Sheabutter export guide


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Sheabutter export guide

  1. 1. SHEA BUTTERA Guide to Production and Marketing Peace Corps Ghana
  2. 2. Peace Corps Ghana Version 1, March 2008This manual was developed for Peace Corps Volunteers, by Peace Corps Volunteers,in an effort to preserve the knowledge we have gained from working with groups atthe producer level, companies who buy and export shea butter, and the variousorganizations and government agencies that you may encounter when working withshea. • Sarah Brabeck, PCV Fiang Upper West Region (2006-07) • Michael Fravel, PCV Hian Upper West Region (20006-07) • Bill Reinecke , PCV Savelugu Northern Region (2006-07) • Paul Sari, PCV Tamale Northern Region (2006-07) • Jennifer Schneidman, PCV Nangodi Upper East Region (2006-07) David McNally APCD/SED March 2008 Page 2 of 28
  3. 3. Peace Corps Ghana Version 1, March 2008Table of Contents1: The Biology of Shea ..................................................................................................4 Where do Shea trees live?..........................................................................................4 Life Cycle...................................................................................................................4 Cultivation and Transplantation.................................................................................5 How to Make Shea Butter..........................................................................................5 A Little Shea Chemistry.............................................................................................62: Uses of Shea..............................................................................................................7 Traditional Products7 Other Traditional Uses of Shea butter .......................................................................7 Traditional Non-Butter Uses......................................................................................8 Industrial Uses ...........................................................................................................93: The Shea Market......................................................................................................104: The Shea Value Chain .............................................................................................115: Working at the Producer Level................................................................................12 Group Dynamics ......................................................................................................12 Roles Within a Group ..............................................................................................13 Identifying Your Market ..........................................................................................13 Processing Equipment & Machinery .......................................................................14 Cooperative Registration .........................................................................................146. Stories from the Field..............................................................................................16 Shea Butter Extractor’s Women’s Group: Lessons Learned ...................................16 AN EXAMPLE OF COSTING ...............................................................................19 Break-Even Analysis from a UNDP study based near Tamale ...............................207: Supporting Actors in the Shea Industry/Contacts....................................................21 NGOs and Companies Involved in the Ghanaian Shea Industry.............................21 Major International Companies in the Shea Industry: .............................................21 Local Buyers in Ghana (Nuts & Butter) ..................................................................218. Appendices..............................................................................................................23 Appendix 1. Value-added to selling price of shea butter cosmetics. ......................24 Appendix 2. Ghana Shea SS MAP (from SNV Ghana)..........................................25 Appendix 3. Traditional Shea Processing (adapted from Dr. Peter Lovett). ..........26 Page 3 of 28
  4. 4. Peace Corps Ghana Version 1, March 20081: The Biology of SheaWhere do Shea trees live?Ghana is lucky. Ghana and Burkina have the best shea butter in the world. Why?Because the shea nuts here have the most desirable chemical balance, and thetraditional processing methods create a very clean butter.The shaded areas depict rainfall values. The small grey dots show areas of shea trees(Vitellaria paradoxa) in West Africa. The white dots are a different variety of sheatrees in East Africa.Life CycleAs deforestation becomes a bigger problem in Ghana, the availability of shea nuts andbutter is directly impacted. Bushfires, cutting of trees for firewood and destructivefarming methods are all factors that affect the availability of shea nuts. Currently,local people and NGOs are more interested in protecting and cultivating shea trees.Understanding the life cycle of shea is essential to the survival of the shea butterbusiness.The number of years for a tree to reach maturity, and therefore produce fruit, is up fordebate, but it is generally accepted to be 3-5 years. Many people will argue that itrequires 15 or even 20 years to fruit, but ask them how many trees they have planted.Information on lifespan of shea trees is sparse.The shea fruit is generally ripe from mid-May through the end of July. There is somevariation due to location and rainfall. The fruit is edible and tasty. Mature nuts comefrom fruits that have fallen to the ground, so women will forage for fallen fruit, either Page 4 of 28
