A success story: Processing groundnut oil brings income and satisfaction to co-op farmers in Malawi

Script

CHARACTERS:
Host (studio presenter)
Field reporter (George Kalungwe)
Farmers (Members of Nthiransembe Co-operative)

• Kuliyani Chadooka (Chairperson/Male)
• Hapisoni Paulo (Secretary/Male)
• Marietta Lameck (Member/Female)

HOST:Hello. My name is (name of host), and I welcome you to the program. In this edition, we look at how small-scale farmers can increase their income by adding value to their groundnuts. We also hear how co-operatives can help farmers market and find funds for processing machinery.

One way that farmers can increase the value of their groundnuts is by making cooking oil. This is part of a popular trend known as “value addition” in most developing countries.

As you may have heard in previous programs on groundnut production, farmers can be effective in their business by working in groups. One type of group is a co-operative.

In simple terms, a co-operative is a business grouping of people working to achieve a similar outcome in their economic and social status. Co-ops are owned by their members.

One co-operative that is helping farmers improve their economic status through adding value to their groundnuts is Nthiransembe, located in Mchinji District, in the western part of Malawi, bordering Zambia.

The co-operative was established under the Government of Malawi’s One Village One Product, or OVOP program.

Before we hear more, here is a song about the value of groundnuts performed in the traditional dance of Ingoma, which is popular among the Ngoni people in Malawi.

INSERT SONG Let’s work hard in groundnut farming (x 6)

Groundnut farming is very productive (x 6)

It gives us money

It gives us oil x 2

It makes us healthy

My friend, what are you waiting for?

Come, come, come and join us in groundnut farming x 2

Come, come, come and join us in groundnut farming if you want to get rich.

HOST:Welcome back. By the end of the next 20 minutes or so, you will have learned how farmers can use co-operatives to help process and market their groundnuts and how farmers can find the financial help to purchase processing machinery.

My producer George Kalungwe will be talking to Kuliyani Chadooka, Chairperson of the Nthiransembe Co-operative, as well as members of the group Marietta Lameck and Hapisoni Paulo Banda. Before they explain how they operate their processing business, let’s get to know them first.

MR. CHADOOKA:I’m Kuliyani Chadooka. I’m a groundnut farmer and the Chairperson of Nthiransembe Co-operative, which produces cooking oil from groundnuts. I’m married with five children. All my children are still in school, except for the firstborn who is married.

KALUNGWE:Let’s hear from you, Mr. Banda.

MR. BANDA:I’m secretary of the co-operative. I come from Mphanga village. I’m a groundnut farmer, and I am married with seven children – two male and five female. The firstborn is in form three at Magawa Secondary School while the lastborn is very young and still being breastfed.

KALUNGWE:Thank you very much. Mrs. Lameck?

MRS. LAMECK:I also come from Mphanga village. I have five children. All of them are married except for the lastborn, who is in form two at Kasiya Community Secondary.

KALUNGWE:You are all growing groundnuts. Can each of you tell me the size of your field and how much groundnut you produce?

MR. CHADOOKA: My field is four acres, but I divide it and grow groundnuts on one side and maize on the other side. This season, I planted two acres of groundnuts, just like last year. When I take proper care of these two acres and when the rains are good, I get two tonnes of groundnuts. According to what the agriculture advisors tell us, the best groundnut for high yields and oil production is the variety we call CG7.

KALUNGWE:Let me also hear from you, Mr. Banda. How big is your field and how much do you produce from it?

MR. BANDA:My garden is about five and a half acres. I also divide it into two parts, and I plant maize on three acres and groundnuts on the remaining two and a half acres. I grow two varieties of groundnuts. On one acre I grow a variety we call Nkhalatsonga Chalimbana. It’s white in colour. And on one and a half acres, I grow CG7. But it is CG7 that provides me with more groundnuts.

KALUNGWE:If you make more profit with CG7, why do you grow the other variety?

MR. BANDA:Because it is good for making groundnut powder, which we use as a spice for vegetables and porridge. I want my children and wife to be healthy by eating groundnut powder.

At the factory they prefer CG7, and I sell about one tonne.

KALUNGWE:Madam, what can you tell us?

MRS. LAMECK:I grow two acres of groundnuts. On one and a half acres, I grow CG7, and on the remaining half acre I grow the white variety which my colleague has just talked about.

I sell CG7 to the factory because I make more profit through the co-operative. I make groundnut powder from the white variety for my children to eat nutritious foods.

HOST:You might be wondering how the Nthiransembe Co-operative got the funds for processing machinery. This is a major challenge for farmers who wish to add value to their crops.

One solution to this problem is to obtain a loan. Some non-governmental organizations and government agencies provide low-interest loans to small-scale businesspeople.

