Smallholder farmers represent 88% of all farmers in Sub-Saharan Africa. 34% of these farmers live more than a 5 hour walk from a town where they can gain access to a market for their products. Because of this and several other compounding factors, the majority of farmers in Sub-Saharan Africa are limited to subsistence farming only for household consumption, without an income for expenses like school fees, medical bills, and other critical family needs.
SIATOL, a Small and Growing Business (SGB) in Burkina Faso, and one of the first portfolio companies of MCE’s new SGB Fund, works to provide market access for the Burkinabe smallholder farmers by marketing, at both local and regional levels, high added value processed soybean products for animal and human consumption. Soybean, the most nutritious crop in the world, contains at least 100% more proteins than any other common crop and yields 5-10 times more protein per unit area than other crops. Through purchasing soybeans directly from its network of more than 3,000 trained farmers, SIATOL is able to produce two different by-products: soybean meal and refined soybean oil. SIATOL is the only soybean oil refinery in Burkina Faso and the neighboring countries of Mali, Niger, and Cote d’Ivoire; they are the only company able to fully valorize the soybean, by not only producing semi-finished products but also refining the extracted oil.
Mr. Marcel Ouédraogo (pictured below), a 40-year-old Burkinabe national, founded SIATOL in 2010. Known for his drive, resilience, and resourcefulness as an entrepreneur, Marcel is a graduated engineer in rural development. Early in his career, Marcel began working as a consultant for the Centre International de Développement et de Recherche (CIDR). In this capacity, he structured and supported a network of about 2,000 African smallholder farmers, improving their agronomic practices and increasing their access to markets. After being promoted to coordinator of the program in 2006 and expanding his role over several years, Marcel developed the idea of starting his own soybean processing business. With the support of CIDR and the NGO APME2A, Marcel incorporated SIATOL with an initial share capital of less than $2,000. A year later, in 2011, he won a World Bank business plan competition and received a $10,000 financing that he used to begin purchasing soybeans.
SIATOL leverages the added value of soybeans toward the benefit of the smallholder farmers in its supply chain. The company provides various services to farmers, including distributing seeds and tools needed for harvesting, as well as training on soybean agronomic best practices – at no cost to the farmers. The post-harvest collection is fully managed and centralized by SIATOL field consultants, guaranteeing fair payment to farmers and transportation and warehousing for their product. 19% of the growers in SIATOL’s network had no cash crop before contracting with the company, and 60% had never grown soybean before. Although cotton is the more common cash crop in Burkina Faso, studies have shown that soybean provides at least 10% better incomes than cotton and therefore has a higher impact margin.
Because of the cyclical nature of agriculture, pre-harvest financing is essential to SIATOL; the company must have sufficient cash before the harvest season begins to purchase soybeans from farmers. In the 2015/2016 harvest season, SIATOL only had enough available financing to purchase about 50% of the total available soybeans directly from its network during harvest. This prevented SIATOL from fully leveraging the strength of its farmers’ network, and ultimately impacted its bottom line.
In order to counteract this issue, MCE is joining a select few investors in providing capital to SIATOL, enabling them to purchase 100% of the available soybeans from its network. With adequate financing, SIATOL will be able to foster its relationship with its farmer network and improve the lives of thousands of families while capitalizing on the expected increase in soybean yield in 2017.