  5. 5. Peace Corps Ghana Version 1, March 2008from the farm or any nearby forest. Butter processing is usually performed from Junethrough August.Cultivation and TransplantationIt has not been a common cultural practice to plant shea. Even some areas have strongtaboos against planting shea, but families’ financial needs are beginning to overturnthose beliefs. You can now find many people who are eager to propagate shea. Andhere’s how:The whole process takes time. Usually around 9 months the seedling will be visibleabove ground. And after one year, the seedling can be transplanted into the field.Transplanting should be done during rainy season, so the roots can fully developbefore the dry season.How to Make Shea Butter*The shea nut is chock full of so many things- some desirable, some not. So theharvesting and post-harvest processing affect which of those things, desirable or not,are in the butter. As quality is the key factor to selling shea butter, it is important tounderstand the chemistry behind shea butter. Most women who process shea butterknow all of this practical knowledge, so to learn how to make shea butter, it is best togo watch these local professionals.Here is a brief summary of the 12 steps to make shea butter from harvested shea nuts:* (see Annex 3 for a more detailed presentation) Page 5 of 28
  6. 6. Peace Corps Ghana Version 1, March 2008 1. Harvest the nuts from the farm 2. Accumulate in piles or pits 3. Heat the nuts – boil (preferred) or roast 4. Dry the whole nuts (if boiled) 5. De-husk the nuts to get kernels (usually cracked by hand!) 6. Dry the kernels & store in a secure place STOP HERE IF END PRODUCT IS NUTS, FOR BUTTER – CONTINUE STEPS 7-12 7. Crush the kernels 8. Dry roast the crushed kernels 9. Mill or pounded/grind into a paste 10. Kneaded (water-boiled or pressed) to form an emulsion to separate fats 11. Boil the oil (fat) to dry and clean by decanting to clarify the butter 12. Prepare for use, sale , or storage (cooled oil will congeal into solid white/cream colored butter)Typically the ratio of butter to nuts is approximately 3-to-1.A Little Shea ChemistryWhat are the important chemical components in shea Butter? • Free Fatty Acids • Peroxides • Impurities • MoistureFree Fatty Acids are undesirable. FFAs cause too much variation in the shea butter,and makes it difficult for production in factories. How can we insure less FFAs? Timeand heat are both our friends. Producers should select mature nuts instead of unripenuts. Women know this, that’s why they forage for fallen ripe fruit instead of pickingthem from trees. Heat also denatures FFAs. Boiling is part of the shea butter process,so it is also important not to under boil the butter. Once again, the women know this.The downside of boiling is an increase in peroxides. Why are peroxides bad? Theydenature the antioxidants, which are the natural protection of shea butter. But don’tfear, most women know how long to boil the butter so that the FFAs and peroxidesare both minimized.Impurities such as water, metal, and dirt can be difficult to keep out. Someprecautionary measures include using sealed containers, taking care when grinding,and filtering butter. A little extra work can go a long way.Moisture is another enemy. Fungus can easily grow and spoil vast amounts of butterfrom just a small amount of moisture. This can be prevented by boiling, storing nutsin jute sacks instead of fertilizer bags, and not adding water to the finished butter. Page 6 of 28
  7. 7. Peace Corps Ghana Version 1, March 2008It may seem like a lot of hard work, but in the end it pays off when you see acontainer of beautiful creamy, pure shea butter.2: Uses of SheaShea has so many uses that we turned to the experts at Cocoa Research Institute ofGhana. The following is an excerpt from a case study done in 2002:The shea nut serves as one of the main sources of livelihood for the rural women andchildren who are engaged in its gathering. Shea butter is the main edible oil for thepeople of northern Ghana, being the most important source of fatty acids and glycerolin their diet. It is an unguent for the skin. It also has anti-microbial properties, whichgives it a place in herbal medicine. It is also used in the pharmaceutical and cosmeticindustries as an important raw material and/or a precursor for the manufacture ofsoaps, candles, and cosmetics. Shea butter is used as a sedative or anodyne for thetreatment of sprains, dislocations and the relief of minor aches and pains. Otherimportant uses include its use as an anti-microbial agent for promotion of rapidhealing of wounds, as a pan-releasing agent in bread baking and as a lubricant fordonkey carts. Its by-products, the brown solid that is left after extracting the oil andthe hard protective shell, are used as a water-proofing material on the walls of mud-buildings to protect them from the eroding forces of the wind and rain. Poor qualitybutter is not only applied to earthen walls but also to doors, windows, and evenbeehives as a waterproofing agent (Marchand, 1988). In a traditional setting, sheabutter of poor quality is used as an illuminant (or fuel, in lamps or as candles).Traditional ProductsOil has played an important part in the local economies in west and central sub-Saharan Africa for centuries. It is reported that the initial traditional roles have notchanged significantly since 1830, when the French explorer Roger Caillie describedthem during his trek across West Africa. In Roger Caillie’s own words as reported inHall et al., 1996, “the indigenous people trade with it, they eat it and rub their bodieswith it; they also burn it to make light; they assure me that it is a very beneficialremedy against aches and pains and sores and wounds for which it is applied as anunguent”. Today the shea tree produces the second most important oil crop in Africaafter oil palm (Poulsen, 1981), but as it grows in areas unsuitable for palm, it takes onprimary importance in West Africa, and in regions where annual precipitation is lessthan 1000mm of rainfall. However, it loses popularity in urban areas within theseregions due to the pungent odor it emits, should it become rancid (Ayeh, 1981b).Other Traditional Uses of Shea butterAs a cosmetic, it is used as a moisturizer, for dressing hair (Dalziel, 1937, Ezema &Ogujiofor, 1992) and for protection against the weather and sun. It is used as a rub torelieve rheumatic and joint pains and is applied to activate healing in wounds and incases of dislocation, swelling and bruising. It is widely used to treat skin problems Page 7 of 28
