Financial Innovations Lab™Financial Innovations Lab

Incentivizing Private-SectorI t t i Af i A i ltInvestment in African Agriculture

October 8, 2010

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The Financial Innovations LabFinancial Innovations Labs are miniature think tanks in action, designed to devise new business models, capital structures and financial technologies that can achieve Designand financial technologies that can achieve concrete goals.

By bringing together a diverse group of stakeholders, Labs encourage collaboration

Design

stakeholders, Labs encourage collaboration between parties who may not normally interact.

These intensive workshops explore the

Research Implement

p ppotential of financial tools to solve specific challenges.

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Aflatoxin Financial Innovations Lab agendaOctober 8 2010October 8, 2010

• Welcome and Introductions

• Scope of the Problem• Scope of the Problem

• Development, Testing and Manufacturing of Aflasafe

• Using Pull Mechanisms to Expand Health Benefits

• Discussion: Intersections Along the Value Chain

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• Next Steps, Action Items and Closing Thoughts

Aflatoxin Financial Innovations Lab October 8 2010October 8, 2010

Goal:

To identify financing mechanisms that will

incentivize smallholder farmers in sub-Saharanincentivize smallholder farmers in sub Saharan

Africa to use aflatoxin biocontrol.

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Background:Background:Agriculture in

Sub-Saharan AfricaSub-Saharan Africa

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Agriculture is an important part of sub-Saharan African economiessub-Saharan African economiesOn average, agriculture…

Employs 64% of the population

Contributes 34%of GDP

Other36% Agriculture

34%

of the population of GDP

Agriculture64% Other

66%

34%

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Source: World Bank, “World Development Report 2008: Agriculture for Development” (2007).

More than half of the population in sub-Saharan Africa lives in extreme povertysub-Saharan Africa lives in extreme povertyPercent of people living on less than 2005 PPP $1.25 a day

50.9%50%

60%

40.3%

30%

40%

16.8%

8.2%3.7% 3.6%

0%

10%

20%

S b S h S th A i E t A i & L ti A i E & Middl E t&

Source: World Bank, “World Development Indicators” (2010).

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Sub-Saharan Africa

South Asia East Asia & Pacific

Latin America & Caribbean

Europe & Central Asia

Middle East & North Africa

Almost three-quarters of the sub-Saharan African population survives on less than $2/dayAfrican population survives on less than $2/dayPercent of people living on less than 2005 PPP $2.00 a day

72.9% 73.9%70%

80%

38.7%

30%

40%

50%

60%

17.1% 16.9%8.9%

0%

10%

20%

30%

Source: World Bank, “World Development Indicators” (2010).

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Sub-Saharan Africa

South Asia East Asia & Pacific

Latin America & Caribbean

Middle East & North Africa

Europe & Central Asia

Sub-Saharan Africa accounts for 26 percent of world hungerof world hunger…

Latin Americaand the Caribbean

Near East and North Africa

4%

Developed countries

2%and the Caribbean

6%

Asia and the Pacific

62%

Sub-Saharan Africa26%

Sources: Food and Agriculture Organization (FAO) of the United Nations (2010). Population Reference Bureau, “World Population Data Sheet” (2010).9

…but only 13 percent of world population.

Expected world population growth necessitates large increases in food productionnecessitates large increases in food productionPercent increase by 2050 Required increase to meet

population growth70%74%

70%

80%

34%43%

30%

40%

50%

60%

0%

10%

20%

30%

World population Food production Annual cereal Annual meat

Source: Food and Agriculture Organization (FAO) of the United Nations, "How to Feed the World in 2050" (2009).

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World population Food production Annual cereal production

Annual meat production

Africa’s cereal yields are about one-fifth of those in the U Sof those in the U.S.Cereal yield (tons/acre)

2.93.0

3.5

2.2

1.5

2.0

2.5

0.6

1.0

0 0

0.5

1.0

1.5

Source: FAOSTAT.

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0.0Africa India China U.S.

Official development assistance (ODA) for agriculture has decreased in recent decadesagriculture has decreased in recent decadesODA for agriculture as a percent of total ODA

13%

12%

14%

8%9%

12%

8%7%

8%

10%

12%

7%

5% 3%

2%

4%

6%

Source: Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD).Note: Data are commitments by DAC country donors. As agriculture did not become a separate category until 1995, data are ODA for Agriculture, Forestry, and Fishing.

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0%1970 1975 1980 1985 1990 1995 2000 2005

Lack of private-sector investment in agricultural R&D in sub-Saharan Africaagricultural R&D in sub-Saharan Africa

Private sector

Private-sector investment made up just 1.7% of total agricultural R&D spending in sub-Saharan Africa in 2000.

1.7%

Source: Philip G. Pardey, Nienke Beintema, Steven Dehmer, and Stanley Wood, “Agricultural Research: A Growing Global Divide?” International Food Policy Research Institute (2006). 13

Public sector98.3%

Scope of the problem: Aflatoxin

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AflatoxinDescriptionDescription

• Toxic substance emitted by the fungus Aspergillus flavus

• Affects maize, groundnuts and other cropsContaminates more than 25 percent of maize and groundnuts in Nigeria– Contaminates more than 25 percent of maize and groundnuts in Nigeria

– Maize accounts for 42 percent of the cereal crop in sub-Saharan Africa• Can grow on the field and in storage

C t i t d ft d b• Contaminated crops are often consumed because of high food insecurity in sub-Saharan Africa

• In Ghana, a study found that grain prices differed little despite widely varying levels of aflatoxin

15Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA, “Annual Report 2009/10.”

little despite widely varying levels of aflatoxin (providing little incentive for control)

AflatoxinImpactImpact

Health• Chronic exposure has been linked to:

Trade

• Annual trade losses due to aflatoxin contamination:

Health Trade

– Liver disease, liver cancer, stunting, malnutrition, immunosuppression, and abortion

• Also adversely affects health of

contamination: – $1.2 billion globally

– $450 million in African economies

A i lt l t f bAlso adversely affects health of livestock who eat contaminated feed

• Burden of disease from aflatoxin worldwide:

• Agricultural exports from sub-Saharan Africa have declined by up to 20% over the past 20 years due to non-compliance with E.U. standards

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– Up to 36 million Disability-Adjusted Life Years (DALYs) every year

Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA, “Annual Report 2009/10.” African Agricultural Technology Foundation, “Mycotoxins in Food Grains” (2010).

