The document outlines a commercialization strategy for Aflasafe, a product that reduces aflatoxin levels in maize. It aims to establish a premium market for low-aflatoxin maize in Nigeria to incentivize farmer adoption. The key target market is the poultry industry, which currently deals with high aflatoxin contamination levels. The strategy involves working with aggregators like Babban Gona to boost farmer yields above 3MT/ha, allowing for a $6.25/MT premium. Over time, the premium can increase to $56/MT as the poultry industry saves up to $0.72 per broiler. Regulatory enforcement will help sustain the premium market.

1. Aflasafe Commercialization Strategy
Improving the Health and Securing the Income of Nigeria’s Small Holder Farmers
Creating Companies | Creating Wealth | Creating Jobs
January 2013
CONFIDENTIAL
Partners:

2. 2

3. 3
USDA / IITA Technology that naturally and
cost effectively reduces Aflatoxin levels
by 80% to 99%
The Solution

4. Aflasafe Commercial Strategy
4
“Establish a sustainable
premium market for low
aflatoxin maize and
ensure this premium
creates sufficient
economic incentive to
sustain farmers adoption
with the buyer and seller
sharing the economic
benefits equally”
Three Strategic Question
I. Who is the target market for
low aflatoxin maize?
II. What premium can this
market afford and does the
premium provide sufficient
economic incentive to
sustain farmer adoption?
III. How will the commercial
plan to be implemented?

5. 5
Who is the market for low Aflatoxin Maize?

6. Target Market for Aflasafe Maize
Poultry Industry… Key Driver of Domestic Maize Production
6
Nigerian Government
Bans Poultry Imports
Nigerian poultry production
has grown from 113 Million
birds in 2000 to 192 million
birds in 2010
Nigerian maize production
has grown from 4 million
metric tons in 2000 to a 7.3
million metric tons in 2010
Each sector has grown on
average 5% per year.
Poultry feed is
approximately 60% maize.
Index of growth in production for maize and poultry relative to
Nigeria’s production in 1961*
Measure: Relative growth in production
Drivers
Correlated Growth In Maize and Poultry Production in Nigeria
* Doreo Analysis, FAO

7. 7
Is Aflatoxin an issue for the poultry industry?

8. Safe
38%
Toxic
62%
Aflatoxin has a significant economic impact on poultry production
8
Poultry fed with Contaminated
Feed ( >500 PPB)
Poultry fed with Safe Feed (
< 20 PPB)
Percentage of Toxic Poultry Feed *
Measure: % with levels of Aflatoxin over 20 PPB
Impact of Toxic Feed
Majority of Poultry Feed in Nigeria Toxic
Significant increased mortality
Dramatic reduction in live weight / Feed efficiency
(40% less in IITA trails)
Drop in egg production rate
Additional IITA trails in progress
*IITA

9. 9
Is the poultry industry currently paying a premium
for low aflatoxin maize?

10. Target Farm gate Price of Aflasafe $15 USD per Ha with Target Yields of
Aflasafe Maize Farmer of 3.5 MT /Ha
10
3
6 6
13
Low Cost Binder - Low
Concentraction
Low End Product - High
Concentraction
High Price Product - Low
Concentraction
High Price Product - High
Concentraction
Toxin Binder
Cost
Toxin Binder
Concentration
Low Low
Low Low
High
High High
High
0
10
20
30
40
50
60
2 2.5 3 3.5 4 4.5 5
Farm
Gate
Price
of
Aflasafe
($/Ha)
Yield Per Ha (MT/Ha)
Teir 1 Tier 2 Teir 3
Tier 2
Customers
Tier 1
Customers
Tier 3
Customers
Poultry Industry Current Premium by
Customer Segment*
($ per Metric Ton of Maize)
Price of toxin binders vary from $2 - $4 per kg
Concentration of use varies from 1kg – 2kg per
metric ton of feed.
600kg of maize per 1000kg of feed
Economically Sustainable Farm Gate Price of
Aflasafe by Customer Segment and Farmer Yield*
Assumes farmer makes 33% profit on use of
Aflasafe
Target Price
Target Yield
* Doreo Analysis

11. 11
What incentive will farmers have to adopt Aflasafe?

12. Purchase
Aflasafe
Repackage
Aflasafe
Farmer
Purchase
Aflasafe for
$15.60/ha
Farmer
Produces
Maize with
Yields above
3.5MT/ha
Babban Gona
Test Maize at
Harvest
Maize passes
test farmer
receives
$6.25/mt
premium
Babban Gona
markets
maize for
+$6.25
premium
Phase 1 Aflasafe Pilot Commercialization
12
1
2
3
4
5
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Modest Premium of $6.25/mt
(Approximately 2% premium) Works if Farmer Attains Yields of Over 3MT/Ha

13. 13
How do you get farmer yields above 3MT/Ha?