  8. 8. Peace Corps Ghana Version 1, March 2008such as dryness, sunburn, burns, ulcers and dermatitis (Vuillet, 1911; Bonkoungou,1987) and to massage pregnant women and small children (Marchand, 1988).Having a high melting point of between (32-45°C) and being close to bodytemperature are attributes that make it particularly suitable as a base for ointments andmedicines (Bonkoungou, 1987). It is also used to treat horses internally and externallyfor girth galls and other sores. The healing properties of shea butter are believed to bepartly attributable to the presence of allantoin, a substance known to stimulate thegrowth of healthy tissue in ulcerous wounds (Wallace-Bruce, 1995). It is used as“white oil” to anoint the dead in Niger (Castinal, 1945), and is placed in traditionalritual shrines.Refuse water from production of shea butter is used as a termite repellent (Dalziel,1937). In Burkina Faso, shea butter is used to protect against insect (Callosobruchusmaculatus) damage to cowpeas (Vigna sp.). Research has shown that after treatmentwith shea butter a reduction occurs in the life span and fertility of the insects andhence the infestation rate. Shea butter, however, is not as effective as cottonseed orgroundnut oil (Pereira, 1983; Owusu-Manu, 1991).Traditional Non-Butter UsesThe shea tree is sacred to many ethnic groups and plays an important role in religiousceremonies (Vuillet, 1911; Millee, 1984).Flowers, Fruits, and NutsSome ethnic groups make the flowers into edible fritters (Chevalier, 1949). The fruitpulp, being a valuable food source, is also taken for its slightly laxative properties(Soladoye et al., 1989). Although not widespread, shea nut cake is used for cattle feed(Salunkhe and Desai, 1986), and also eaten raw by children (Faegri, 1966; Farinu,1986). The residual meal, as in the case with shea butter, is also used as awaterproofing agent to repair and mend cracks in the exterior walls of mud huts,windows, doors and traditional beehives. The sticky black residue, which remainsafter the clarification of the butter, is used for filling cracks in hut walls (Greenwood,1929; Marchand, 1988) and as a substitute for kerosene when lighting firewood(Wallance-Bruce, 1995). The husks reportedly make a good mulch and fertiliser(FAO, 1988b), and are also used as fuel on three stone fires.FoliageLeaves are used as medicine to treat stomachache in children (Millee, 1984). Adecoction of young leaves is used as a vapor bath for headaches in Ghana. The leavesin water form a frothy opalescent liquid, with which the patient’s head is bathed. Aleaf decoction is also used as an eye bath (Abbiw, 1990; Louppe, 1994). The leavesare a source of saponin, which lathers in water and can be used for washing (Abbiw,1990). When a woman goes into labor, branches may be hung in the doorway of herhut to protect the newborn baby. Branches may also be used for covering the deadprior to their burial (Agbahungba & Depommier, 1989). Page 8 of 28
  9. 9. Peace Corps Ghana Version 1, March 2008RootsThe roots are used as chewing sticks in Nigeria, most commonly in savannah areas(Isawumi, 1978). Roots and root bark are ground to a paste and taken orally to curejaundice (Ampofo, 1983). These are also used for treatment of diarrhoea andstomachache (Millee, 1984). Mixed with tobacco, the roots are used as a poison bythe Jukun of northern Nigeria. Chronic sores in horses are treated with boiled andpounded root bark (Dalziel, 1937).BarkInfusions of the bark have shown to have selective anti-microbial properties, as beingeffective against Sarcina lutha and Staphylococcus mureas but not mycobacteriumphlei (Malcolm & Sofowora, 1969). Macerated with the bark of Ceiba pentandra, andsalt, bark infusions have been used to treat cattle with worms in the Tenda region ofSenegal and Guinea (Ferry et al., 1974). The infusions have been used to treat leprosyin Guinea Bissau (Dalziel, 1937) and for gastric problems (Booth and Wickens, 1988)as well as for diarrhoea or dysentery (Soladoye et al., 1989). A bark decoction is usedin the Cote d’Ivoire in baths and therapeutic sitz-baths to facilitate delivery of womenin labour, and is drunk to encourage lactation after delivery (Abbiw, 1990; Soladoyeet al., 1989; Louppe, 1994). However, in northern Nigeria such a concoction is said tobe lethal, (Dalziel, 1937).A bark infusion is used as an eyewash to neutralise the venom of the spitting cobra(Soladoye et al 1989) and also, in Ghana, as a footbath to help extract jiggers.Greenwood (1929) noted that the stripping of bark for medicinal purposes may have asevere impact on the health of shea trees and may even be fatal. The wood is onlyused when individual trees are not valued for butter production. The latex is heatedand mixed with palm oil to make glue (Hall et al., 1996). It is chewed as a gum andmade into balls for children to play with (Louppe, 1994). In Burkina Faso, Bobomusicians use it to repair cracked drums and punctured drumheads (Millee, 1984). Itcontains only 15-25% of carotene and, therefore, is not suitable for the manufacture ofrubber (André, 1947a,b).Industrial UsesResearch into the properties and potential industrial uses of shea butter began in thefirst few decades of the last century. Previously, it was used in edible fats andmargarine, and was only beginning to attract the soap and perfume industry wheninterest ceased because of the 2nd World War. Revival of the shea industry after thewar suffered serious setbacks from an insufficient pricing mechanism, logisticalproblems of transport (low availability and unpredictable) unable to cope with thesupply of the nuts, thus making the ventures economically non-viable. During the mid1960s shea trade re-emerged when Japanese traders joined their Europeancounterparts, which saw a considerable expansion of the industry, particularly in thecosmetics and confectionery industry barely a decade thereafter.Shea butter has several industrial applications, but the majority of kernels(approximately 95%) provide an important raw material for Cocoa Butter Replacers(CBRs), and are used for manufacturing chocolate and other confectionery. Minor Page 9 of 28