Aflatoxin Intervention methodsIntervention methods

Intervention method Description

Aflatoxin-resistant Crops that are naturally resistant to aflatoxin are being crops developedBiocontrol Introduction of competing varieties of fungi that do not

produce aflatoxin (atoxigenic strains of A. flavus) prevents the growth of toxic strainsprevents the growth of toxic strains

Dietary supplements Enterosorbents, such as NovaSil, have been found to reduce aflatoxin levels in animals and humans

Post-harvest Control of temperature, moisture and pests in storage,

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management among other efforts, can prevent mold growth

Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated).

Aflatoxin interventionBiocontrolBiocontrol

Experience with aflatoxin biocontrol to date:

United States

-Successfully used for cottonseed and peanutsStates

- Afla-Guard™ is currently being sold by Syngenta

Nigeria - aflasafe™ has been produced by the International Institute of Tropical Agriculture (IITA) and is provisionally registeredof Tropical Agriculture (IITA) and is provisionally registered

- Has reduced contamination on maize by about 80% in trials

Other - IITA is working to develop biocontrol for Burkina Faso and

18Sources: Diana M. Grusczynski, “Aflatoxin: An Antinutrient that Undermines the Health and Nutrition of the World’s Poor” (not dated). IITA website.

African countries

Senegal, among other countries

AflatoxinProblem statementProblem statement

Smallholder farmers in sub-Saharan Africa are

unlikely to purchase aflatoxin biocontrol because

they perceive the costs to be higher than thethey perceive the costs to be higher than the

benefits from using the product.

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Key questions to be addressedScope of the ProblemScope of the Problem

• Who is likely to purchase aflasafe?

Wh h b i id d f fl f h h• What are the barriers to widespread use of aflasafe throughout Nigeria?

• Is there sufficient incentive for manufacturers to invest in production of aflasafe?

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Using Pull Mechanisms to Expand Health Benefits

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Pull vs. push mechanisms

Mechanism Description Best funding use

Pull mechanism

- Donors provide funding to private-sector firms only when

- Where there are informationasymmetries (between donors andmechanism private-sector firms only when

specified outcomes are delivered and adopted- Pay for results

asymmetries (between donors and researchers, researchers and consumers)- Where it is difficult to identify best R&D path to prod ct de elopment- Ex-post R&D path to product development

Push mechanism

- Donors provide funding to increase the supply of R&D

P b f lt

- Basic science to inform specific applications

Wh R&D h l il t- Pay before results- Ex-ante

- Where R&D has clear milestones

Source: Kimberly Ann Elliott, “Pulling Agricultural Innovation and the Market Together,” Center for Global Development (2010). 22

Pull mechanismsExamplesExamples

Mechanism DescriptionAdvance Market Commitment (AMC)

Donors agree to subsidize purchase of a product for a set number of units; requires manufacturers to continue supplying the product at a set price after donor funds dry updry up

Advance Purchase Guarantee (APG)

Donors agree to purchase a minimum volume of a product

Best-entry tournaments

Rewards given to whoever gets closest to a specific goal by a given date

Licensing Owner of technology agrees to allow another entity to use it for a fee

Patent buyout Donors purchase existing patentProportional prizes Overall award set at the beginning, then divided among applicants according to

their innovation's impacttheir innovation s impactWinner-take-all prizes

Rewards given to whoever achieves a specific goal

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Pull mechanismsBest useBest use

Mechanism Best useAdvance Market Commitment (AMC)

Where characteristics of desired technology can be specifiedCommitment (AMC),

Advance Purchase Guarantee (APG)

can be specified

Licensing and Where there are potential spillovers from patent buyouts developed-country R&D

Prizes and best-entry tournaments

Where characteristics of desired technology are unknown, but general goal is identified

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First Advance Market Commitment (AMC) Pneumococcal vaccinePneumococcal vaccine

• In June 2009, GAVI, the World Bank, WHO and UNICEF, five national governments and the Bill & Melinda Gates Foundation launched a pilot AMC to accelerate access to vaccines for

l dipneumococcal disease.• Price per dose:

– $3.50 paid by GAVI and developing-country governments that introduce the vaccines

$ $– $7 for the first 20% of doses; the additional $3.50 per dose paid for by donors to encourage manufacturers to make the initial investment to expand manufacturing capacity

• In March 2010, GlaxoSmithKline and Pfizer each made long-term commitments to supply 30 million doses of the vaccine per year for 10 years.

Source: GAVI Alliance website.

pp y p y y

• Estimated that it will prevent more than 7 million childhood deaths by 2030.

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Structure of Advance Market Commitment Pneumococcal vaccinePneumococcal vaccine

Source: GAVI. 26

Key questions to be addressedUsing Pull Mechanisms to Expand Health BenefitsUsing Pull Mechanisms to Expand Health Benefits

• Will farmers have sufficient incentive to purchase/use aflasafe under the proposed options?

• How much funding is required under each of the proposed options?

• What barriers might be encountered?

• Are the proposed options sustainable?

• How do we minimize distortion if we use a pull subsidy?

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Discussion:Discussion: Intersections Along

the Value Chainthe Value Chain

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Key questions to be addressedIntersections Along the Value ChainIntersections Along the Value Chain

• At what stages in the value chain are pull mechanisms likely to be most effective?

• How can key players (e.g., the government, grain reserves, World Food Programme) be positioned to most effectively aid in the pull mechanism?

• Could similar mechanisms work in other countries in sub-Saharan Africa?

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Creating incentives for aflatoxin risk reduction: Improving the outcomes for the poor

i  Af i   d  l h  in Africa and elsewhere 

Devesh Roy, London October 8 y,

li f hOutline of the problemResearch questionsResearch questionsPoints to ponderFuture stepsp

Number of biological studies on control options; shows only limited adoption.Economic losses related to mycotoxins/aflatoxins –The large ones hog the limelight but need to ask questions on:g g q

Source of economic losses▪ Trade/regulation▪ Public healthMethods

Al   b   h   fl i  i     bl     f ▪ Always remember that aflatoxins is a problem out of many

Use of data▪ Zero trade is information – keep itp

Validation checks –Time for which predicted is long over – let’s check it

Market loss occurs when:

Health loss occurs when:Center for Disease Control has estimated that Food IS monitored for 

aflatoxin: Buyers pay lower prices for or j t  t i t d 

occurs when:Food IS NOT monitored for aflatoxin: 

Center for Disease Control has estimated that more than 4.5 billion people in developing countries are chronically exposed to aflatoxins in their dietsreject contaminated 

food (developed nations, local or international trade)

Dangerous levels enter food supply (developing nations)

are chronically exposed to aflatoxins in their diets.

)Animals become sick from aflatoxin consumption

nations)

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T  id tif    To identify pro‐poor cost‐effective aflatoxin risk‐reduction strategies in order to assess the uptake of these uptake of these strategies and to suggest interventions ggthat ensure high rates of adoption along value chainsvalue chains.