In Malawi, one such institution is called One Village One Product, or OVOP. The Nthiransembe Co-operative received seed money to buy machinery from this source.

MR. CHADOOKA:We were producing a lot of groundnuts here in Chioshya Extension Planning Area, but we were not making enough profit because vendors were buying from us at low prices. So, in 2005, we agreed to find a way to produce oil from our groundnuts. Then we had to find a way of getting machinery.

We went to the district commissioner’s office, and were told to try getting a loan from OVOP.

In 2007, we received a message that our application had been successful and we would be given a machine for oil processing. In 2009, we were advised to register our group with the government as a co-operative, which we did.

We got the loan with other equipment, together worth 3.2 million kwacha in 2009 and started repaying in 2010.

KALUNGWE:Let’s hear from the secretary of the group. Your colleague has talked about lack of reliable markets as the major factor that inspired you to start groundnut processing.

MR. BANDA:It is indeed true. Our concern was that most of our groundnuts were bought by vendors who took them to factories where they made a lot of profit, but we were getting peanuts (Editor’s: “getting peanuts” means “getting very little.”)

KALUNGWE:What are the requirements to join your co-operative?

MR. BANDA:We verify if the person is a Malawian citizen and if he or she comes from this area of sub-traditional Simphasi. Secondly, we require them to pay membership fees and buy shares.

KALUNGWE:Chairperson, please describe the process after the farmers have grown their groundnuts and the groundnuts are ready for processing into oil.

MR. CHADOOKA:Firstly, we provide advice to our farmers on how to take care of their groundnuts in the field and after harvesting. And, we buy the groundnuts from their homes.

We conduct a survey to find out the highest market price and we buy from our members at a slightly higher price than that, so they make a good profit. For example, last season the highest price was 250 kwacha per kilo and we bought from our farmers at 270 kwacha. The farmers were very happy because they made a good profit.

When we processed all the groundnuts we bought, we made a profit of 600,000 kwacha, which was shared among the farmers. Most of the farmers took home a net profit of between 14,000 and 30,000 kwacha, depending on the shares they bought. So we are actually experiencing a changed life. We thought this was only possible in the developed world, but now we see it happening here – farmers producing cooking oil and sharing huge profits.

KALUNGWE: Are there limits in terms of the amount of groundnuts members can sell to the co-op?

MR. CHADOOKA:We buy all the groundnuts a member can offer. If we need more groundnuts after buying from our farmers, we buy from non-members.

KALUNGWE:How much of your groundnut production did you sell to the co-operative last season?

MR. CHADOOKA:About 1250 kilos. I earned about 270,000 kwacha from that.

KALUNGWE:Let’s hear from the two of you. How much groundnuts did you sell, and how much money did you earn?

MR. BANDA:I sold a huge amount to the coop, and made about 180,000 kwacha. My overall harvest was two oxcarts. I can’t really say how much I harvested in terms of kilograms as we harvest using oxcarts.

MRS. LAMECK:Last season I sold 150,000 kwacha to the co-operative. This was a good profit since I stopped selling to vendors. The vendors were just stealing from us. But since I started selling to the co-operative, I make enough money.

KALUNGWE:How is the production process organized?

MR. CHADOOKA:When we buy the groundnuts, we keep them in a warehouse inside this building. We carefully grade them so that we process only the best nuts into oil. We remove those which are rotten or contaminated with aflatoxin.

We received training from the Ministry of Agriculture and a government program called the Rural Livelihoods Economic Enhancement Program, or RLEEP, on how to identify these problems.

KALUNGWE: What do you do with the damaged nuts?

MR. CHADOOKA: We have been taught that we should not consume groundnuts which are damaged. We throw them away.

KALUNGWE: How much groundnut did you buy as a co-operative last season?

MR. CHADOOKA: Last season, we bought about 10 tonnes of groundnuts.

KALUNGWE: We often hear of factories having production seasons and closed seasons. Is it the same with you?

MR. CHADOOKA:As small-scale farmers, the major problem we face is limited capital. Our only capital is our shareholdings and is very small. With that little amount, we cannot buy enough groundnuts to process throughout the year. We have problems, for example, in the months of March and April. We do not necessarily close the factory, but production is very low at this time.

KALUNGWE: Do you have certification from the Malawi Bureau of Standards?

MR. CHADOOKA: We have just started the process of acquiring a food processing certificate. As you can see, we have plywood here which we want to use to separate the building into sections, so that each production process has its own room, as required by the Bureau of Standards.

However, we have already asked for assistance from the government so that we can have a purpose-built building.