  10. 10. Peace Corps Ghana Version 1, March 2008uses include cosmetics and pharmaceuticals. The export market for CBRs is shared byUnilever (UK), Arhus (Denmark), Fuji Itoh and Kaneka-Mitsubishi (Japan).3: The Shea MarketThe Shea Market: Local and InternationalThe local and international shea markets are two very different buyers with theinternational market having strict specifications while the local market uses sheabutter for its traditional uses. These two markets are beginning to conflict with eachother as demand forshea butter increases on the international market. As theinternational market demand increases, the price of nuts and butter in the local marketincreases at the same time. The high demands have made local shea butter and nutsless affordable on the local market creating an interesting situation for localconsumers and producers.The Local Market:The local shea market exists because of the women of Ghana. There are men whotrade in nuts and work in processing but women are the primary pickers, processorsand sellers of shea butter in the local marketplace. The majority of shea butterconsumption in Ghana is in the raw form for cooking and skin care. Some local sheabutter is processed to make soaps that are sold in the market as well. The processorssell directly to the end consumer in the local market. Very little is packaged, labeledor certified before sale and it is sold in small balls or bowls in major marketsthroughout the country (Northern regions?).The International Market:The world’s biggest international markets for shea butter are in Europe and NorthAmerica. Shea is used primarily for skin care cosmetics and for medicinal andcooking products. The industry is extremely competitive and is dominated by aboutsix large international companies (see section 7). Supply to the major companies onthe international market is typically done by another organization within Ghana thatbuys nuts and processes butter to the specifications of the major buyer. Thesecontracts are very big and have extremely strict quality requirements. Communitiesin Ghana generally supply the nuts to local buyers who in turn supply the internationalcompanies with bulked shea nuts or butter. There are also certain organizationsbuying shea butter from individual communities but standard quality is a challenge.Increasingly due to corporate responsability, certain companies like Savannah FruitsCompany, although relatively small, have been working to attain quality commercialproduction while supporting rural women’s groups. Page 10 of 28
  11. 11. Peace Corps Ghana Version 1, March 2008The number one concern for international buyers is “perceived quality” before price.For edible products the major market is in Europe and India and the butter extractionand refining is done there. The major cosmetic and soap industry is in the UnitedStates and is known as the most lucrative global shea butter market. The majority ofshea butter consumed internationally is mixed into a finished product containing apercentage of shea butter. The finished products in North America tend to have hightech containers and extensive marketing campaigns behind them and are high endproducts. Less than ten percent is used by the final consumer in its raw form.Shea nuts grow in 20 countries in the world, all of which are in Africa. The Exportseason is from August to April each year. It is estimated that 150,000 – 200,000tonnes of nuts are exported each year from West Africa, 50,000 tonnes (approx. 33%)coming from Ghana alone. The nuts are shipped out of West Africa mainly fromports in Dakar, Senegal, Lome, Togo and Tema, Ghana.4: The Shea Value ChainWhat’s a Value Chain?PCVs see shea butter at both extremes. Here in Ghana, we see it in the form of ballsof local butter sold for around GH 0.50. In the US, we saw fancy cosmetic productssitting on supermarket shelves that sold for around $20. Where is that value added tothe product? Who is making that profit?It will help to look at the shea butter value chain. A Value Chain includes all thosegroups involved at different levels of producing a single product. When consideringshea, the members in a value chain are usually as follows: Nut Nut Butter Butter Nut and Producers Producers Traders Producers Traders Butter of Food and Exporters CosmeticsEach member of the chain affects the product. Each member also depends on theother members of the chain for supply and income. A chain is not supposed to beintra-competitive. Instead, the entire chain functions in union to compete with otherchains (e.g. in other countries/markets). The value of the product is shared along thechain, meaning each member of the chain receives some income for their work. Thatcauses the increase in price from local to foreign marketsStrengths and Weaknesses of a Value ChainAlthough the members of the Value Chain are not intended to compete, the system isnot perfect. Each member will have needs that counter the needs of other members. Page 11 of 28
  12. 12. Peace Corps Ghana Version 1, March 2008For example, The butter buyer wants to buy butter at the lowest price. Meanwhile thebutter seller wants to sell at the highest price. Still there are many benefits to a ValueChain as compared to a traditional business relationship. First, Value Chains providefor better information sharing among all members. A butter buyer will offer qualityfeedback or make packaging requests of the butter seller. The butter seller can ask thebuyer for help with transportation. Also, the Value Chain as a whole is competingwith other chains, so the focus will shift from profit to quality. If the end result is poorquality butter, consumers won’t be interested and the whole chain will suffer.As you go up each step of the chain, the level of education, time, and other resourcesincreases. When deciding where on the Value Chain you want to be, consider thelevel of education and resources available to the group. It may not be possible foryour group to export directly to a US company, but maybe you can connect them to abuyer of shea butter, educate producers on quality standards, provide local producerswith market information, link producers to buyers, or help source funding for agrinding mill or other equipment to increase production.In rural villages, price is definitely the most talked about problem. The mostimportant thing is to account for all costs in the production of the butter and crosscheck for profit or loss. Butter buyers complain more about consistency and quality.At the end of the chain there is a huge factory processing chocolate, and they want allingredients to be standardized. And the occasional stick or dead bug may seem like nobig