Multi‐disciplinary research teamEconomic Impact –Obj 1

‐Health‐Household‐level analysis (income, gender)

Perceptions of Aflatoxin and WTP–Obj 4• KAPP (Knowledge Attitudes Perception Practices)•Contingent valuation (willingness to pay/ to 

‐Trade accept)•Auctions (demand)

Risk Analysis‐Obj 3

•Risk maps

Disease Prevelance ‐Obj 2 ‐Collection of prevelance data along value chains (with and without control 

Endpoints of interest: exposure 

1) Market access/ •Risk assessment•Cost benefit/and cost effectiveness analysis

(measures) in different ecological zones

1) Market access/ income/ poverty reduction

2) Health

i i d d bjCommunication and Advocacy –Obj 5

Mali: Kita  Kayes  and Koulikoro Mali: Kita, Kayes, and Koulikoro districts 

70 % of groundnuts produced in Western MaliComprise all groundnuts producing agro‐ecological zones

Kenya: Nyanza province (west) – transect from Kisi to Homabay (high  low from Kisi to Homabay (high ‐ low elevations) Upper East – transect from Embu to Mbeere (high ‐ low lands) L  E     h  i l d  Lower East transect that includes Machakos and Makueni districts. 

fEconomic impact:Health – (Liver cancer ‐Disability‐Adjusted Life 

Perceptions of aflatoxin 

Knowledge  attitude  Disability‐Adjusted Life Years ‐DALYs) Livelihoods (income and 

Knowledge, attitude, perception and practices (KAPP)

wealth)Missing Trade

Willingness to pay and auctions (WTP)

Toxic

Acute aflatoxicosis

Carcinogenic

Liver cancer (HCC) Acute aflatoxicosis4 outbreaks since 1974 

747 cases, 243 deathsLiver cirrhosis

Liver cancer (HCC)560,000 cases; 500,000 deaths/yr32X more prevalent  Liver cirrhosis

772,000 deaths annuallyStunting and wasting in children

32X more prevalent in poor nationsOther risk factors: hepatitis B (HBV), 

Immunomodulationp

hepatitis C (HCV), alcohol, tobacco

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M i M i

District

Maize Aflatoxin (ppb)

Geom. Mean

Maize Aflatoxin (ppb)

Range

Mak eni 52 9 1 5 400Makueni 52.9 1 – 5,400Kitui 35.2 1 – 25,000Machakos 17.8 1 – 3,800

Thika 7.5 1 – 46,400TOTAL 20.520.5 1 – 46,400 Drought

Pl t  t Food Scarcity

Poor storage

Plant stress

Hi h  fl t i

Aflatoxicosis

High aflatoxin

Mycotoxins regulations impose costs on the producers that y g p pcould take the form of both variable and fixed costs. 

Th     f  ff  Three types of effects: Volume of trade effect –Already trading could trade less

Missing trade or lost trade effect – Producers/countries could be g ffscreened off the export market. The ones to be screened off the export markets would be the ones comparatively less productive 

Market reallocation effect – Exporters could reallocate their ff psupplies across markets including towards domestic markets. Note that missing trade effect is not independent of market reallocation effect as:▪ Lost trade in a particular market can surface as new trade in some other 

market. 

U   th d  th t  ll  f    t d  Use methods that allow for zero trade 

Also consider the trade among all countries 

Apart from zero trade – look at relative trade across relative high and low standard markets for groundnuts and maize

Key finding:Mycotoxins regulations have significant effect on relative bilateral trade flows for groundnuts but no significant effect for maize. Moving from codex to EU will shift maximum up to 22 percent trade to low‐standard markets in groundnuts and much lower in maize.

How low value is low standard?How low value is low standard?

A b  h   d d/ f   ill  h   h  b idA better home standard/performance will shorten the bridgeBridges are long for many countriesDomestic markets Domestic markets 

Raise the speed on the bridge 

Cushion the fall

k L       h   k  Markets Some market is missing here 

Let us create the markets that are missingAfla‐control – Can it not be missing here 

Let us understand the critical difference in 

ISO/ GlobalGAPWhat is needed

Credible informationdeterminants of ATP and WTP

Credible information▪ Institutions protecting brand

Subsidy syndrome  How to generate or preserve credibility?p y

iIncentives InfrastructureInstitutions Institutions 

The three are not mutually exclusivey

Farmers:Generally aware of aflatoxin, but didn’t know what caused it;Wanted to know if it was safe to Wanted to know if it was safe to dry maize directly on the ground;Knew neighbors died because of Knew neighbors died because of aflatoxin; how could they know if they were exposed;Some farmers consumed moldy Some farmers consumed moldy maize produced on own farm, but would not consume moldy maize from storesmaize from stores

• How many know aflatoxins?How many know aflatoxins?• How many know its dangers?•Who could credibly convey the message?Who could credibly convey the message?• Increased valuation by consumers – how to translate into producer incentives?to p oduce ce t es

•Credible certification is the key• Product differentiation is another keyProduct differentiation is another key

• Small farmers will find it too costly to mitigate – no cost too big if rewarded with higher priceg g p

Stated preference methods (SPM, e.g., the contingent p , g , gvaluation method)

Let’s play in real markets — Is Nestle 10,000 farmers 4 ppb feat is for domestic markets or for western markets (mostly European)? 

Let there be a gigantic information campaign – no piecemeal (Rotary International awareness campaigns)

Let there be real world intervention

A package worth trying

Aflatoxin levels (µg/kg) in maize grain collected from Kaiti  Kenya

30 40 days

grain collected from Kaiti, Kenya

Maize variety Pre‐harvestPost‐harvest (15‐25 days after harvest)

30‐40 days after post‐harvest

Mean Range Mean Range Mean Range

DH 04 0 0‐0 206.10 0‐577.4 690.13 0‐2069DH 04 0 0 0 206.10 0 577.4 690.13 0 2069

Pioneer 3253 66.28 0‐273.8 31.54 0‐113.6 30.71 0‐294.70‐

Local 24.48 0‐174.4 344.58 0‐3180.7 185.910

2024.6

Panar 2.65 0‐10.6 33.83 0‐135.3 6.30 0‐23

DK 8031 29.67 0‐44.5 809.07 0‐1213.6 26.13 0‐39.2

bl ld h b bPossible interventions:

Breeding for aflatoxin i t

Could there be sub‐standards 

resistance

Biocontrol

h

How will the payment mechanism work?