We are working hard to get certification. You have seen that we have wire mesh in the windows. That is required by the Bureau of Standards. We would like to meet all the requirements by 2015; we already received training on the standards.

We will be reconstructing this building, depending on the money we get. We hope our fundraising efforts will work. If we do not get assistance from the government, we will use the little resources we have to get the certificate.

KALUNGWE: How do you currently assure your customers that the product they are buying from you is not harmful to their health, since you are yet to get approval from the Bureau of Standards?

MR. CHADOOKA:Currently, our quality assurance is based on the process we follow in making the oil. We follow all the requirements on food processing spelled out by the Bureau of Standards.

For example, we take good care of our crop from the field to the factory. We have a very clean warehouse and we sieve our oil with a machine. We have good packaging. We do not just use empty bottles to package our oil, but buy new bottles from recommended manufacturers, and our products are labeled. Furthermore, we do not use any chemicals to process our oil. Chemicals can cause diseases such as cancer or hypertension, so we avoid them.

On top of that, we work under the guidance of our colleagues from the Japan International Co-operation Agency. Volunteers from this organization visit us regularly to check on how we are doing with quality assurance.

KALUNGWE:How big is your processing machine?

MR. CHADOOKA:Our machine is big compared to most of those owned by co-operatives and even companies in Malawi. It is capable of working for 24 hours a day. To work for 24 hours a day, we would need about four tonnes of groundnuts, but we cannot manage to buy that much because of limited capital. If we were to operate at full capacity, we would require a huge tonnage of groundnuts, but would make a lot of profit from selling it.

KALUNGWE:How many litres of oil do you produce per day?

MR. CHADOOKA:The machine is capable of making over 1,000 litres a day, but because we do not have enough groundnuts, we ration production to about 200 or 250 litres a day to keep the factory running for many months.

Still, we do not work every day because our capital is small. This is why we are asking well-wishers – non-governmental organizations or financial lending institutions – to assist us with a loan so that we can produce oil every day, all year round.

KALUNGWE:Maintaining a processing machine is not an easy task. Do you have any skills in such work? And where do you get the money to repair the machine when it breaks down?

MR. CHADOOKA:We cannot avoid mechanical breakdowns. We mostly have problems with belts, bearings, the shaft of the oil presser, and the heater used to roast the groundnuts. We fix minor problems like these, but report big problems to OVOP and they send technicians. If we fix the problem on our own, we pay for the costs, but if we get assistance from OVOP, they pay.

KALUNGWE:Is that cost added on the loan you received from OVOP?

MR. CHADOOKA:That’s right.

HOST: You are listening to (name of radio station), and this is (name of host) with (title of program). We have heard how members of Nthiransembe Co-operative run their oil-processing factory. Because they are not yet certified by the Malawi Bureau of Standards, their product is sold only within the district of Mchinji. Nevertheless, the farmers make a good profit, and hope it will rise when they go nationwide or sell across the border to Chipata in Zambia.

MR. BANDA: Many people in the area around Chioshya Trading Centre and in Mchinji like our cooking oil. Now we also supply Lilongwe through OVOP.

KALUNGWE: How do you sell your product? You told me earlier it’s packed in bottles and labelled.

MR. BANDA:Yes, we package our oil in bottles which have a label saying Nthiransembe Cooking Oil. We package in quarter, half, one, two, five, 10 and 20-litre bottles.

KALUNGWE:Does the co-operative make a profit?

MR. BANDA:We think we are making a profit. Our lives have changed. In the past season, we had an income of about 1,600,000 kwacha after selling all our oil. We could not make such huge sums of money before we started oil processing.

KALUNGWE:That’s your total income, but after subtracting your costs to buy groundnuts, maintain the machine, pay workers and other expenses, how much remains as profit?

MR. CHADOOKA:We keep records of expenses for raw materials, workers’ salaries, electricity bills, rent and many more things. For example, last season we made a net profit of 673,850 kwacha after all expenses. The net profit is distributed among the members as dividends for our shares.

KALUNGWE:It appears you are making enough profit, indeed. I would like to hear from each of you one or two things which you have done with your income.

MRS. LAMECK:I’ve benefited a lot from groundnut processing. I’ve bought all my property with the money from the profits I get from the co-operative. I have bought kitchen utensils, goats, a bicycle and many more things. I have eight goats, and I also use the money to send my children to school.

KALUNGWE: Mr. Banda, what about you?

MR. BANDA:I have transformed my life through groundnut processing compared to the time when I used to grow a lot of tobacco. I lacked many things in my household. I did not have enough food; I lacked money to send my children to school…. But since I started groundnut farming and joined the co-operative, I have enough money to buy all my household needs. I now employ other people to help me on my farm. I buy adequate food and clothes for my children and I have three goats. I’ve also built a house which is now at the roofing stage. All this came from the profits I make from the co-operative.

