1. Creating Companies | Creating Wealth | Creating Jobs October 2012
Aflasafe Commercialization Strategy Improving the Health and Securing the Income of Nigeria’s Small Holder Farmers
Creating Companies | Creating Wealth | Creating Jobs
October 2012
CONFIDENTIAL

2. Stunts the growth in children by 25% - 35% Massive immunosuppressant
Aflatoxin: A very dangerous food toxin present in over 40% of household grains across sub Saharan Africa. Impacting the health and incomes of millions of farmers
Type 1 Carcinogen
Stunts the growth in children by 25% - 35%
Massive immunosuppressant
Source: IITA

3. Aflatoxin problem starts in the field
Aflatoxin Levels in various fields
Farmer with harvested grain 20 40 60 80
100
120
140
160 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Farmers
Aflatoxin (ppb)
792
309
64% fields above 20 ppb at harvest in northern Nigeria
Increases in stores; interventions required in field and stores
Source: IITA

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

5. How does Aflasafe work Aflasafe in 5 kg Boxes
Broadcast at 10kg/hectare
Sporulation on moist soil
Reduced levels of Aflatoxins
Spores in the wind and via insects
Soil Colonization

6. Extent of Aflasafe use by farmers belonging to various organizations in Nigeria, 2011
State
Crop
Farmers (No.)
Area treated (ha)
CADP
Kano
Maize
158
193.0
Groundnut
106
61.5
Kaduna 92
560.0
MVP 59
30.5 19
10.5
TOTAL
434
855.5
CADP = Commercial Agriculture Development Project
MVP = Millennium Village Project of the United Nations

7. Farmers treating maize and groundnut in field
Key Takeaways
Aflatoxin reduction in corn
Harvest: 2009 (80%), 2010 (89%)
Storage: 2009 (90%), 2010 (96%)
Duration
71% and 52% carry over of innoculum 1 and 2 years earlier
Aflatoxin reduction of peanut at harvest
2009 (96%), (98%)

8. Productivity increased of communities in aflasafe-treated areas
Impact of Aflasafe on Trade and Health
Aflasafe
Productivity increased of communities in aflasafe-treated areas
DALYs saved: 103, ,000
Cost-effectiveness ratio:
Source: Felicia Wu, Pittsburgh Univ.
100
untreated
100 80 60 40 20 94 75 73
farmers' fields (%) 39 27 3
<4
<10
<20
>20 EU
WFP US
unsafe
maximum allowable aflatoxin level (ppb)
Source: IITA

9. Aflasafe Commercial Strategy
Three Strategic Question
Who is the target market for low aflatoxin maize?
What premium can this market afford and does the premium provide sufficient economic incentive to sustain farmer adoption?
How will the commercial plan to be implemented?
“Establish a sustainable premium market for low aflatoxin maize and ensure this premium creates sufficient economic incentive to sustain farmers adoption”
Shown that it works, next phase is figuring out the market for these products.

10. Who is the market for low Aflatoxin Maize?

11. Nigerian Government Bans Poultry Imports
Target Market for Aflasafe Maize Poultry Industry… Key Driver of Domestic Maize Production
Correlated Growth In Maize and Poultry Production in Nigeria
Drivers
Index of growth in production for maize and poultry relative to
Nigeria’s production in 1961*
Measure: Relative growth in production
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.
Nigerian Government Bans Poultry Imports
* Doreo Analysis, FAO

12. Is Aflatoxin an issue for the poultry industry?

13. Aflatoxin has a significant economic impact on poultry production
Majority of Poultry Feed in Nigeria Toxic
Impact of Toxic Feed
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
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

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

15. Target Farm gate Price of Aflasafe $15 USD per Ha with Target Yields of Aflasafe Maize Farmer of 3.5 MT /Ha
Poultry Industry Current Premium by Customer Segment*
($ per Metric Ton of Maize)
Economically Sustainable Farm Gate Price of Aflasafe by Customer Segment and Farmer Yield*
Tier 3
Customers
Tier 2
Customers
Tier 1
Customers
Target Yield
Target Price
Toxin Binder Cost
Low
Low
High
High
Toxin Binder Concentration
Low
High
Low
High
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
Assumes farmer makes 33% profit on use of Aflasafe
* Doreo Analysis

16. Analysis Aligns with Farmer Willingness To Pay Study Conducted by IITA
Target Farm Gate Price Range
Source: IITA Analysis

17. Babban Gona: Agricultural Franchise Model Enabling Aflasafe farmers to double their yield utilizing a sustainable private sector mechanism
Trust Group 1
Trust Group 2
Trust Group n
Small Holder Farmer
Members
Services
Small Holder Farmer
Members
Services
Services
Small Holder Farmer
Members

18. Babban Gona: Trust Group Service Delivery Model
Development and Training
Credit
Input
Services
Output

19. Impact of Babban Gona: Doubling Farmer Incomes
Babban Gona Field
Expected Yield 4 MT per Hectare
Non Babban Gona Field
Expected Yield 1.5 MT per Hectare

20. Phase 1 Aflasafe Pilot Commercialization
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 1 4 5 2 3 6 7
In addition, Piloting Proof of Purchase Option

21. How cheap can you produce Alfasafe?

22. Significant Product Development Investment to Reduce COGs Reduced from $20 per Ha to $7 per Ha
Analysis of Ex Factory Price and End Farmer Cost
Key Takeaways
Aflasafe Estimated Price ex Factory*
Measure: USD per Ha
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
Substrate (Sorghum)
Inoculum
Labor/OH
Packaging
SG&A
EBITDA
Margin
Ex Factory Price
Aflasafe Estimated Farm Gate Price*
Measure: USD per Ha
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.
Ex Factory
Price
Transport to DP
DP Margin
Retailer Margin
Farm Gate Price
* Doreo Analysis

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

25. Ownership and advocacy by the Nigerian Government
Billboards
Interactive Forum
A commercialization strategy for distribution and adoption being piloted
Consider Aflasafe as public health intervention for aflatoxin

26. Contact Details Lagos 3B Baajiki Close Lekki Phase I Lagos, Nigeria
London
11 Mount Pleasant
London, England
SE27 9PU
Kola Masha
Managing Director
+234-(0)
Doreo