beyond production, and it covers the full spectrum of the oats value chain. For example, being an unknown business opportunity for farmers and agri-dealers, there was a shortage of oats seeds in the country. This inspired the company to work directly with small-scale farmers in an oats seed multiplication initiative. To do so, Nutridense purchased 1,000 kg of improved oat seeds from EIAR and implemented a contract farming scheme to train and closely work with 10 farmers for seed multiplication. Since the beginning of the partnership with IAP, Nutridense has sourced 70,062 kg of oats from 262 smallholders.

Nutridense is making nutritious oatmeal products available where no one did before, and it is doing so by distributing their products in supermarkets, baltinas (small shops), and women-owned coffee vendors in Addis Ababa. But also, their products are available through the online trading platform HellooMarket where Nutridense’s oats-based products are gaining in popularity also among the low-income segments. Although Nutridense’s products are already highly appreciated by middle- and high-income consumers (over 10,000 oats-based products were sold in the last couple of months through urban supermarkets), penetrating the low-income market segment is proving to be a slower process. To successfully introduce a new product in low-income markets, companies need to invest in targeted marketing campaigns to raise awareness among low-income customers of the benefits and affordability of consuming oats-based products. By doing so, demand will increase, and shop owners will be more willing to accept to stock (and in some cases even pre-pay) the oats-based products without fearing that they will stay on their shelves for a long time.

Partnerships for last-mile distribution in Uganda

Malnutrition affects millions of Ugandans and is particularly devastating for women, babies, and children. 45% of child deaths in Uganda is attributed to nutritional deficiencies. Even though there are nutritious food products in the markets, they are mostly within the urban centers and with very little outreach to rural areas where 75% of Uganda’s population live and where most of the nutritional deficiency cases emerge. Thus, the last-mile distribution challenge is a typical underlying contributor to malnutrition in rural areas.

One company that has successfully deployed an innovative last mile distribution strategy to efficiently reach low-income rural markets is Yellow Star based in Kampala, Uganda. This is especially important in the fight against food insecurity since it brings nutritious food products to areas that have been previously neglected by businesses. Traditional distribution models to last-mile markets come with high distribution costs that translate into expensive products that are not affordable for low-income consumers.

Florence Okot founded Yellow Star Food processors in 2014 as an agro-trading company. Soon recognizing the great need for nutrient-rich foods, the company started processing grains and cereals into fortified porridges and flours. Yellow Star’s understanding of the business opportunities available in low-income markets convinced IAP to support the company in developing affordable packaging and establishing an efficient distribution model that could allow for profitably selling its nutrient-rich instant flour in low-income rural areas at half the price.

The company works closely with farmers as suppliers, imparting knowledge through training on good agronomic farming practices for sustainable agriculture and on better market access for their produce. Currently, Yellow Star is working with 13 farmer groups in Northern and Eastern Uganda (with a combined membership of more than 3,000 small-scale farmers), thereby establishing a secure supply of raw ingredients (maize, cassava, rice, millet, groundnuts, and soya beans) for food production purposes. Yellow Star currently sells 300 tons of nutrient rich products annually, and this is expected to grow to 1,000 tons annually in the next five years. Part of the IAP grant was used to construct an ultra-modern processing facility to boost production in order to meet the ever-increasing demand for their products.

The grant was also used to grow the company’s last-mile distribution channels, especially as low-income markets represent a largely untapped business opportunity. Uganda’s rural areas embody a significant consumer market that is often overlooked and underserved. Yellow Star, through its partnership with an NGO called Healthy Entrepreneurs, can access a network of over 1,200 community members who act as last-mile distributors and sales agents of the company’s range of nutritious food products. The company has grown its order size from 1-2 tons to 5 tons monthly under the Healthy Entrepreneur distribution model over a 2-year period.

Aside from having a vast distribution network, Yellow Star also customized their packaging to smaller units of 250 g and 500 g to meet the daily purchasing power of low-income customers. The company is more intentional in its way to reach these markets while remaining profitable and serving a social purpose. During the three years that IAP and Yellow Star collaborated (2017-2020), the company increased its production capacity and sold 297 tons of different products (millet flour, soya rice flour, pure rice flour, soya rice flour mixed with oats and milk, soya rice mixed with silverfish). Of these, 123 tons were sold to low-income markets, making nutritive food products affordable and impacting the lives of 13,300 people living in poverty.

