Improving food security and access to nutritious food

Lessons from businesses supported by Innovations Against Poverty

By Ana Perez Aponte and Benjamin Cok

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.