COVID-19 disrupted many aspects of the world as we know it, and supply chains were no exception. As international shipping grew more difficult, risky, and expensive, the immense importance of resilient, local supply chains became clear.
This was true for Delish & Nutri, a Kenyan food processing firm that struggled with skyrocketing prices of imported peanuts during the pandemic.
Delish & Nutri, an innovative food company founded in 2018 in Kiambu, Kenya, sells the first peanut powder to come available on the national market. An inexpensive protein source, peanut powder is an ideal product to help support the nutritional needs of bottom-of-the-pyramid consumers.
However, more than 90% of Delish & Nutri’s raw material initially came from imported peanuts. This lack of local sourcing left them vulnerable to the supply chain disruptions caused by the COVID-19 pandemic, forcing the company to pay 40% more for its peanuts.
Part of the problem was that a strong, local peanut supply chain did not exist. And this was because smallholder peanut farmers in the area faced a number of challenges.
Few farmers had training on the best agronomic techniques, and struggled to access accurate weather information. Many were unable to afford seeds for new, higher performing peanut varieties. Finally, without access to mechanical threshing machines, farmers must thresh their peanut crops by hand–a laborious process that frequently causes contamination and breakage, rendering them unsellable to companies such as Delish & Nutri.
Due to these challenges, TechnoServe partnered with Delish & Nutri’s management to create an inclusive business plan that would support both the company and the farmers. This work was enabled by the Visa Foundation and the Coalition for Farmer-Allied Intermediaries (CFAI), a group of organizations including TechnoServe and Partnership for Food Solutions, that was founded in response to COVID-19 food system challenges, and supports vital agribusinesses in the middle of African value chains.
TechnoServe set about identifying the supply challenges faced by the food processor and then went to the farming community to better understand what their constraints were to meet these market needs.
Delish & Nutri struggled to get reliable, quality supply at an affordable price from the local producers. Imports were typically of a higher standard but were rapidly becoming increasingly cost prohibitive.
TechnoServe’s business advisors met with local farmer groups to better understand the challenges they faced and the solutions they needed. The groups confirmed that their top needs were:
- Access to high-quality seeds
- Agronomy training
- Weather information
- Threshing services
With these needs identified, Delish & Nutri, along with TechnoServe’s business advisors, designed a plan to meet them. Under this plan, 70 initial smallholder farmers will have the option to sign a production contract stipulating that Delish & Nutri will provide them with:
- Access to high-quality seeds from the seed bank at nearby Egerton University
- Agronomy training and weather forecasts via SMS, also provided by Egerton
- The provision of mechanized threshing services
While this plan is still in the beginning stages of implementation, the expected returns are exciting. Once fully implemented, this inclusive business plan is projected to help Delish & Nutri increase its local sourcing of peanuts to 236 tons in 2024, up substantially from only 19 tons in 2021. Participating smallholder farmers are expected to see their per-acre revenues double or even triple by 2024, earning an average of $470 in additional revenue. Finally, Delish & Nutri anticipates an increase in gross annual earnings of 165% between 2021 and 2024.
Most of all, this business plan could not only improve the lives of smallholder farmers and the profits of Delish & Nutri, but also serve as a model for future inclusive business plans. A key lesson from sudden supply chain disruptions, is that businesses can mitigate against these shocks by more proactively investing in their supply chains. Through approaches like this, small- and medium-sized food companies have the power to reshape markets in a way that immensely benefits both themselves and their communities.