Conclusions

The deadline for meeting the SDG 2 target on Zero Hunger is only seven years away, but while many targets are on their way to being met, the possibility to reach Zero Hunger by 2030 is diminishing each year. The intensification of the major drivers behind food insecurity and malnutrition trends (i.e. conflict, climate extremes and economic shocks) combined with the high cost of nutritious foods and growing social, economic and political inequalities will continue to challenge food security and nutrition. Unfortunately, this will be the case until food systems are transformed, become more resilient, and are delivering lower cost nutritious foods and affordable healthy diets for all, sustainably and inclusively.

By working with food processing companies, agricultural input suppliers and distributors, IAP is showing how the private sector can play an important role in addressing poverty and combating food insecurity and malnutrition, while being profitable. Top-three take-aways for actors from the private and public sectors are:

• The potential to increase productivity sustainably by promoting the use of high-quality agricultural inputs and improved cultivation techniques is immense but requires companies to invest in farmer training, demonstration farms, lead farmer-to-farmer knowledge transfer events, and cost-benefit data collection to assist smallholder farmers in making informed decisions about the type of inputs and techniques to use.
• Strengthening collaborative linkages among value chain actors results in more resilient farmers and food systems that can provide affordable healthy diets. For example, strong partnerships for last-mile distribution or for marketing/raising awareness (such as the one between Yellow Star and Healthy Entrepreneurs) can result in a more cost-effective distribution model, one that lowers transport costs and therefore makes nutritious food more affordable and available in rural communities.
• More investments and other non-financial resources need to be directed to innovative and inclusive private sector involvement in scaling up their operations and expanding their impact. Public-private partnerships (such as the one between Nutridense and the Ministry of Agriculture) with will be extremely important for investments in agrifood system transformation.

Mitigating climate change through food system innovations

Lessons from businesses supported by Innovations Against Poverty

Rising global greenhouse gas (GHG) emissions jeopardise the liveability of our planet. Major changes are needed to meet the Paris Agreement target, that is to limit global warming to well below 2°C, preferably 1.5°C. In response, most countries have set out national climate strategies including Nationally Determined Contributions. These set out what countries are planning in climate adaptation planning and mitigation across different sectors, including energy, waste and agriculture, among others.

The agriculture sector accounts for more than one-quarter of the world’s emissions, including forestry and land-use change.[1] To reach the Paris Agreement target we must change how we farm, what we eat, and how much food we lose and waste. A nearly two-thirds contribution to climate mitigation targets is needed from these combined changes by 2050.[1]

A major challenge for the agriculture sector in particular is the required pace and scale of change. Reducing emissions requires action by the more than two billion people employed in agriculture. Most of these people are employed on small farms of less than two hectares, representing about 75% of all farms.[1] Including small farms within climate change strategies is key to bringing agriculture in line with the 1.5°C pathway.

Businesses have a critical role for mitigating climate change. Until recently, the focus for most companies has been measuring emissions from one’s own operations and electricity consumption. Increasingly, companies understand the need to also account for GHG emissions along their value chains.[2] This includes the purchase of goods and services as well as the use of sold products and their disposal. Agri-businesses that reduce emissions or increase climate resilience by purchasing from, or selling products to, smallholders are ahead of the curve. They fight against poverty and climate change simultaneously, while they make a profit. Unfortunately, these green and inclusive business models are perceived to be investment risky in their early stages, creating a structural barrier of capital constraints. Breaking this barrier is a challenge.

The agriculture sector accounts for more than one-quarter of the world’s emissions, including forestry and land-use change

The Innovations Against Poverty (IAP) project aims to challenge these perceptions by supporting the growth of such businesses towards commercial viability. Three inspiring examples of green and inclusive business models from the IAP portfolio are highlighted below. Each addressing one of the major changes needed in agriculture to limit the impact of climate change to 1.5°C.