Postharvest intervention package

Not all of them ha e Not all of them have the same outcome

Creating the right markets

Foreign markets are good, but a lot can happen in domestic/regional markets 

Public health issues might be the central driver of policymakers’ incentivesp y

That will however also be used for market creationcreation

Source: Environmental Health Perspectives

BiocontrolBiocontrolin Africa

BiocontrolRanajit BandyopadhyayRanajit Bandyopadhyay

Peter CottyPeter Cotty

www.iita.org

BiocontrolPeter CottyPeter CottyJacob MignounaJacob Mignouna

Margaret McDanielMargaret McDaniel

Aflatoxin, health and trade

Death (>200 people in Kenya)S i ti ith H titi B Vi (HBV) tSynergistic with Hepatitis B Virus (HBV) to cause liver cancer• 30 times more potent in HBV+ people• 5 60 times higher cancer risk• 5-60 times higher cancer risk

Impairs growth and development of childrenSuppress immune system – increased susceptibility to diseases (e g HIVsusceptibility to diseases (e.g., HIV, malaria)?Impedes uptake and utilization of micronutrients in human systemsyAnimal productivity reduced – growth rate, embryo toxicity, feed efficiency, cancer, death…

2 3 illi b i d i

www.iita.org

~2.3 million bags contaminated maize not tradable in 2010 in Kenya

Aflatoxin: What is it?

• Highly toxic metabolite produced by the ubiquitous Aspergillus flavus fungus

• The fungus infects crops and produces the toxin in the field and in stores

• Fungus carried from field to store• Contamination possible without p

visible signs of the fungus• Some predisposing factors:

pre harvest high temp and drought stress– pre-harvest high temp and drought stress– wet conditions at harvest and

post-harvest periodsinsect damage

www.iita.org

– insect damage

Prevalence of aflatoxins in food and feedin food and feed

• Several African staple commodities affected• Several African staple commodities affected• High human exposure in Africa – mother to baby• Levels and frequency of occurrence high

– >30% maize in stores with >20 ppb aflatoxin– ~90% stores are contaminated with Afla fungi– Up to 40% grain in households with aflatoxinUp to 40% grain in households with aflatoxin

• Concern for food and feed processors, government and emergency food reserve agenciesHi hl t i t i d i i t l• Highly toxic strains, conducive environmental conditions, traditional farming methods and improper grain drying and storage practices,

www.iita.org

unregulated markets

Aflatoxin contamination in W. Africa

Primary products Food products MTL = 20 ng/g

Maize: 4000 – BeninPeanut: 216 – Ghana

y p• Peanut paste: 3278 – Ghana• Peanut sauce: 943 – Ghana

p MTL 20 ng/g

Peanut: 216 – GhanaSorghum: 80 – GhanaMillet: 200 – Nigeria

• Leaf sauce: 775 – Gambia• Maize dough: 313 – GhanaMillet: 200 Nigeria

Tiger nuts: 120 – Nigeria• Kenkey: 524 – Ghana• Cashew paste: 366 – Ghana

P t il 500 Ni i• Peanut oil: 500 – Nigeria• Yam flour: 7600 – Nigeria• Local beer: 135 Nigeria

www.iita.org

• Local beer: 135 - Nigeria

Distribution (%) of aflatoxin (ng/g) in maize products in Kenya 2004in maize products in Kenya, 2004

District Products District Products (No.) < 20 21-99 100-1000 >1000

Makueni 91 35 13 40 12

Kitui 73 38 21 32 10Max 25,000 ppb

Machakos 102 49 25 23 3or 1200 times

MTLThika 76 66 17 13 4

TOTAL 342 47 19 27 7

International Institute of Tropical Agriculture – Institut international d’agriculture tropicale – www.iita.org

TOTAL 342 47 19 27 7

Nyamongo et al

Aflatoxin and poultry (broilers)

Aflatoxin Aflatoxin level (ppb) Samples (%)

<20 -- safe 38levels in feeds in Nigeria

>20 to 100 14

>100 to 500 41ge a>500 to 1,000 7

~40% reduction in live weight (8 weeks)

www.iita.orgAF-free diet 500 ppb AF diet

AflasafeAflaguard

BIOCONTROL WORKSWORKS

IN TENS OF IT WORKS IN AFRICA

THOUSANDS OF ACRES IN

www.iita.org

IN AFRICA TOO!

OF ACRES IN THE US!

Principles of aflatoxin Principles of aflatoxin biological controlbiological controlbiological controlbiological control

Fungal communities differ in aflatoxin-producing ability and this influences 100producing ability and this influences crop vulnerability to contaminationSome strains produce a lot (toxigenic), 75

100TOXI

AT

and others no aflatoxin (atoxigenic)Competitive exclusion (one strain competing to exclude another) is

50

ence

(%)

IGENI

OXIGcompeting to exclude another) is

biocontrol principle in practice in the US 25

Inci

de C ENIC

S Strain A. flavus L Strain or “typical” A. flavus

Shift strain profile from toxigenic to atoxigenicThus aflatoxin contamination reduced

0

Natural Biocontrol

www.iita.org

Thus, aflatoxin contamination reducedOn average, S strain isolates produce much

more aflatoxin than L strain isolates.

Aflatoxin biocontrol factsAflatoxin biocontrol facts

Crops are infected by complex Crops are infected by complex communities of diverse fungicommunities of diverse fungi

Treatments may have Treatments may have longlong--term influence term influence gg

Fungal communities differ in aflatoxin-producing ability, and this influences crop vulnerability to contamination. Atoxigenic

ggand cumulative and cumulative

benefitsbenefitsstrains can be used to reduce aflatoxin-producing ability.

There are many atoxigenicsThere are many atoxigenics

More than one crop More than one crop may benefit from the may benefit from the

li d t ili d t iThere are many atoxigenicsThere are many atoxigenicsSelect safe strains best adapted to cropping systems, ecosystems, and climates.

applied strainapplied strain

Atoxigenic strains can Atoxigenic strains can Atoxigenics are already Atoxigenics are already present on the croppresent on the cropJ t i th f f d i

ggbe applied without be applied without

increasing infectionincreasing infectionand without increasing the overall

www.iita.org

Just increase the frequency of endemic strains and natural interference with contamination.

and without increasing the overall quantity of A. flavus on the crop

and throughout the environment.

How does biocontrol work?How does biocontrol work?