14. Small Holder Farmer
Members
Small Holder Farmer
Members
Small Holder Farmer
Members
Babban Gona: Agricultural Franchise Model
14
Trust
Group 1
Trust
Group 2
Trust
Group n
Services
14

15. Training
Credit
Agric
Inputs
Good
Markets
Babban Gona Services Provided
15
15

16. Babban Gona Impact
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Babban Gona Field
Yield Up to 4.6 MT per Hectare
Non Babban Gona Field
Expected Yield Less than 1.5 MT per Hectare
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17. Babban Gona Impact
Ibrahim Mustapha
Attained yields of 4.6MT/ha i.e. 3X the
National Average and almost 6X the
average yield in the community.
4.6 MT/Ha
Achieved an economic value net of all
loans of over $1,250 from his small 1.1
Hectare farm. From a GDP per capita
standpoint he moves from poverty into a
lower middle income bracket..
$1,250
Samaila Haruna
Achieved an economic value net of all
loans of over $2,500 from his small 2.5
Hectare farm. From a GDP per capita
standpoint he moves from poverty into a
lower middle income bracket.
$2,500
With his earning from his first season in
Babban Gona he bought a car.
1
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18. 18
How cheap can you produce Alfasafe?

19. 6.88 8.75
12.19
3.13
3.44
0.63
2.5 0.63
1.88
12.2
15.6
1.9
0.9
0.6
Significant Product Development Investment to Reduce COGs
Reduced from $20 per Ha to $7 per Ha
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Aflasafe Estimated Price ex Factory*
Measure: USD per Ha
Substrate
(Sorghum)
SG&A
Packaging Ex
Factory
Price
 Final ex factory price assumes an
EBITDA margin of 28% (55 Naira /
kg) applied to product to enable
factory to be sustainable.
 Simple, low-cost formulation and
manufacturing process developed
for use in this manufacturing plant
 Process amenable to seed
processing companies
 Discussions underway with 2 seed
processing companies for
manufacturing aflasafe in Nigeria
Analysis of Ex Factory Price and End Farmer Cost
Inoculum Labor/OH EBITDA
Margin
Aflasafe Estimated Farm Gate Price*
Measure: USD per Ha
Ex
Factory
Price
Retailer
Margin
Farm
Gate
Price
Transport to
DP
DP
Margin
 Key actors in distribution are the
Distribution Partners (DPs) and
Retailers.
 As product is new and requires
addition work by the value chain
actors i.e. marketing and education,
margins are set slightly higher than
normal to encourage effective
distribution.
 Cost to farmer includes labor cost to
apply assuming half day at 800 naira
per day.
Key Takeaways
* Doreo Analysis

20. 20
How high can the premium for Aflasafe maize go?

21. Poultry Industry Currently Paying an Implied Premium in Lost Profits
Aflasafe Treated Maize Dramatically Increases Profitability by up to $0.72/ Broiler Started
21
Lost Gross Profit ($/Broiler Started) of Not Using
Aflasafe Treated Maize*
Assumptions
 2kg live weight
 Conservative low cost finisher feed mix:
$0.50/kg
 Average bird dies at 4weeks weighing 1kg
 Price of dressed weight bird: ₦650/kg
 Cost of day old chick: $1/Chick
* Doreo Analysis

22. The Recommended Premium For Aflasafe Treated Maize is
$56/MT vs. $6.25/MT
The Poultry Industry Makes Money… the Farmer Makes Money
22

23. 23
How will the commercial plan be implemented?

24. Strategic Plan to Drive Sustainability
Leverage Strong Regulatory Enforcement to Sustain Premium Market for Aflasafe maize
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1
Year
2 3 4 5
PACA and Pull Mechanism
Generate Supply of
Cost Effective Low
Aflatoxin Maize
Enforce Regulatory
Policy
Enable Market
Forces to Drive
Sustainability
Promote Health
Awareness to Value
Chain Actors
Policy:
Build
Regulators
Capacity
Policy:
Develop
regulatory
framework
Policy: Phased in regulatory enforcement mechanism
Market Forces
Health Awareness: Farmer Focus
Health Awareness: Industry
Focus
Health Awareness: End Consumer
1
2
3
4

25. Contact Details
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Lagos
3B Baajiki Close
Lekki Phase I
Lagos, Nigeria
London
11 Mount Pleasant
London, England
SE27 9PU
Kola Masha
Managing Director
kola.masha@doreopartners.com
+234-(0)-805-5000-350
www.doreopartners.com
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