Changes in how we farm

Biochar[3] has significant mitigation potential through CO₂ removal and emissions reduction. In the production of biochar, CO₂ is first removed from the atmosphere during plant growth. Organic feedstocks are then converted into biochar by heating biomass in the total or partial absence of oxygen (a process called ‘pyrolysis’). Finally, this biochar is sequestered for decades and potentially up to thousands of years when applied to soils. Globally, biochar’s mitigation potential is estimated at 2.6 Gt CO₂e annually.[4] That is an astonishing 13% of all current emissions from agriculture, forestry and land use.[1] Potential co-benefits of biochar application to degraded soils include enhance productivity, increasing water-holding capacity and nitrogen use efficiency, among others.[4] This not only sees biochar application sequestering CO₂ but also increasing farm’s resilience to climate change.

Rice husk waste: a business opportunity

Typically, the risk of failed or lower yields from climatic shocks makes sustaining their livelihoods untenable for smallholder farmers. This means there are clear benefits to serving low-income farming communities with affordable biochar soil amendments. Until today, insufficient investment remains a key barrier to upscaling biochar production. High production costs at small-scale is a contributing factor.[5]

IAP aims to change this situation for the better by de-risking the transition from small- to large-scale production facilities for inclusive businesses. To this end, IAP partnered with HUSK in 2021, the first company that commercialised biochar- or carbon-based fertilisers in South-East Asia. So far HUSK has reached more than 4,000 farmers with their biochar, carbon-based fertiliser and rice husk vinegar. The latter a by-product of the pyrolysis of rice husk and a proven, effective organic pesticide. Biochar produced by HUSK is sinking CO₂ at a rate of 1.34 tonne CO₂e per tonne, when applied to soil.[6] More recently, HUSK brought a granulated carbon-based fertiliser onto the market, called ONIX P9. This product currently competes at US$ 500 per tonne with chemical as well as other organic granulated fertilisers. ONIX P9 increases a farmer’s return on investment by its simultaneous effects on soil enhancement, moisture retention as well as nutrient uptake. HUSK has run over 220 trials with several varieties of crop across 12 provinces in Cambodia.[7] They have seen an average 26% yield increase after the first application of biochar, 16% for carbon-based fertiliser and 21% for vinegar.

The greatest uncertainty for a biochar-business like HUSK is the availability of sustainably-sourced biomass for biochar production. HUSK managed to turn this uncertainty into a key factor of success. They are successfully aligning the interest of different stakeholders in the rice value chain of Cambodia. Cambodia is estimated by FAO to have an aggregate rice production of 11 million tonnes in 2020.[8]

The successful model of HUSK was shaped by coping with the uncertain availability of rice husks for biochar production

Rice mills, where the husk is separated from the grain, are offered a solution for their organic waste. Rice husks account for approximately 20% of paddy production on a weight basis. Hence, storage and disposal of rice husks easily becomes a challenge for rice mills. HUSK takes away these pains by offering long-term purchase agreements and collects rice husk at the factory gate. To sustain this relationship in the long-term, HUSK aims to build joint ventures, where rice mills partially own the biochar business. In addition, the supplying farmers of the rice mill are targeted for sales of the carbon-based fertilisers. Farmers benefit from increased yields and improved resilience to climatic shocks. These increased yields lead to increased paddy supply to the rice mill. Everybody benefits. Moreover, HUSK generates carbon removal certificates, allowing them to offer such certificates to international rice brands for offsetting part of their footprint. The carbon revenues help to set more competitive pricing strategies, increasing affordability of the organic fertilisers for farmers. So far, HUSK has sold 337 tonnes of carbon removal certificates to various buyers in the voluntary carbon market.

The successful model of HUSK was shaped by coping with the uncertain availability of rice husks for biochar production. They were enduring declining production rates by the previous supply chain partner. IAP provided grant financing to de-risk the transition to a new and larger production facility in Kampong Thom province in Cambodia. This new facility is strategically located next to Cambodia’s largest rice miller: AmruRice, who partnered with IAP in 2017. New machinery obtained through IAP funding enabled HUSK to double its production capacity, from 300 to 600 tonnes of biochar per month. At full capacity, HUSK will contribute 1.2% to Cambodia’s Nationally Determined Contribution for the agriculture sector by 2030.[9]

