Impact of AFLATOXINon the Private Sector in the EASTERN AFRICA region

Impact, measures &recommendations

Gerald Makau MASILA, Executive Director, EAGC

Presented to the COMESA Aflatoxin Challenge WORKSHOP 10th March 2014, Lilongwe, MALAWI

Contents....• Intro to EAGC Who & Why

• Grain Sector in EASTERN AFRICA

• Afflatoxins IMPACT to Private Sector

• MEASURES taken by Private Sector

• Recommendations

EAGC –Who we are….Grain Value Chain Actors..GETTING TOGETHERInclusive…

◦Farmers/Producers – small holder and large◦Traders, Handlers, Warehouses◦Processors/Milling/Manufacture

As Members of EAGC…Active, Affiliate, Associate

EAGC is a Regional Council for Grain Value Chain, Not for Profit Company, Ltd by Guarantee

Object – develop and promote regional structured grain TRADE and advocate for an enabling environment, reduce transaction costs trade barriers, increase incomes/reduce poverty, improve food security

Why EAGC.Grain Sector Issues – Global/Regional/NationalProduction Structure – Large Scale/SmallholderProduction Risks/Surplus/DeficitPost Harvest – Storage, Preservation, lossesAccess to Markets & Price Risks/VolatilityCross Border Trade Barriers

◦ Frequent Bans on Cross Border Maize◦ Tariff and Non Tariff Barrier◦ Informal Cross Border Trade

Standards/Quality/Grading/Safety/AflatoxinsMarket mechanisms (ss/dd) vs State

regulations

EAGC Services/Benefits• A unique FORUM for Grain Stakeholders

– TO ADDRESS COMMON ISSUES & CREATE PARTNERSHIPS– SET OWN PRIORITIES AND DESTINY FOR THE SECTOR– HAVE A VOICE/SAY IN THE POLICY DIALOGUE AFFECTING YOUR

BUSINESS– ACQUIRE SKILLS/TRAINING IN STS, REGIONAL TRADE– BUSINESS TO BUSINESS (B2B)LINKAGES – SUPPLY CHAIN & SERVICES

• A link to the REGIONAL GRAIN value chain– Larger Regional Market – More Sales/Profits– Regional Integration & Harmonization (Trade Policies, Standards etc– Regional & Continental Trade SUMMITS– Share best practice in the region – COMMODITY EXCHANGE!

• A link to the REGIONAL Market Information System (RATIN)– Access market and Trade info for ESA region, RFBS

EAGC Benefits.........Benefits Farmer Trade

rProcessorMillers

Financial Inst

Consumer

Market Information (RATIN) √ √ √ √ √

Grain Bulking, Market AccessBetter PricesPrice Risk Mgt (WRS/Commodity Exchange)

√√√

√√√

√√√ √

Finance Access (WRS, Inventory Credit)

√ √ √

Storage, Handling, SafetyQuality, Supply Guarantee

√ √ √ √

Policy/Enabling Environment √ √ √ √ √

Transaction Costs Reduced(Working Capital, Multi -Transact

√ √ √ √

Increased Incomes √ √ √ √

More Organised Clients √ √ √

Grain Sector in E. AfricaMAIN GRAINS/CEREALS

•MAIZE•WHEAT•RICE•BEANS•TEFF•SORGHUM•MILLET•FINGER MILLET•SOYA BEANS•SIMSIM..etc...

GRAIN VALUE CHAIN.....PR

OD

UC

TIO

N

/FAR

MER

S

POST

HA

RVE

ST

MG

T/ST

OR

AGE

TRAD

E N

ATIO

NAL

/IMPO

RT/

EXPO

RT

PR

OC

ES

SIN

G/

MIL

LIN

G/M

AN

UFA

CTU

RE

CO

NS

UM

ER

/

DIS

TRIB

UTI

ON

/

MA

RK

ETI

NG

•PRODUCTION ( SMALLHOLDERS 70-80%)•INPUTS(SEEDS, AGRO-INPUTS, FERTS

•FINANCE ACCESS•MARKET ACCESS,

•MKT INFORMATION•RISK MANAGEMENT

•PRICE VOLATILITY•COMPETITION (INTERNATIONAL/REGIONAL

•POLICY – MACROECON•FISCAL •MONETARY

•NATIONAL POLICIES•IMPORT/EXPORT

•REGIONAL POLICIES(RECS)•AFRICAN UNION(AUC)•IGAD,COMESA,EAC•SADC, ECOWAS etc

Grain Sector CHALLENGES... .......& OPPORTUNITIES• PRODUCTION ISSUES

– QUANTITY & QUALITY– SAFETY & NUTRITION

• TRADE IN FOOD – LOW– MARKET ACCESS– CROSS BORDER TRADE

• TRANSACTION COSTS – HIGH

• FARMER INCOMES – LOW• FINANCE COSTS - HIGH

• INVESTING IN AGRIC– CAADP - AUC– MDGs

• STRUCTURED TRADE– STDS & GRADES– PHH& M, WRS– COMMODITY EXCHANGE

• ENABLING POLICIES• HARMONIZATION• REG. INTEGRATION

Key EAGC InitiativesStructured Trading Systems (STS)