deal to the market women, but L’Oreal will freak out.5: Working at the Producer LevelMost likely, as a Peace Corps Volunteer, you will be working with Producer Groups.This section addresses some of the issues to consider when working at this end of theValue Chain.Group Dynamics Most communities have womens groups that form and come together for avariety of reasons, but most likely for economic support. When considering sheabutter processing as an economic venture, forming establishing a well structuredwomens group is imperative. As with any group that aims to be functional andeffective in its capacities, certain roles and responsibilities must first be designated torightful people in that group. Having proper knowledge of the personalities andcharacters of the group is a great asset in learning who would best assume a particularleadership role.Women already have deep relationships with the other women in their communitiesand know who the natural leaders of the group are. Sometimes, however, members areelected to higher positions of the group based on social standing in the community(for example being the wife of a big man in the community) and not necessarily the Page 12 of 28
  13. 13. Peace Corps Ghana Version 1, March 2008leadership skills that would designate her as the right person for the position. This isa delicate issue, but may require attention to ensure the vitality of the group.Roles Within a GroupTry holding a meeting with interested women in your community and discussing theroles necessary for group management. When becoming engaged in shea processingwith bigger buyers, groups should have at least the following positions to helpmanage the group: 1. A Chairwoman to call and facilitate meetings, communicate current information, and guide the larger decisions of the group 2. A Vice Chairwoman to assist the Chairwoman and to serve as Acting Chairwoman in her absence. 3. A Treasurer to collect and record meeting dues and money distribution amongst the group 4. A Secretary to write minutes, monitor producing groups (if in different locations), and keep records of the activities of the group.Identifying Your MarketOne of the most important things to do in establishing your group is to identify yourmarkets. Different markets require different levels of group development, skills andresources to satisfy the demands for that particular market. For example, some womencome together and produce butter in larger quantities for local markets around theirarea striving for a reputation as having better butter quality than their localcompetitors. Other groups who have more resources and management knowledge maygain access to medium size buyers within the region and be able to sell in quantity atwhatever desired quality. Some well developed groups have earned the trust tocontract with larger private companies that might have more strict demands onquantity at quality with strict deadlines to fulfill orders. What is best is a matter ofopinion and depends on whatever circumstances face your particular group andprocessing location.Assessing your groups capacity is vital to determining your markets. Here are somekey questions to ask: • What is the level of commitment and seriousness upon your group? • Is there strong leadership? • How many available processors are there and what are their time constraints? • Do your women pick their own nuts during the season or do they buy them from surrounding communities? • What level of quality are you capable of producing? Page 13 of 28
  14. 14. Peace Corps Ghana Version 1, March 2008Processing Equipment & MachineryOnce you have assessed your capacity, you should be able to make some decisionsabout the needs of the group in order to serve the market you are targeting. You mayconsider acquiring machinery in some cases to speed up the processing, for example.Machines are expensive, but so are milling charges in many producing areas,especially smaller villages where people don’t produce commercially and competitionis little. You may want to do a cost/benefit analysis based on the quantity your buyersare requesting and the price they are offering. Each situation is unique. Machinerymay be beneficial, or it could be an added burden to the group.Cooperative RegistrationAnother thing to consider for your group/groups is cooperative registration. Acquiringthe status as a legitimate cooperative offers many benefits. For instance, coop statusqualifies you to receive check ups, monitoring and trainings from the CooperativeOffice in your district. Every district should have a District of Cooperatives Officerwho you can contact and learn about the necessary procedures to apply for coopstatus. They can visit and interact with the groups and walk them through the stepsrequired for registration. Once registered, The District Cooperative Officer will comeperiodically or upon request to share new information and opportunities with thegroup. They can provide information regarding new loan programs or other forms ofsupport that the coop may qualify for.Being listed under the Cooperative Department allows district officers to more easilyidentify viable communities in the district and extend the benefits that come theirway. Cooperative registration can also increase the marketability of the group. Severalbigger buyers require or prefer to work with coops, as it denotes a higher level oforganization within the group, creditability and accountability. Coops are a legalentity of their own. Groups that register as coops also enjoy access to more forms ofsupport. If you want to apply for a loan to acquire processing machinery or someworking capital, this title will pave your way.There are some requirements to gain cooperative status. The group has to prove theircreditability by demonstrating solid organization and management skills within theircircle. That requires strong leadership and elected roles, an active bank account (at aRural Bank is fine), proof of record keeping from their meetings, histories includingminutes and collected dues, and a registration fee. This fee is a one time up front feeof 5 new Ghana Cedis (2007) paid to the district office. It puts you in the system andlines you up for all the perks listed above. In my personal experience, the cooperativeofficer in my district has been extremely helpful and responsive to our needs.Many times, very few of the women you work with are educated or literate.Developing the necessary management skills is a challenge in such cases, butorganizing training on recordkeeping, financial planning, and small businessmanagement will benefit the group greatly in the long run. Start with inquiring at yourlocal district assembly on current programs for these trainings. They often havefunding for such things and links to other local organizations who work directly with Page 14 of 28