Change in what we eat

Changes in diet are one of the most impactful measures to reduce emissions. The mitigation potential of shifting diets to dairy alternatives is huge. Globally, emissions from milk production represent about one-third of the livestock sector emissions.[10] The global average emission intensity of dairy milk was estimated at 2.5 kg CO₂e per kg milk in 2015, according to FAO.[11] There are however large differences in emission intensity between regions, with the highest in Sub-Saharan Africa at 6.67 kg CO₂e per kg milk. Within each region, there is again a wide variation in emission intensity due to the diversity in on-farm efficiency.[11]

260Brands leveraged the IAP partnership by raising additional financing to build and operate the first soya milk processing facility in Zambia

On the market side, the demand for dairy alternatives is strongly on the rise. Its market is valued at an estimated US$ 27.3 billion globally in 2022 and projected to reach US$ 44.8 billion by 2027.[12] That is an annual growth rate of 10%. Key consumer drivers are the veganism trend gaining popularity. Besides, more and more consumers without any dietary requirements are opting for plant-based alternatives for health and nutrition reasons. This presents an opportunity to innovate and create tasty products that appeal to all consumers who have an interest in plant-based alternatives.

Affordable and nutritious soya milk: a business opportunity

As source of dietary protein, soya milk presents a nutritious dairy alternative. Legumes, especially soya beans, have the highest protein content and amino acid composition among plants.[13] Soya milk’s mitigation potential is estimated at 5.69 kg CO₂e per kg of dairy milk substituted in the Sub-Saharan African market.[14] However, affordable and locally produced soya milk in low and lower-middle income countries is scarce. For example, no locally produced soya milk existed in Zambia until today. As an alternative to dairy, in 2021, 260Brands partnered with IAP to bring an affordable nutritious soya-based drink to the Zambian market. Thereby, combatting the national malnutrition crisis in the country, contributing to improved income for smallholder soya bean producers, whilst reducing emissions. 260Brands produces long life sweetened and unsweetened as well as flavoured soya milk, free from cholesterol and low in saturated fats. It is processed at ultra-high temperature and packaged aseptically in brick and pouch packaging, allowing for a 6-to-12-month shelf life. Long life milk caters to the large low-income consumer group, who have little to no refrigeration access. The longer shelf life allows them to store the milk and consume it at their convenience.

260Brands leveraged the IAP partnership by raising additional financing to build and operate the first soya milk processing facility in Zambia. Last September, it began operations and is now projected to produce three million litres of soya milk annually for the coming 20 years. Such production capacity could result into a potential avoidance of 17.5 thousand tonnes of CO₂e emissions annually.[15] At full capacity, this equals 0.7% of Zambia’s Nationally Determined Contribution by 2030.[16] To successfully implement the soya bean sourcing model from smallholders, 260Brands is diversifying its sourcing locations. This helps to mitigate the risk of external shocks in one area, where other areas are not affected to fluctuating soya bean prices. Secondly, the company is anticipating limited willingness or ability to pay for quality seeds on credit among farmers. Causal factors could be delayed rains, free agri-input schemes or delayed payments from governmental programmes. Thirdly, 260Brands aims for the timely collection of soya beans to mitigate the risk of side-selling by smallholders. Lastly, defaulting on agreements is mitigated by offering a premium price for organically grown beans.

Changes in how much food we lose and waste

Around one-third of food produced globally is lost or wasted.[17] Food loss and waste is a major concern from an environmental, social and economic point of view. About 8 to 10% of global greenhouse gas emissions are associated with it.[18] In the sub-Saharan African region, the percentage of food loss is reported to be over 20%.[19] This forms a major concern for smallholder farmers, who rely on their harvest for food and income security. Ethiopia is one of the countries affected by high post-harvest losses of foods. Key reasons are poor handling and market infrastructure, such as limited number of roads to farm gates and a lack of cold chain and proper packaging or storage facilities. Limited private investment is a contributing factor.[20] A comprehensive post-harvest loss study for several cash crops in Ethiopia revealed that storage presents a critical loss point. Hence, a storage solution could offer the biggest potential for food loss reduction. For maize, the crop grown by most smallholders, 11.1% of the food loss occurs at storage from farm to fork.[21]

Shayashone’s annual growth of sales has been an astonishing 45% during 2017 to 2021