KALUNGWE:And you, Mr. Chadooka, as chair of the group, what benefits have you realized through groundnut processing?

MR. CHADOOKA:Firstly I can say, unlike before, we have no problems in accessing seed for groundnuts because RLEEP assists us with seed. Secondly, since I started farming as a business, my homestead has changed significantly. I have five goats; I have bought beautiful furniture; I have constructed a house roofed with iron sheets. I do not have problems buying clothes and food for my children in school. So my life has changed significantly.

HOST:From what we have heard in this program, it is clear that adding value to produce has more benefits for farmers than selling their harvest in raw form.

In Malawi there is an old saying: Wandisokosera n’kulinga utamva, literally meaning “Even if you accuse me of making noise, you have heard what I’ve said.” I hope the three farmers we’ve been talking to did not just make noise, but have told us important things about how farmers can venture into profitable agriculture processing. Before we leave, let’s hear what advice they have for those of you willing to borrow a leaf from their success, and what future plans they have for their business.

MR. CHADOOKA: My advice to farmers here in Mchinji and indeed across the world is that we should start appreciating the fact that groundnut is a productive crop. Groundnut is also a very nutritious crop, so when we process it into oil, we are assured of more income and improved nutrition for ourselves and our children. We will not suffer from nutrition or economic hardship since we bring both cash and nutrition closer to us.

KALUNGWE:Thank you very much. Let’s hear what plans you have for the future as individuals, but also as a group.

MRS. LAMECK:This year I have a vision to further improve my farming. I have grown two acres of groundnuts. I hope I will make more money than the 150,000 kwacha I got last season.

MR. BANDA:My plan this year is to use the money I get from the co-operative to finish the house I am building. I want to make an iron roof. This season I have planted two and a half acres and I hope, if we have good prices like last year, I will earn over 300,000 kwacha.

MR. CHADOOKA:This year, I have grown three acres. So, if we have good rains, I will harvest more groundnuts than I have done in the past two years. I plan to buy cattle if I make a good profit this season.

In terms of our co-operative, we would like to be independent by 2015 or 2016, in other words, to stop getting assistance from RLEEP, OVOP and other sources. We want to have our own building and produce cooking oil certified by the Malawi Bureau of Standards which we can sell anywhere in the country and across the borders.

It is our hope that the government, through RLEEP or OVOP, will assist us to get the important things which we are lacking – a warehouse and a factory that satisfies the requirements of the Malawi Bureau of Standards.

HOST:This is (name of host) on (name of radio station), and you’ve have been listening to (title of program). Before we wrap up, here is a poem by a farmer from Umodzi Farm Business School, one of the clubs growing groundnuts in Malawi.

INSERT POEM:My name is Mussa Skenala, from Khuzi village. I have a poem which I call “I am groundnut.”

I am groundnut; I grow easily, unlike many other crops. .

I hear other crops lack food. What type of food is that?

They say NPK and urea.

Ah, my friend!

I am groundnut; I grow easily, unlike many other crops. .

Just make sure no weed comes close to me.

Do you want iron sheets for your house?

Just grow half an acre of me.

You will smile your way to the shop.

I am groundnut; doesn’t my ability amaze you?

Haven’t I removed your shame?

Don’t I make you proud?

I am groundnut.

Haven’t you acquired livestock because of me?

Haven’t I made you rich?

When you plant me in two rows on the ridge, you know I have no friend. (Editor’s note: Meaning “there is no crop which can compare with me.”)

More especially, when you plant me at 10 centimetres apart, neighbours back off. (Editor’s note: meaning that groundnuts outshine other crops.)

I am groundnut.

HOST:That was a poem by a young farmer, Mussa Skenala, from Khuzi Village in Mchinji talking about the productivity of groundnuts, despite being a crop that is easy to grow.

With that, we come to the end of this edition of (name of program) here on (name of station). In this program, we’ve been looking at groundnut processing and marketing. We were joined by three farmers who are members of Nthiransembe Co-operative in Mchinji, Central Malawi, which produces cooking oil from groundnuts.

Join us again when we bring you another edition of (program title) from (time of broadcast). I’ve been your host (name of host). If you have any questions or comments about the OVOP groundnut processing program in Malawi, contact:

The National Coordinator, Mrs. Kamia Kaluma-Sulumba,
One Village One Product
P.O. Box 31762, LILONGWE 3
MALAWI
Tel: + 265 1 772 506/ + 265 1 770 698 / + 265 1 770 698 606
E-mail: ovop@globemw.net
Fax: 01 770 698