  15. 15. Peace Corps Ghana Version 1, March 2008building groups organizational capacity. I have found NBSSI (National Board forSmall Scale Industries), SNV (a Dutch NGO), Technoserve and World Vision, amongothers, to be very active players involved with group development. Page 15 of 28
  16. 16. Peace Corps Ghana Version 1, March 20086. Stories from the FieldShea Butter Extractor’s Women’s Group: Lessons LearnedOne of my counterparts and I propositioned a private company (we’ll call it ABCCompany) about providing them with high quality shea butter for export to U.S. andEuropean markets. The owners of the company were out of the country and thecompany was in a crunch to fulfill an order. The field assistant agreed to meet with usabout the possibilities of working together. We let the representative know that wehad 30 women ready to make shea butter under their strict quality control guidelinesand within the timeframe needed. The company agreed to test the women’s abilityand quality of butter with a 2,000 kilogram order (that’s 2 tons or 4,000lbs) at a pre-set price. The women would get half of the money up front and then the rest upondelivery. The company would provide packaging and pick up the butter from thevillage. My counterpart and I figured the costs of production and profit desired anddecided the price the company was willing to pay was worth it.Everyone seemed happy. The women were especially excited to be a part of a group(this is an understatement – they were thrilled!). The women were now the KalpohinShea Butter Extractors Association! More importantly, to them, they could tell otherwomen of their village of 5,000 that they belonged to something. They were soproud. Note to self – It was time to set expectations to the group that this is a newventure and we must proceed carefully and with much caution. Who could know ifthis was something that would continue? Constant communication would prove to bekey.As a requirement from the company, my counterpart set up a bank account for thenewly formed women’s group. The bank in turn required GH¢200 to get the accountup and we used the women’s own money. The account was necessary fortransparency purposes for the company and made good sense to the group so theycould easily receive and keep track of monies received and earned. My counterpartwould act as the accountant, manager, and liaison between the group and any outsidebuyers for the women since none of the women spoke English.Once the money was received from ABC Company, the women went right to work.This was where problems started. Not until after the money was received and thewomen were well in to production was the group informed that they needed toprovide their own scale to weigh the butter for packaging. My counterpart tried fortwo weeks to find a scale and when he did, the women were nearly done making thebutter. The women even used their own money to buy more nuts to cover the totalamount needed to complete the order. I was unaware they spent their own money tocomplete the order, but was impressed at their eagerness to finish the product in thetimeframe requested by the buyer.Once the scale was in place my counterpart and the women began weighing andpackaging the butter. Everything seemed on track until the ABC Company sent oneof their field assistants out to check the status of the order. When they weighed theorder, it was below the required amount by 25%! We concluded that the scale that thevillagers used was faulty. The second blow was that the women spent all the money Page 16 of 28
  17. 17. Peace Corps Ghana Version 1, March 2008they were given and half of their own money (the money they assumed the companywould reimburse them), but they only produced 1,500kgs of butter. If ABC Companypaid them for only 1,500kgs the women would be at a loss! Oi!This was a crisis and the owners of the business were still out of country. Whatwould we do!? We were in limbo for some weeks. I met with my counterpart to goover all our numbers and costs. We spent hours and hours double checking figures.Everything seemed fine with our calculations. I met with the women multiple timesto talk with them about the situation. I learned that they had informed others of thevillage and that the whole village was on stand-by to see how the ABC Company,made up of non-Ghanaians, would handle the situation. I’m not sure what theimplications were, but I know that they were not happy and it seemed like bad thingscould happen if things weren’t resolved amicably.After hours of pouring over the cost data I acquired from the company and our owncalculations, it appeared it was really no one’s fault except for a weighing scale’s.That coupled with low yielding shea nuts (this particular season was now proving toyield low butter from nuts due to lack of rains).The good news was the women produced excellent butter in a timely manner. It waspackaged neatly and ready for delivery even before the company was ready to receiveit.The main lesson learned for me as a facilitator: Nothing Ventured, Nothing Gained(even if it’s just knowledge). When you go into a new venture, you take chances andeven if you are very careful to reduce your risks, there are still risks. This entire issuemay have been avoided had the company doubled checked the villages scalemeasurements upon the first batch of butter made, but would that have been areasonable expectation? Perhaps yes, for a newly formed group such as ours,however, the company was spreading itself thin trying to cover this particular order.But then again the scale issue was uncommon; why should the company think that ascale would be off by 25% when it hadn’t happened before? Even if an issue wasdetected, this may have meant the order would have been cancelled because