Grades and Standards

Storage and Warehousing, Post Harvest

• Warehouse Receipt System,• Trade Contracts, ADR• Financing Systems –Inventory Credits -Collateral Management •Grain Trade Platform/Commodity Exchange

Market Information Systems (MIS)

Capacity Building

Trade Policy •Policy Dialogue•Regional harmonization of Trade Policies•Regional Food Balance Sheet•Removal of Trade barriers

Regional Grain

Trade Flows&

EAC regional

Integration

Structured TRADING System

SILOSSTORES

WRS

SILOSSTORES

WRS

FARMERS/ TRADERS

FARMERS/ TRADERS

PROCESS/MILLING

PROCESS/MILLING

STANDARDS & GRADINGSTANDARDS & GRADING

RULES OF TRADE/CONTRACTS/ARBITRATIONRULES OF TRADE/CONTRACTS/ARBITRATION

MARKET INFO. SYSTEMMARKET INFO. SYSTEM

TRADING PLATFORM/COMMODITY EXCHANGE

TRADING PLATFORM/COMMODITY EXCHANGE

BANKSBANKS

ENABLING POLICY ENVIRONMENT/LEGAL & REGULATORY FOR STSENABLING POLICY ENVIRONMENT/LEGAL & REGULATORY FOR STS

EAGC WRS PROCESS.......

FOO

D SECU

RITYEAGC & FOOD SECURITY

QUANTITY QUALITYVARIETY

AFFORDABLEMKT ACCESS

MKT INFO.

NUTRITIONACCEPTABLESOC-CULTURAL

EAGC - Vision

“To be the leading voice for the grain industry in Africa”

Mission.....“To advocate for an enabling environment and promote structured grain trade for optimum stakeholder benefits”

The Aflatoxin Challengeto Private Sector

FusariumFusarium AspergillusAspergillus PenicilliumPenicillium

Aflatoxin Challenge....

• Question posed to Private Sector – EAGC– How has aflatoxin affected your business?

– What steps have you taken to address the challenge?

– What do you Recommend be done to more effectively address the Aflatoxin Challenge ?

Aflatoxin effects to business...• We procured a lot of maize in Eastern Province

of Kenya following a bumper harvest in 2008. The Maize was found to have excessive levels of afflatoxins and was CONDEMNED. Grains worth millions of dollars lost! In a country where people a dying of hunger!

• Disposal of the afflatoxins infested maize is a challenge. Maize does not burn !. We spent KSh 1m to INCINERATE 200 bags,(USD 62.5 per bag). Double the commercial value of a bag of maize. It is not sustainable !

Aflatoxin Effects cont....• We have kept in the stores contaminated maize

for over SIX years, and we still have the maize in store, taking up storage space and costs. Huge ECONOMIC loss!!

• We are yet to figure out an effective and efficient DISPOSAL method!

• We have not purchased any grain since 2010 from the Eastern parts of Kenya, thus LIMITING OUR MARKET.

• TESTING of Afflatoxins is EXPENSIVE! Adds to cost of food, reduces profitability/returns

Aflatoxin effects..cont.....• We gave an order for supply of Ground Nuts from

local farmers to make Nutritious foods for immune compromised patients. ALL was CONTAMINATED and rejected. Waste of TIME and MONEY!. We resulted to IMPORTING. Thus is capital intensive and a logistical challenge.

• There is a lot of contaminated GRAINS in the market being sold and consumed. A recent sampling of PROCESSED foods in supermarkets revealed very high levels of contamination!

Aflatoxin effects cont...

• Unfortunately it is a new issue to the public and even to most Govt officials outside the quality control and agriculture departments.

• Almost all clients do no know about it.

• Consequently, we have had to institute the knowledge program unto our team.

• But because RICE is a deficit crop the DEMAND blinds all to issues of rice !!.

• Because of the major health concerns, most millers now test for afflatoxins. This means that for us to trade grains, the company has to DO TESTS on every single consignment bought from farmers. THIS HAS SIGNIFICANTLY INCREASED OUR COSTS.