Reducing post-harvest food loss: a business opportunity

Shayashone’s hermetic PICS bags[22] offer a solution to the problem of storage loss due to weevils, rodents and grain mould. The PICS bag is a three-layered storage bag that preserves the freshness, taste and odor of the grain. It distinguishes itself from ordinary non-airtight storage bags in a three times longer use life and its dual function of storage and protection. The GHG abatement costs of PICS bags are estimated at US$ 36 per tonne of CO₂e avoided when storing maize.[23]

In 2017, IAP partnered with Shayashone Trading Plc to pilot a youth resellers distribution model for the PICS bags. Since then, the company managed to sell more than 5 million bags to farmers. This equals an estimated 111 thousand tonnes of maize saved from storage loss and 188 thousand tonnes of CO₂ avoided. A demand of more than two million bags is collected for this harvest season alone. On average, Shayashone’s annual growth of sales has been an astonishing 45% during 2017 to 2021. The key success behind this growth is a strategy heavily relying on demand creation. As a new product in the market, the company recognized the need to demonstrate the product value to farmers. Extensive demonstrations were, and still are, organised through influencers like community leaders, model farmers and extension workers from the government.

Evidence resulting from demonstrations are used as critical sales points with key repeated messaging to rural customers using local FM radio stations. Moreover, sales points are close to farmers, like agro-dealers, small shop vendors at small towns, and youth resellers in rural areas. Each vendor is linked to youth resellers, who are taking the product to the villages where they promote and supply the bags. To date, Shayashone sells through 450 vendors and 400 youth resellers and has reached over 10,000 villages across Ethiopia.

The key challenge is to sustain the last-mile distribution. This requires a strong market demand to reach critical volumes, so that vendors and resellers run a profitable business. To achieve this, Shayashone aims to offer product bundles that include water filters and is relying on customers to act as promoters. In October 2020, IAP funded a customer survey among 262 PICS bag customers using a lean data approach, conducted by 60 Decibels. This survey revealed that an astonishing 86% of all customers are promoters, with only 3% detractors. As promoters are powerful brand ambassadors, Shayashone is able to keep marketing costs within limits to sustain a healthy profit margin. Promoters loved that the PICS bag maintains a high quality of goods (42%), provides chemical-free storage (38%), and is durable and long-lasting (29%). One farmer explained: “It preserves agricultural products for a long period. I kept my products for more than one year without being spoiled.” The youth resellers distribution model has served as a catalyst for market development, facilitating access at the last-mile, and product knowledge transfer.

These businesses present highly attractive investment opportunities for triple bottom line investors for further scaling in the region or elsewhere

Why are these innovative business models that remove carbon or reduce emissions while serving low-income market segments so relevant to highlight? The science is clear that to stop climate change from jeopardizing the liveability of our planet, we need to drastically reduce emissions. And agriculture has an important contribution to make. Major changes in agriculture will need to come from producing food more efficiently, changing our diets, and reducing food loss and waste. The examples highlighted for each of these changes show that there are clear and proven business opportunities in these categories; business opportunities that deliver positive impacts for farmers, consumers, businesses and investors.

Both follow-on investments and replication of these green and inclusive business models in other contexts are needed to achieve impact at scale. The highlighted businesses all have strategies in place to expand regionally in the coming years, but they are still confronted by capital constraints. The success factors and key challenges discussed in rolling out these business models are applicable to other geographies. GHG abatement potential and costs for these innovations might vary across geographies. However, such information contributes to an increased understanding how the agriculture sector can reduce its emissions.

HUSK, 260Brands, and Shayashone are all on track in their pathway to scale. Their unique inclusive models address pressing local development challenges[24], while contributing to bringing agriculture in line with the 1.5°C pathway. This makes them critical actors in the transition towards more sustainable food systems. As such, these businesses present highly attractive investment opportunities for triple bottom line investors for further scaling in the region or elsewhere.

[1] J. Ahmed, et al. Agriculture and climate change. Reducing emissions through improved farming practices. McKinsey & Company, 2020.

[2] World Resources Institute & World Business Council for Sustainable Development, Technical Guidance for Calculating Scope 3 Emissions, 2013.