theproblem then would lie with the nuts that the women purchased which were yieldinglow butter. Then the women would have been left with a bunch of nuts and acancelled order.Communication with my counterpart and the women was important during this entireprocess. This is where I feel things went well. I stayed in constant contact with themthrough the process and met with them frequently to insure them that we were all inthis together and my counterpart and I were working hard to represent them to thisoutside foreign company. I did not want them to think I was conspiring with anyoneto take advantage of them.Also, my relationship with the company helped smooth things over, as well. I knewone of the owners and one of the field assistants. We discussed things thoroughly andwe all came to an agreement to chalk this up to no one’s fault, but it would mean aloss for the company. They graciously agreed to reconcile the initial amount agreedto be paid to the women without making the women produce more butter, whichwould mean a loss to them. I knew this would provide a hit to the company, but Page 17 of 28
  18. 18. Peace Corps Ghana Version 1, March 2008luckily, the company had the vision to see that the right thing to do was take the lossand move on.The bad news is that the company will mostly likely not use this group again. Whilethey are in a village, they are so close to a large town they have to go to markets tobuy nuts, which mean they pay more, and therefore the shea butter costs more. If theywere more remote, they could collect the nuts themselves, cutting out the middleman(or middlewoman) so to speak.The good news is the group is not through. We are on hold though, and we havelearned quite a bit in our new experience. There is plenty of demand for shea butter.My next step is to work with my counterpart on contacting other organizations whowould like to purchase shea butter where production cost is not as much of an issue.This should not be too difficult.One more lesson learned is costing the production of the butter to insure the womenreceive a fair price. This is not easy. I worked with my women to figure out everycost in detail. Even when I did this, I later learned there were other costs (hiddencosts). Hidden costs can be a women feeding someone or paying them to assist them.Or, variable costs; for example, the price of nuts is hard to determine – are theybuying a rounded bowl or flat bowl? Our buyer wanted to price things by bag of sheanuts, but the women buy in bowls – another potential issue. In addition, in leanerseasons where there may be less rain, the nuts may yield less butter and you may notknow this until you produce the butter. All these factors need to be taken in toconsideration.I’m wrapping up my service so I haven’t had time to resolve all these issues. Onethought would be for a firm they work with to purchase the nuts up front and simplypay the women for their labor and cost of production.There is big potential for village women to get more involved in the shea butter exportindustry. Especially due to the rise of large and small businesses alike wanting topurchase anything from low quality shea butter to high quality certified organic orcertified fair trade shea butter for use in their products. Don’t underestimate thedemand from small companies willing to pay slightly higher prices for more nichemarkets. Opportunities selling shea butter, both in country and to exporters, isgrowing rapidly. It’s up to the new wave of PCVs to continue to help improve andsupport the women to insure they are truly getting fair prices while giving them thesatisfaction and pride of being a part of a team; helping them improve the lives oftheir families; and passing on the shea butter production trade to future generations. Page 18 of 28
  19. 19. Peace Corps Ghana Version 1, March 2008AN EXAMPLE OF COSTINGSHEA BUTTER COST OF PRODUCTION(Kalophin Shea Butter Extractors Assoc)Order = 2 TONS (4000 Lbs or 2000 Kgs)40 WOMEN TOTAL50 Kgs EACH = 2000 KgsCost breakdown to produce 1 kg of shea butter for a 2000 kg order, asof 24 July 2007 Cost Cost Item Cost Per Kg Assuming 1 bowl nuts = 1Bowl of shea nuts 7,500.00 7,500.00 kg butterFirewood 30,000.00 15.00Milling 30,000.00 15.00Transportation toprocessing point 15,000.00 7.50DA Tax 1,000.00 0.50Total Cost 7,538.00 Profit Profit Item Per Kg TotalProfit For Administrator 50.00 100,000.00Profit For Women 1,000.00 2,000,000.00Total Profit Per Woman (40 women) 50,000.00Total Cost with Profit 8,588.00Other possible variable:PackagingTransportation to BuyerFor those interested in creating shea butter women’s groups, this is an opportunity todevelop the skill set of an administrator and/or help a group of women improve theirlives and their families. Another benefit is that if the group is successful, the youngerwomen of the village would be more likely to continue with this craft and less likelyto flee the village to head south for what they think are bigger and betteropportunities. The women that leave the village are at a higher risk of prostitution,becoming pregnant or getting AIDS. Overall this is a very positive opportunity, butbe very aware of what you and the group is embarking on.Here are a few suggestions and general information; • Assuming your women’s group do not speak English and/or are uneducated, you will need to look for someone to handle the management and administration of the women’s group within the community. • The administrator should be able to open a bank account, do the accounting for the income and outflow of money, be able to determine costs in detail to make sure the group is making money, etc. The administrator should receive a Page 19 of 28