Sporulation on moist soil

3-20

Soilcolonization

Insects

3 20 days

Spores

Wind

30-33 grains m-2

Hyphal network in seed pericarp

www.iita.org

Broadcast @ 10 kg/ha 2-3 weeks before flowering

Inoculum on sorghum grain carrier

Technology development: Technology development: Atoxigenic strain identificationAtoxigenic strain identificationgg

Collection/characterization Toxin assay VCG/DNA characterization

cnx

Unknown 2

cnxnia-D

+

Field

Field

Lab Field efficacytest

Competition assays

Lab

www.iita.org

BB--aflatoxin in stored maize grains from aflatoxin in stored maize grains from untreated and atoxigenic treated plotsuntreated and atoxigenic treated plotsuntreated and atoxigenic treated plotsuntreated and atoxigenic treated plots

Stored Poorly storedLocation Treatment

yAflatoxin

(ppb)Reduction

(%)Aflatoxin

(ppb)Reduction

(%)Control 42 2 408

IbadanControl 42

732,408

96Treated 11* 105**

Control 54 956Ikene

Control 5491

95693

Treated 5* 62**

Z iControl 73

857,561

95Zaria 85 95Treated 11* 343**

MokwaControl 50

862,481

94

www.iita.org

Mokwa 86 94Treated 7* 149**

* P < 0.05, ** P < 0.01

Recovery of released strains from soil Recovery of released strains from soil and grain of control and treated plotsand grain of control and treated plots

90 Soil before inoculation

70

80

sed

s (%

)

Soil at harvestGrain at harvest

50

60

y of

rele

ac

stra

ins

30

40

Rec

over

yto

xige

nic

*Mean of0

10

20R at

www.iita.org

Mean of four sites

0

Control* Treated*

ExEx--ante impact assessment of ante impact assessment of aflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeriaaflatoxin biocontrol in Nigeria

• DALYs saved: 103,000 to 184,000• Cost-effectiveness ratio: 5.1 – 24.8Cost effectiveness ratio: 5.1 24.8 • Benefits are likely to be higher if all

health impacts from aflatoxin exposurehealth impacts from aflatoxin exposure are considered.

www.iita.orgWu & Khlangwiset (2010) Food Additives & Contaminants

ChallengesChallenges

• National regulatory systems for commercial release of bio-pesticidescommercial release of bio pesticides must be addressed for significant impact

• Market for biocontrol product

• The nurturing of local enterprises toThe nurturing of local enterprises to produce and market such biocontrol products is a significant challenge

Partnerships and institutions key for meeting these

www.iita.org

key for meeting these challenges

Building partnerships for Building partnerships for aflatoxin biocontrolaflatoxin biocontrolaflatoxin biocontrolaflatoxin biocontrol

• Registration of the atoxigenic strains as biopesticidesp

• Sensitisation of growers, consumers, regulatory agencies and policymakers b t t ti l f bi t labout potential of biocontrol

• Upscaling and outscaling to wider areas (Nigeria and Kenya AATF MycoRed)Kenya – AATF, MycoRed)

www.iita.org

OutlineOutline

aflasafe™For displacing aflatoxin-producing fungip g p g g

aflasafe™is a mixture of four atoxigenic strains of Aspergillus flavus that occur naturally on the maize crop and field soils in Nigeria. When broadcast in maize fields 2-3 weeks prior to flowering @ 10-20 kg per hectare, the four strains in aflasafe™ compete with strains of Aspergillus flavus that produce large amounts of aflatoxin and in so doing limit the amount of these high aflatoxin producers that become associated with the crop.

Active ingredient: Four Aspergillus flavus strains*……...………… 0.0005% Other ingredients: Sorghum seeds (sterilized colonized) 99 9995%Other ingredients: Sorghum seeds (sterilized, colonized)………..99.9995%Total: ………………………..…….……………..…………………….….. 100%

*Contains a mixture of four strains that cannot produce aflatoxins: La3279, Og0222,

La3304, and Ka16127. A minimum of 3,000 Colony Forming Units are present in each gram of aflasafe™.

KEEP OUT OF REACH OF CHILDREN

THIS IS NOT A FOOD GRAIN

PRECAUTIONARY STATEMENTSCAUTION: Harmful if inhaled. Avoid breathing dust. Causes moderate eye irritation. Avoid contact with eyes, skin or clothing. Prolonged or frequently repeated skin contact may cause allergic reaction in some individuals Wash hands thoroughly with soap and water after

NAFDAC NAFDAC provisionalprovisional

allergic reaction in some individuals. Wash hands thoroughly with soap and water after handling and before eating, drinking, chewing gum, or using tobacco, or using the toilet.

SEE ADDITIONAL PRECAUTIONARY STATEMENTS INSIDE THE CONTAINER

NAFDAC Registration Number:

Manufacturer: IITA, Oyo Road, Ibadan 200001, Nigeria

Phone: 08034035281, 08055055954 Manufacturing Date:

www.iita.org

provisional provisional registration registration

approval letterapproval letter

Fax: INMARSAT: 873761798636 Expiry Date:

Email: iita@cgiar.org Batch Number:

NET CONTENTS: 10 kg

10-kg boxes of AflaSafe ready for deployment

www.iita.org

www.iita.orgExplaining aflatoxin and biological

control to farmers in their fields

NAFDAC officials inspecting maize fields treated with AflaSafe

www.iita.org

Farmers treating maize and groundnut fields with AflaSafe

Aflatoxin reduction: Aflatoxin reduction: 80% at harvest80% at harvest

56 to 73% carry56 to 73% carry--over of over of

www.iita.org

inoculum one year after inoculum one year after application application

Different levels of aflatoxin in Different levels of aflatoxin in Afl S f ™ t t d dAfl S f ™ t t d dAflaSafe™ treated and AflaSafe™ treated and

untreated fields at harvestuntreated fields at harvest

94100

100

120

)

Treated

C t l75 73

60

80

field

s (%

) Control

3927

20

40

Farm

ers'

030

<4 <10 <20 >20Nestlé/EU WFP/Nigeria US Unsafe

F

www.iita.org

Nestlé/EU WFP/Nigeria US Unsafe

Maximum allowable aflatoxin level (ng g-1)

Aflatoxin reduction in 4 zones Aflatoxin reduction in 4 zones 4 th ft t i Ni i4 th ft t i Ni i4 months after poor storage in Nigeria4 months after poor storage in Nigeria

800646

85% 82% 99% 95%% reduction in aflatoxin reduction in treated fields over control

Mean

400

600

xin

(ppb

) ControlTreated

646 Mean reduction

90%

200

400

Afla

tox

96

271171

0Birnin Gwari Lere Maigana Pampaida

9614

4917 9

www.iita.org

BB--aflatoxin concentration (ng/g) aflatoxin concentration (ng/g) in groundnut after poor storagein groundnut after poor storagein groundnut after poor storagein groundnut after poor storage

Treatment B aflatoxin* Reduction (%)Treatment B-aflatoxin* Reduction (%)