[3]Biochar is a material made of carbon and ashes, produced by heating organic matter in an oxygen-limited environment.

[4] IPCC, Sixth Assessment Report (AR6), Working Group III (WGIII). Chapter 7: Agriculture, Forestry and Other Land Uses (AFOLU). p. 7-63-7-64.

[5] Gwenzi, W., N. Chaukura, F. N. D. Mukome, S. Machado, and B. Nyamasoka. Biochar production and applications in sub-Saharan Africa: Opportunities, constraints, risks and uncertainties, J. Environ. Manage. 2015.

[6] Based on carbon sink certificate from 2022 issued by the European Biochar Certificate (EBC).

[7] 157 farms on biochar, 17 farms on carbon-based fertiliser, and 16 farms on rice husk vinegar as natural insect repellent.

[8] FAOSTAT. Domain: Crops and livestock products. Area: Cambodia. Element: Production. Item: Rice. Year: 2020, https://www.fao.org/faostat/en/#data/QCL (accessed 23-11-2022).

[9] Source: UNFCCC. Cambodia’s Updated Nationally Determined Contribution (Version 2), https://unfccc.int/NDCREG (accessed 23-11-2022).

[10] C. Opio, et al. Greenhouse gas emissions from ruminant supply chains – A global life cycle assessment. Food and Agriculture Organization of the United Nations (FAO), 2013.

[11] FAO and GDP. Climate change and the global dairy cattle sector – The role of the dairy sector in a low-carbon future. Rome, 2018. p. 25.

[12] MarketsandMarkets. Dairy Alternatives Market by Source (Soy, Almond, Coconut, Oats, Rice, Hemp), Application (Milk, Yogurt, Ice creams, Cheese, Creamers), Distribution Channel (Supermarkets, Health Food Stores, Pharmacies), Formulation and Region – Forecast to 2027, http://newfoodmagazine.com/article/150352/the-rise-of-the-non-dairy-consumer, (accessed: 23-09-2022).

[13] I. Weindl, et al. Sustainable food protein supply reconciling human and ecosystem health: A Leibniz Position. Global Food Security. Volume 25, 2020.

[14] 6.67 kg CO₂e per kg of dairy milk, see footnote 11, subtracted by 0.98 kg CO₂e per kg of soya milk. Source: J. Poore, & T. Nemecek. Reducing food’s environmental impacts through producers and consumers. 2018, Science, 360(6392), 987-992.

[15] Assuming all soya milk is substituting dairy milk in the market. Soya milk density at 1,027.1 gram per litre.

[16] Sales of 3 million litre annually during 2023-2030 equals 24 million litre. Substitution of dairy milk to this amount results in avoiding roughly 140 ktonne of CO₂e, which equals 0.7% of the 20 Mtonne CO₂e reduction of Zambia’s Nationally Determined Contribution 2030 target.

UNFCCC. Nationally Determined Contribution (NDC) of Zambia for the timeframe 2015-2030. Updated as of 30^th July 2021. https://unfccc.int/NDCREG (accessed: 23-11-2022).

[17] FAO. Global food losses and food waste – Extent, causes and prevention. Rome, 2011.

[18] United Nations Environment Programme (UNEP). UNEP Food Waste Index Report 2021, Nairobi, 2021.

[19] FAO. Sustainable Development Goals. Indicator 12.3.1 – Global Food Loss and Waste. Percentage of food loss by region, 2020. https://www.fao.org/sustainable-development-goals/indicators/1231/en (accessed 23-11-2022).

[20] T.F. Teferra. The cost of postharvest losses in Ethiopia: economic and food security implications. 2022.

[21] FAO. Postharvest Loss Assessment of maize, Wheat, Sorghum and Haricot Bean, 2017. p. 28-30.

[22] Hermetic storage technology, called Purdue Improved Crop Storage (PICS) bags.

[23] Calculations based on 100 kg maize storage per bag, a useful lifetime of 3 years for PICS bags, CAPEX and OPEX from Shayashone during 2017-2021, and carbon footprint of 1.7 kg CO₂-eq. per kg maize produced (source: see footnote 14).

[24] Land degradation, nutrition crisis, and high post-harvest losses, respectively.