  20. 20. Peace Corps Ghana Version 1, March 2008 percentage of the profit (I suggest 5% - 10%). Finally, the administrator should be trusted by the women and able to communicate effectively with the women in order to set realistic expectations. • Be prepared for the unexpected and possible major issue to occur, such as a possible loss on a particular order. • If a firm will pay 50% (for example) of the money up front so the women can get started, monitor if the women are starting to use there own money to complete the order and how much so they don’t exceed an amount that would eliminate their profit. Also, monitor what a the nuts are yielding in butter by weighing them on initial production. You may want to double check the figures as you continue production. • 1 rounded market bowl of nuts (a bowl of nuts that are piled above the rim of the calabash) produces approximately 1 kilogram of butter • 30 rounded bowls of nuts equals one bag of nuts • 40 flat bowls of nuts (a bowl of nuts where they level the nuts off to the equal the rim of the calabash) equals one bag of nuts • 1 bag of nuts produces approximately 30 kilograms of butter Be sure to measure and check your local measuring system.Break-Even Analysis from a UNDP-JICA study near Tamale(Personal communication via Oliver Hoellige (DED Wa NBSSI Regional Office)Preliminary findings:Sagnarigu:I started the study around May-June this year when price of shea nuts is GHc 20 perjute bag (between 90-94 kg). Daily wage rate was computed at US$1=GHc 0.92.Semi-mechanized processing. Yield=40%. Break-even is GHc 0.97/kg of shea butter.Walewale:The same activities were conducted in Walewale (100km further north of Tamale)around the same time. The price of a jute sack of nuts is GHc 25 per jute bag(between 92-95 kg). Semi-mechanized processing. Yield=33%. Break-even is GHc 1.63/kg shea butter.This higher break-even price might be attributed to transportation costs of firewood,water, and milling station.Note: Break-even price for unrefined shea butter in these two examples does notinclude packaging, marketing expenses, etc. Page 20 of 28
  21. 21. Peace Corps Ghana Version 1, March 20087: Supporting Actors in the Shea Industry/ContactsNGOs and Companies Involved in the Ghanaian Shea Industry 1. SARI (Savannah Agriculture Research Institute) 2. JICA – Village group training programs 3. Africa 2000 has some Shea programs (Office located in Kalpohene Estates) 4. SNV – shea is a focus product in their private sector development program. Chris Bakaweri is the Tamale coordinator for their Private Sector Development program working in shea. Balma also works with him at the SNV Tamale office. 5. NGO Ride – this is the social responsibility arm of the Company. Katharina Woener is the Country Director, telephone number: 020 932 2693. e-mail: Kwabena Badu-Yeboah is the Director, F&A, tel 0244 523 594 and 020 813 1258, e-mail: International Companies in the Shea Industry: 1. L’OReale 2. L’Occitane 3. AarhusKarlshamns- in Denmark / Sweden 4. IOI group (Loders-Croklaan in Holland) 5. Feeds, Fats & Fertilisers in India 6. The Pure Company (International Market Demands high butter content, stearin rich, boiled, sun-dried, low free fatty acid & no foreign bodiesLocal Buyers in Ghana (Nuts & Butter) 1. Bosbel Industries Email: Phone: 0244-864799 Tamale 2. Kassardjian Industries Limited PO Box 2246, Accra, Ghana Tamale 3. Ghana Nuts Techiman Buying Shea Nuts, Cashews, Groundnuts, and Soybeans 4. Savannah Fruits Company – Shea Butter Pre-finances groups of rural women to supply quality Butter to Company Page 21 of 28
  22. 22. Peace Corps Ghana Version 1, March 2008 Peter Lovett, Production Manager Tamale (Peter): 0244292898 Accra: 0246360185 5. Ghana Specialty Fats Industries LTD. - Shea Nuts (Plant capacity: 25,000 Tonnes in 2008), Plant Near Tema K.V. Shevaa – Northern Region Agent/Buyer Address: P.O. Box TL 2178 Tamale, N/R Ghana, West Africa Contacts: Mobile: 0244 315267 Email: 6. Centre For Agriculture and Rural Development (CARD) Manager: Naresh Shukla Address: P.O. Box TL 1504 Tamale, N/R, Ghana, West Africa Contacts: Office: 071 23512/24939 Mobile: 0244 716849 Fax: 071 26566 7. K.I. Ghana – Wa (Formerly Kassardjian) Mr. Tewiah Wa, Upper West Region 027 22261 (Wa) 0243 435312 0756 22656 0209 069044 Page 22 of 28
  23. 23. Peace Corps Ghana Version 1, March 20088. Appendices Page 23 of 28
  24. 24. Peace Corps Ghana Version 1, March 2008Appendix 1. Value-added to selling price of shea butter cosmetics. Marketing Shea Nut Marketing Step 1 Step 2 0.1 € Cost of the legal files Bottle to permit selling 1€ 1€ (13 times the initial Shea Butter price of shea butter 0.3 € Advertising Costs Carton production) 5€ 0.5 € Finished Finished Finished Finished Imported Product Product Product Product Finished Sold to Sold Tax Sold Tax Bulk Sold Product Retailer Exclusive Inclusive Production Finished Packaged by 6€ by to the to the 0.5 € Product Finished Producer Importer Public Public 50ml Product 5€ 12 € 21 € 25 € 1.5 € 3.5 € Transport Retailer’s and Import Margin Producer’s costs 9€ Other Raw Margin 1€ Materials 1.5 € Packaging 0.7 € 0.5 € Taxes, VAT 4€ Page 24 of 28
  25. 25. Peace Corps Ghana Version 1, March 2008Appendix 2. Ghana Shea SS MAP (from SNV Ghana). Regional? Pharma - Cosmetics Emerging? Food Sector (EU) ceuticals End Use? (US, CD) Markets Body Exporting Private Secaf, Loders Shop AAK Exporters Akoma Croklaan GSFI Ltd SFC TPC Butter Private Trading Agents Kassardjian Indivi (50% dual Women NASFPB Loders Butter (rural & Blue Croklaan Production Urban) Mont? (In country) (20 – Women 25% Groups 3Fs:15-20%? Nut IBG?:(<10%) Bulking NASFPB OLAM Individual Rural Small scale Private local buyers, women Nut Trading LBAs of Companies and NASFPB Primary Processing Individual Rural Women Production Page 25 of 28
  26. 26. Peace Corps Ghana Version 1, March 2008Appendix 3. Traditional Shea Processing (adapted from Dr.Peter Lovett). 1. Harvest: fall fruit picked from the ground 2. Accumulate: Fresh fruit heaped for 1-2 weeks 3. Boil: Boil sheanuts with water for ~ 90 min. at temps >95oC 4. Dry Nuts: Whole nuts spread in the sun on a hardened mud or concrete surface 5. De-husk: Nuts are hand- pounded to remove husks 6. Dry Kernels: Kernels spread in the sun for storage, sale, or further processing. Page 26 of 28
  27. 27. Peace Corps Ghana Version 1, March 2008 7. Crush kernels: Hand-pounded. 8. Dry-roast kernels: Dry- fried in large iron. pots. 9. Milling: Milled into paste, usually by commercial operator. 10. Kneading: Vigorously, hand- beaten for 30-60 minutes until fats form emulsion, washed, & removed 11. Boil fat: Cleaned by boiling on an open fire with decanting stages to clarify the oil. 12. Prepare for use, sale, or storage: Liquid is left to cool and stirred into a smooth, creamy butter Page 27 of 28
  28. 28. Peace Corps Ghana Version 1, March 2008 9. NOTES: Page 28 of 28