Afri-Nut Ltd: a landmark groundnut processing plant for Malawi
Working with producer group NASFAM and social investors, Twin has launched Afri-Nut Ltd, a groundnut processing facility that adds significant value to nut products and creates additional income for producers in Malawi.
In late 2011, the doors opened at the brand new Afri-Nut plant in Lilongwe, the capital of Malawi. Afri-Nut will process groundnuts (peanuts) for export to the UK under Fairtrade terms and for use in ‘ready-to-use therapeutic food’, the paste given to malnourished children and used in HIV Anti-Retro Viral programmes across Africa.
The plant is the culmination of many years of work by Twin and the National Smallholder Farmers’ Association of Malawi (NASFAM) to reinvigorate exports from the groundnut sector in Malawi. Together we worked with smallholders to develop nut growing capacity and diversify crops, address the issue of aflatoxin which has blighted the African nut industry (see below), and to establish trade relations with buyers in the north.
“A bag of peanuts can just be a bag of peanuts – or it can be a way of helping farmers to build a real future for their families and communities and help build a way forward for smallholder farmers in Malawi.” - NASFAM’s Chief Executive Dyborn Chibonga
Malawi in its heyday was renowned for its ‘jumbo’ peanuts and used to export 25,000mt to the UK alone. In the 1960s, African countries dominated the world peanut market with approximately 75% of international exports. By 2005 their market share had fallen dramatically to around 5%, due to increased competition from America, China and Argentina, combined with stricter controls from Europe on aflatoxin.
Aflatoxins are carcinogenic by-products of a fungus (Aspergillus sp.) that grows on crops such as maize and groundnuts as a result of poor pre- and post-harvest practices. In the 30 years prior to 2000 there had been little investment to control aflatoxin in smallholder peanut value chains in Africa.
Malawi’s farmers needed new methods to produce, store, test and process their nuts in order to protect the crop from this mould. To this end Twin began working with NASFAM to invest in mechanised shelling and aflatoxin testing equipment, and to establish quality management systems, with support from DFiD, Comic Relief and Sainsbury’s Fair Development Fund, to assess and mitigate key risks in the production process.
Then, in 2007 Twin set up Liberation Foods CIC – a nut business co-owned by farming groups including NASFAM – to help producers in the south gain a foothold in the UK market. Liberation now provides a significant proportion of own-label Fairtrade peanuts in UK supermarkets.
Afri-Nut is a joint venture, financed and co-owned by shareholders from the commercial and development sectors: NASFAM, TWIN, Ex-Agris (a commercial agricultural company with interests in Malawi), Cordaid (a Dutch donor organisation) and Waterloo Foundation (based in Wales).
The aim of Afri-Nut is to move Malawian smallholder peanut producers up the value chain and to expand the volume of Fairtrade and other value-added peanuts produced for international, regional and domestic markets. Afri-Nut is developing new roles in supply chain coordination, facilitating communication and trading between players (producers, processors, other manufacturers, distributors and different types of consumers).
Afri-Nut currently has the capacity to produce 4000mt of groundnuts per annum which meet the exacting standards of Europe’s aflatoxin regulations and Fairtrade certification requirements. It aims to increase these volumes as the business develops.
One of Afri-Nut’s key long-term aims is to be a benchmark business that focuses on food safety, particularly in relation to aflatoxin mitigation, management and control. It is estimated that around 60% of peanuts in Malawi do not enter formal food chain markets. But there is little awareness among smallholder farmers about the consequences of consuming contaminated food.
A new pan-African initiative, the Partnership for Aflatoxin Control (PACA) has identified Afri-Nut as an example of how a for-profit social investment business has the potential to have an impact on the health status of millions of people.
DFiD’s Business Innovation Facility, which helped Twin facilitate the start up phase of Afri-Nut are also watching with interest to see how this innovative business model can be replicated.