AflasafeTM 0.3 ± 0.4 96Control 8.2 ± 2.5

*Mean of 4 samples ± SE

www.iita.org

KENYAKENYA

www.iita.org

The S Strain of A. flavus Caused the Kenyan Maize Contamination Episodes that Led to Hundreds of Deaths through Acute Aflatoxicosis

95 CFU/AP Aflatoxin Machakos District

85

(%)

5.90933301 to 1,00041.901001Over 1,000

mg(%)S (%)n(ppb)

75

S st

rain

1 326630 5 t 20.136732 to 195.013701021 to 300 5.90933301 to 1,000

65Makueni District

Matchokos District

Kit i Di t i tposnegposTrend5.577520Overall 1.326630.5 to 2

550 500 1000 1500

Kitui District

0.9320.7410.975Quadratic R2,

0.8970.014

0.2290.415

0.8900.016

Linear R2,Linear P

www.iita.org

Aflatoxin (ppb)0.0680.2590.024Quadratic P

Probst, Njapau, & Cotty. 2007. Applied & Environmental Microbiology 73:2762-2764.

Aflatoxin in maize coAflatoxin in maize co--inoculated inoculated ithith t i it i i t i d ft i d fwith a with a toxigenictoxigenic strain and a few strain and a few

Kenyan atoxigenic strainsKenyan atoxigenic strains

Isolate co inoculated

Aflatoxin B1 (µg g-1) Average reduction

(%)Test 1 Test 2co-inoculated (%)Test 1 Test 2Toxigenic alone 105 109

C6-E 9 19 87C6 E 9 19 87

C8-F 13 21 82

E62-L 8 23 87E62-L 8 23 87

E63-I 12 25 82

R1 N 12 25 83

www.iita.org

R1-N 12 25 83

NRRL-21882 9 27 86

Current status and future Current status and future l f bi t l i Kl f bi t l i Kplans for biocontrol in Kenyaplans for biocontrol in Kenya

• Current status– High-level support from Kenyan

government– Funding from USDA and AATF

KARI: lead Kenyan institution– KARI: lead Kenyan institution – Partnership with IITA/USDA-ARS/AATF– Application for repatriation of strains

submitted• Future plans

– Potential funding: Bill and Melinda Gates FoundationO i i l O 2010 F b 2011– On-station trials: Oct 2010 to Feb 2011

– EUP from PCPB: Jul to Sep 2011– On-farm & safety trials: Oct 2011 to

Feb 2012

www.iita.org

Feb 2012– Apply for full registration with PCPB:

Aug 2012

Steps in aflatoxin biocontrol RSteps in aflatoxin biocontrol R--44--DD1. Strain id and optimization

• Sample collection2.Building partnerships

• Sensitizing stakeholders• Strain characterization

• Atoxigenic strain identification (lab)

Sensitizing stakeholders

• Training of regulators for biopesticide registration

( )

• Genetic and molecular characterization

• Detection and monitoring

• Harmonization of biopesticide regulations

• Experimental Use Permit or• Detection and monitoring methods

• On-station field efficacy

• Experimental Use Permit or provisional registration

• On-farm efficacy testing• Optimizing treatment

protocols

• Cost-effective formulations

• Cost-effectiveness analysis

• Farmer-market linkages in l h i i l di

www.iita.org

• Create African strain libraryvalue chain, including catalyzing farmer groups

Steps for promoting biocontrol Steps for promoting biocontrol for wide adoptionfor wide adoptionfor wide adoptionfor wide adoption

3.Commercialization 4.Capacity developmentBill d M li d G t F d ti

• IP issues• Farmer training in integrated

aflatoxin management

Bill and Melinda Gates FoundationDoreo Partners

• Identification of potential manufacturer

• Full registration

• Industry and regulatory agencies for aflatoxin monitoringg

• Business plan

• Manufacturing plant

g

• Students and national program staff in product development deployment

• Product stewardship

• Technical backstopping

development, deployment and monitoring

• Regulatory agencies and

www.iita.org

• Monitoring and evaluation commercial manufacturer for quality control

Focus countries and Focus countries and t f d l tt f d l tstages of developmentstages of development

Country Strain identification Partnerships

Commercial-ization

Capacity development

Nigeria

Senegal

Burkina FasoBurkina Faso

Ghana

Cote d’Ivoire

Kenya

Malawi

Mozambique

Tanzania

Ethiopia

Mali

www.iita.org

Mali

Yet to startPartially startedCompleted

Partnerships are Key:Partnerships are Key:Ni iNi iNigeriaNigeria

• USDA-ARS, Universities of Ibadan d B T h l d l t

• Millennium Village Program: and Bonn: Technology development

• GTZ/AATF/EU/BMGF: Funds• AATF: Intellectual propriety• USDA-FAS: Registration

Testing/awareness

• Nestle: Market

• Animal Care: MarketUSDA FAS: Registration• NAFDAC: Regulation, monitoring• Ag Dev Program (extension):

Testing/promotion/awareness

• Livestock Feed Plc: Market

• UNIDO: Promotion/investor forum

• Nigerian Export Promotion Council: • Maize Association of Nigeria:

Promotion/awareness• Ministry of Health:

Promotion/awareness

Promotion/investor forum

• NEPAD Business Group: Promotion/investor forum

• Nigerian Mycotoxin Society: Awareness

• Commercial Ag Development Program: Testing/awareness

• Nigerian Economic Summit Group: Promotion/investor forum

• Bill and Melinda Gates Foundation:

www.iita.org

Program: Testing/awareness Promotion/commercialization

CommercializationProduction Room Atoxigenic Strain Manufacturing FacilityArizona Cotton Research & Protection Council

www.iita.org

Summary• Aflatoxins in food and feed pervasive

in Africa

y

in Africa• Biological control in conjunction with

other management practices can dramatically reduce aflatoxin contamination

• Large-scale manufacturing and commercialization of biocontrol agents a prerequisite for adoptionagents a prerequisite for adoption.

• Aflatoxin mitigation plan developed• Linkage being developed with other

i ti f d torganizations for downstream dissemination activities for biocontrol

• Support and partnership needed from national governments

Africa-wide initiativeon Aflatoxin biocontrol could i h l h d i f

www.iita.org

from national governments, donors/investors, private food sector, farmer groups, and regulators

improve health and income of African people

IITA Campus, Ibadan

www.iita.org

Aflasafe Strategic Roadmap Optiong p pImproving the Health and Securing the Income of Nigeria’s Small Holder Farmers

Creating Companies | Creating Wealth | Creating Jobs

October 2010

CONFIDENTIAL

Outline

Sector Overview

Strategic Road Map

Overview maize sector in Nigeria

Integration of strategic efforts into a strategic roadmap

2

S t O iSector Overview

3

Maize production in Nigeria has grown dramatically with a sevenfold increase from 1960-2008. Growth has been driven primarily by increased hectarage, with recent increase driven by improved yields.