• This is also increasingly making grain handling and storage more complex. Because logistically it is impossible to offer identity preserved storage, it becomes a challenge to charge all farmers to carry out tests on grain delivered and segregating grain that has been tested and that which as not.

Aflatoxin effects cont...

• Due to high prevalence of afflatoxins levels in Eastern part of Kenya, we are procuring our commodities from North Rift area only.

• The business has been very low since we have to be very cautious before we buy any cereals from small scale farmers.

• Leads to Poor Maize Flour Quality !. Animal Feeds more affected by the use of by-products from maize (Maize Germ + Maize Germ meal) used for production of the animal feeds.

Aflatoxin effects cont...

Control measures being taken...

• We are trying to find cheaper kits for measurement of the afflatoxins.

• We now test all intakes for aflatoxin for key suppliers. We would like to extend this to all grains delivered but it is not sustainable.

• We have ensured we only procure well cleaned, dried maize (13% m.c) with aflatoxins levels to acceptable Standards – EAC standards. This adds to our costs of operations.

• We requested Uganda National Bureau of Standards to GUIDE US on this matter.

• We requested PUM from Netherlands to TRAIN our staff and set up a POLICY PROGRAM FOR QUALITY matters. We bought a generic lab and three staff trained

• EAGC trained two staff on stores and quality management. We applied and received training for two staff sponsored by aBi Trust specifically on afflatoxins.

Control measures being taken...

• Field surveys, regular analysis and random sampling during harvesting at farm level to assess the prevalence and extend of contamination and do not purchased from areas with a high prevalence. This affects the market and prices.

• We ensure ALL grain tested before being purchased for storage and milling.

• Regular analysis on animal feeds and addition of toxins binders into the feeds to improve of quality though these are extra expenses on the production costs

Control measures being taken...

• EAGC has developed partnerships with various stakeholders to address the Aflatoxin issue. In Nov 2013, EAGC and the Mexican Embassy and other stakeholders hosted a training on Afflatoxins.

• EAGC through its training and capacity building division the Eastern Africa Grain Institute – EAGI, is developing a comprehensive Training Program to offer to members and stakeholders. We are reaching out to work with others.

Control measures being taken...

What should be done?• Farmers should be TRAINED on post-harvest

handling and on ways to improve their storage facilities

• Find out the main source of aflatoxin in maize, hence preventive measures, and education to the farmers and suppliers.

• Mitigation of afflatoxins should start from farm level. Mitigation at storage level is like trying to collect spilt milk. So, efforts should be made to provide the technologies that suppress the aflatoxin causing strains of aspergillums.

• Education of Public officials and thereafter the general public on the aflatoxin situation.

• Make and create educative and punitive measures with private sector participation all over the region.

• Develop labs and infrastructure to test and store well all grain etc.

• Provide incentives for this exercise

What should be done?

• Be that as it may, it would help if the governments and donor community gave this issue the same attention as they do major diseases (for lack of better word) like cancer, HIV, and malaria.

• This is because the population may be taking high doses of the toxin without their knowledge since aflatoxin analysis is very expensive for most traders, leave alone small scale farmers.

What should be done?

• What is the Issue? Aflatoxin - poisons• Where from? Fungi contamination, at FARM and

in STORAGE. At farm stress factors-weeds, water/rain, seed variety – open ends give room for fungi to grow. In storage- damaged kernels (insect/shelling), insect infestation create heat transfer, moisture content in grain beyond standard of 13.5% are causes!

• How to know?, not visible to naked eye. Require test. High levels of IGNORANCE about aflatoxin

What should be done?

• Control OCCURANCE by preventive measures– Farm Level – GAP, Post Harvest Handling, Storage

• Knowledge & Education and Training– Research – Collaborative efforts, Best Practice– Training – EAGC Grain Institute - EAGI

• Trade Testing, Labs, Quality control cost effective• Disposal methods – effective, efficient

– Ethanol distillation ?, get out contaminated grain

• Food preparation/Processing methods to reduce afflatoxins - NIXTAMALIZATION

What should be done?

FOR MORE DETAILS PLEASE CONTACT

Gerald Makau MASILAEXECUTIVE DIRECTOREASTERN AFRICA GRAIN COUNCIL (EAGC)Maple Court, off Westlands Road,P. O. Box 218 - 00606, Nairobi KenyaTel: +254 20 3745840 | Fax +254 20 3745841Cell: +254 733444055 | Email: gmasila@eagc.org

www.eagc.org, www.ratin.net