Maize Production **Measure: Millions of Metric Tons

Population****Measure: Millions of People

145

Young population with medianage of 19 years old.Urban population currently approximately 50% of population

Key Takeaways

4.2% 2.6%

DriversGrowth

1961 1970 1980 2000 2008

50 5275

125 145

1961 1970 1980 2000 2008

growing at 4.4% annually.Rural population currently approximately 50% of population growing at 1.3% annually.

A h d i fMaize consumed as staple food in NorthernArea Harvested ** Measure : Millions of Hectares

1 38 1 45

3.163.85

Area harvested growing at a faster rate than rural population.Average area cultivated by individual farmers has increased.2.2%

Maize consumed as staple food in Northern Nigeria, accounting for 59% of energy intake.*

1.38 1.450.465

1961 1970 1980 2000 2008

Crop Yield**Measure : Metric Tons per Hectares

Yields have significantly increased primarily due to increased fertilizer

tili ti d d ti f i dp

0.8 1 1.3 1.32

2%

*Akinleye S, J Soc Sci, (2009). Food Demand in Northern Nigeria: Implications for Food Policy18(3): 209-215

utilization and adoption of improved seeds.

4

1961 1970 1980 2000 2008

g p y ( )** FAO**** World Bank

Majority of maize in Nigeria is consumed at farm level, with the balance consumed by relatively concentrated industry sectors, primarily located in Southern Nigeria.

Industry LevelMarket Level Farm Level

Percent of Famer Production Sold vs. Consumed*Measure: %

Sales to Players from Markets*Measure: %

Sales to Industry Players from Markets*Measure: %

30%70%Consumed by Farmer

Sold inMarket

40% 60%

10%40%

20%

Consumer

Industrial Poultry

Branded Maize Flour

Breweries

30%Other

Average farmer produces 3 – 4 MT on 2Ha.Consumes 1.5 – 2.5 MT annually.

Sales to Regions from Markets*Measure: %

Poultry industry dominant consumer of grains amongst industry players.60% f lt i d t l di t t

15%

35%NorthernNigeria

Export

60% of poultry industry sales are direct to poultry farmers with the balance to a concentrated group of feed millers.Branded maize flour highly concentrated with Grand Cereals accounting for over 60% of the market.B i l t t d ith NBC

50%Southern Nigeria

Breweries also concentrated with NBC and Guinness over 60% of the market.

* Doreo primary research

5

Doreo primary research

Aflasafe would primarily be utilized in the months of July and August during the same period as urea fertilizer.

Land PrepLand Prep

Seasonal Maize Calendar*Measure: Months

Planting

NPK

Planting

Fertilizer

Aflasafe Aflasafe

Urea

DecNov Jan Feb Mar Apr May Jun Jul Aug OctSept

HarvestHarvest Harvest

* Doreo primary research

6

Doreo primary research

D l St t i R d MDevelop a Strategic Road Map

7

Analyzed five strategic efforts that integrate into a strategic road map

DescriptionStrategic Efforts

Leverage current market incentive structures for increased farmer profitability.

DescriptionStrategic Efforts

Market Forces

Leverage influence of regulatory authorities to drive market behavior (e.g., adoption of a FDA Action Levels Model; i.e., 20ppb of aflatoxin – for humans, immature animals and all dairy).

Policy

Develop public/private sector direct incentive structures for farmers to utilize Aflasafe (e.g., product bundling – discount of fertilizer with purchase of Aflasafe).

Bundle

A i l t th h lth i k f fl t i t i ti iHealth

Develop model analogous to disease immunization programs Provide

Aggressively promote the health risks of aflatoxin to incentivize farmers to utilize Aflasafe to protect their families’ health.

HealthAwareness

(e.g. polio vaccination) where product is provided for free or spread directly on farms free of charge.

Free

88

Bundle effort - Urea fertilizer is the most appropriate incentive for Aflasafe

Effective Incentive

Not appropriate, demand low Seed

AnalysisOptionDriver

Sample 2KG Bag of Combined Aflasafe and Urea

Incentive

Characteristics1. Agro input 2. High farmer demand 3 Utilized at similar

Herbicide

Insecticide

Not appropriate, not used at the same time

Not appropriate, demand low Potential benefit as insects are key carrier of A flavus3. Utilized at similar

time and in similar manner. Fertilizer Best alternative, Urea fertilizer

High demandUsed at the same timeCan be packaged with AflasafeCustomarily dispersed the same

carrier of A. flavus

Customarily dispersed the same way as AflasafeIncreases the volume of Aflasafe-free grainsCustomarily utilized at approximately the same rate as Aflasafe 10kg/haAflasafe 10kg/ha In donor-supported model, profit from fertilizer sales will lower amount of support requiredEstimated cost saving of 30%

9

Potential Strategic Road Map: Four Focus Areas

Options 1: Bundle Generate Supply of Cost-Effective Low

Aflatoxin Grains Option 2: Provide Free

1

Enforce Regulatory Policy

Policy: Build

regulators’

Policy: Develop

regulatory Policy: Phased-in regulatory enforcement mechanism

2

Regulatory Policy

Enable Market

regulators capacity

regulatory framework

Market Forces3

Enable Market Forces to Drive Sustainability

Market Forces

Health Awareness: Farmer Focus4Promote Health

Awareness to Value Chain Actors

Health Awareness: Farmer Focus

Health Awareness: Industry Focus Health Awareness: End Consumer

10

1Year

2 3 4 5

Appendix: Firm OverviewAppendix: Firm OverviewCreating Companies | Creating Wealth | Creating Jobs

11

Creating Companies | Creating Wealth | Creating Jobs

Our Strategy At Doreo Partners, we build on the core philosophy of

General Georges Doriot, the pioneer of modern Venture g , p

Capital, that is to help great people build great

companies.

Our Team… Creating Value We bring deep sector expertise and operational

excellence to the companies we back. We have

structured our investment approach and organization tostructured our investment approach and organization to

provide entrepreneurs and their management teams with

access to the combined resources of the entire firm and

our advisors In addition Doreo provides consultingour advisors. In addition, Doreo provides consulting

services to select clients in the agriculture and

development sectors.

CONFIDENTIAL 1212

Creating Companies | Creating Wealth | Creating Jobs

Our team focuses on providing effective strategic

guidance, hands-on leadership, deep industry expertise Creating Companies

and access to capital to assist entrepreneurs and their

teams to become market-leading companies.

Creating WealthOur investments in high-growthh industries with limited

threat from imports ensures superior returns to our

investors. We do not limit our potential; we invest

Creating Jobs

investors. We do not limit our potential; we invest

across the agriculture value chain in Africa.

Our industry focus enables us to be a significant Creating Jobs

contributor to the reduction of Nigeria’s spiraling

unemployment rate and associated social unrest, by

providing a significant number of semi-skilled to lower-

1313

skilled job opportunities.

Our TeamKola Masha MBA (Honors) Harvard Titi Odunfa MBA HarvardKola MashaManaging Director

Over 10 years leadership experience in Venture Capital, Business Over 10 years leadership experience in Investment Management,

MBA (Honors) Harvard

MS Egr. (Highest Distinction) Mass. Inst, of Tech. - MIT

Titi OdunfaAdvisory Partner

MBA Harvard

y p p p ,Development, Corporate Finance, Operations and Marketing acrossEurope, North America, Asia and Africa. Experience with GeneralElectric, Abiomed , Notore and Doreo Partners. Kola brings deepexperience in building businesses particularly in the Agricultureindustry as a former Managing Director/CEO of Notore Foods a

y p p g ,Accounting and Consulting, across North America and Africa.Experience with Goldman Sachs, Zenith Bank, PWC, KPMG andSankoré. Titi brings deep experience in Investment Managementboth Globally and Africa specific, with her experience managing over$1 Billion USD for organization including Goldman Sachs and Zenithindustry as a former Managing Director/CEO of Notore Foods, a

member of the Notore Group, one of Sub Saharan Africa's largestagro allied companies.

$1 Billion USD for organization including Goldman Sachs and ZenithBank, a leading Nigerian Bank.

Ladell Robbins MBA Harvard Tope St. Mathew Daniels MS Egr. Stanford

Over 10 years leadership experience in Investment Banking, RealEstate, Corporate Strategy, Business Development, across NorthAmerica, Europe and Africa. Experience with JP Morgan, Credit

Over 10 years leadership experience in Engineering, Operations,Consulting and Venture Capital across North America and Africa.Experience with McKinsey & Company, Palladium Partners and IBM.

Advisory Partner Advisory Partner

, p p g ,Suisse, Alcatel - Lucent, Renaissance Group and Bluesky Partners.Ladell brings deep experience in Emerging Market/AfricanInvestment Banking as a former Director of Investment banking withthe Renaissance Group, a leading global emerging marketInvestment Bank

p y p y,Tope brings deep experience in Strategic thinking both Globally andAfrica specific, as a former Associate Partner at McKinsey &Company leading their activity in the Nigerian Market.

14

Investment Bank.

A di B dl Eff t Fi i lAppendix: Bundle Effort Financials

15

Bundle effort – Fertilizer input support system significantly reduces the level of supportneeded to make the product successful

Utilize, lower cost, more effective input support system.Provide manufacturer discounted sorghum, urea and inoculum.Estimated reduction in cost to donor/government of 30%.

D t l k f d d

AnalysisPartnerDriver

Partner Incentive

Manufacturing and Distribution

Partner More sustainable as it enables the development of effective distribution systems and ensures farmers begin to appreciate value of Aflasafe.In addition, promotes the use of fertilizer to further improve the incomes and health of farmers.

Due to lack of demand of Aflasafe, partner would need an incentive to invest in equipment and distribution channel for combined product.

Comparison of Input Subsidy Support vs. Purchase Support * Measure : Naira per 1kg of Aflasafecombined product.

Direct Sales Revenue 125Operating Cost

Purchase Support 195Operating Cost

Fertilizer Incentive System (1kg Aflasafe + 1 kg Urea)

Total Support: N130/kg

Purchase Support System(1kg Aflasafe ONLY)

Total Support: N195/kg

Measure : Naira per 1kg of Aflasafe

Operating CostSorghum RM Cost (Support :N50) 0Urea Cost (Support: N70) 10Inoculum Cost (Support: N10) 0Production Cost 40Packaging 10

Operating CostSorghum RM Cost 50Inoculum Cost  10Production Cost 40

Packaging 10

Target support to specific partners (e.g., govt , donors etc.)

g gTotal Operating Cost 60

SG&A 30

EBITDA 35

Packaging 10Total Operating Cost 110

SG&A 30

EBITDA 55

16

EBITDA Margin  28%EBITDA 55EBITDA Margin  28%*Adapted from IITA analysis

Contact Details

Lagos3B Baajiki Close

Lekki Phase I

London11 Mount Pleasant

London, England

Lagos, Nigeria SE27 9PU

Kola Masha Managing DirectorManaging Director

kola.masha@doreopartners.com

+234-(0)-805-5000-350

www doreopartners comwww.doreopartners.com

17

Structure of Pull Mechanism Pros Cons

fl f d l llh ld f f f• Easiest way to clearly  • Distribution difficult to do 

1. Buy Aflasafe directly, give to smallholder farmers for free OR highly subsidize and bundle with other inputs such as fertilizer

incentivize manufacturing

and verify

• No monetary incentive for farmer (fully reliant on health education effort)

• Creates precedent of Manufacturer Purchase Subsidy

Distributor (Government?  Farmer p

giving Aflasafe away for free, distorting market 

2. Pay for performance: survey maize fields and reward contractor (& farmer?) for prevalence of Aflasafe strains OR

• Ensures money is provided for successful adoption by farmers, 

• Need for costly surveys, both baseline and results, with results potentially 

Subsidy Bundle?)

contractor (& farmer?) for prevalence of Aflasafe strains OR reduction in overall aflatoxin contamination in an area

aligning subsidy with ultimate objective

questioned

• As above precedent of Aflasafe given free/below cost is established

• No clear partner to takeManufacturer Distribution 

Contractor FarmerSurvey of Aflasafe 

Prevalence

Subsidy to Contractor  (& 

Farmer?) No clear partner to take on contracting role

3. Buy aflatoxin‐free ag products (like maize), creating a ‘premium’ value‐chain 

• Establishes precedentfor farmers buying Aflasafe

C t

• Requires careful coordination among a number of additional players• Creates new 

commodity category of aflatoxin‐free maize with price premium

• Introduces aflatoxintesting at many points

p y

• More difficult to explain to manufacturer when trying to incentivize investment

• Involves all the tricky

Manufacturer Distributor Farmer Aggregator Grain Reserve

Purchase Subsidy

School Feeding Program

testing at many points of the value chain

Involves all the tricky aspects of a maize purchasing subsidy

Other ideas?