Technical Report: Value Chain Approach - Aflatoxin (Groundnuts) Final Report

Transcription

1 Technical Report: Value Chain Approach - Aflatoxin (Groundnuts) Final Report Andrew Emmott, Senior Project Manager, Twin Trading Submitted by: AECOM International Development Submitted to: USAID/Southern Africa March 2012 USAID Contract No. 674-C DISCLAIMER The author s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. PO Box Plot 50668, Tholo Park, Fairgrounds Gaborone, Botswana Phone (267) Fax (267) info@satradehub.org

2 TABLE OF CONTENTS LIST OF ACRONYMS... 4 EXECUTIVE SUMMARY Aflatoxin and Groundnuts Aflatoxin as a Barrier to Groundnut Trade Groundnuts and Smallholders Groundnuts and Aflatoxins The Groundnut Value Chain Ikuru Critical Control Points Analysis and Possible SATH Interventions Priority Intervention SSSCI Commercial Viability at Each Relevant Critical Control Point Buying from Members Commercial viability of a change in buying practice Alternatives to aflatoxin testing Key stakeholders in the buying process Grading and Sorting Commercial viability of improved grading and sorting techniques Sorting Key stakeholders in grading and sorting Bagging for Storage Commercial viability of a move to jute bags Key Stakeholders in bagging for storage Machine Shelling Commercial viability of hand operated mechanical shelling Key stakeholders in mechanical shelling Warehousing Commercial viability of changes in warehousing Key stakeholders in warehousing Intervention Plan Phase 1 Interventions Phase 2 Interventions Concluding Remarks

3 References Annex 1: Proposed Methodology and Work plan Figure 1: Organized Smallholder Value Chain in Malawi Figure 2: Ikuru s and Afri-Nut s Optimum Areas of Focus for Supply Chain Aflatoxin Risk Mitigation Figure 3: Groundnut Flow through the Current Value Chain Figure 4: Groundnut Flow through the Value Chain after the Cluster Intervention Figure 5: Phase 1 and Phase 2 Interventions Figure 6: Aflatoxin Commercial Viability Table 1: Malawi Groundnut Market Segments (2009)... 9 Table 2: Critical Control Points

4 LIST OF ACRONYMS CAADP CODEX EU GPAF FAO FTIR HS ICRISAT IRR IRRI MAC MASFA MOU NASFAM PACA QMS RLEEP SADC SATH SSSCI SSA TIRS UK UN US USAID UV WFP WHO Comprehensive Africa Agriculture Development CODEX Alimentarius-FAO and WHO food and veterinary standards European Union Global Poverty Action Fund Food and Agriculture Organization Fourier Transform Infrared Hermetic Storage International Crop Research Institute for Semi-Arid Tropics Internal Rate of Return International Rice Research Institute Market Action Committee Mchinji Area Smallholder Farmer Association Memorandum of Understanding National Smallholder Farmers' Association of Malawi Partnership of Aflatoxin Control in Africa Quality Management Systems Rural Livelihoods and Economic Enhancement Programme Southern African Development Community Southern Africa Trade Hub Shelling, sorting and storage cluster intervention Sub-Saharan Africa Transient Infrared Spectroscopy United Kingdom United Nations United States United States Agency for International Development Ultra Violet World Food Program World Health Organization 4

5 EXECUTIVE SUMMARY Background Between August and December 2011 Twin worked with the United States Agency for International Development (USAID) Southern Africa Trade Hub (SATH) on a groundnut value chain research project to identify risks of aflatoxin contamination related to the ingress points of aspergillus sp. in the Afri-Nut value chain. While the primary focus was on Afri-Nut in Malawi (a company that Twin has a shareholding in), Twin also took into consideration groundnut sourcing work they have done with Ikuru, a Mozambique based farmer s cooperative. The research reviewed techniques and technologies that may be applied to mitigate these risks and recommends a cluster of commercially driven interventions to facilitate change across the groundnut sector in Southern Africa. This project involved desk research on the causes of aflatoxin contamination, techniques that have been developed to control and/or manage the risk of contamination and a review of where these have been applied in groundnut production systems. Aflatoxin Aflatoxin is a highly toxic metabolite produced by the ubiquitous Aspergillus flavus and parasiticus fungi. The Food and Agriculture Organization (FAO) estimates that the fungi affects 25% of the world s crops and the Centre for Disease Control estimate that more than 4.5 billion people are chronically exposed to aflatoxin through contaminated foods such as maize and groundnuts. Exposure to aflatoxin has been shown to cause cancer, immune-system suppression, liver disease, growth retardation and death in both humans and domestic animals. Aflatoxin control in high value export markets such as Europe is tightly regulated with maximum permissible levels for human consumption set at 4ppb. Value chain integration from key export countries such as Argentina has been successful in keeping imports to Europe below the maximum permissible levels. Africa used to dominate the global export markets in the 1960s and 1970s, but a lack of investment in post-harvest handling and aflatoxin management and control contributed to a decline in market share from around 75% to less than 5% between the 1970s and Recent efforts by Twin and the National Smallholder Farmers' Association of Malawi (NASFAM) to re-engage with this market through Liberation Foods have led to the development of the Afri-Nut peanut processing plant in Lilongwe, Malawi. While Afri-Nut aims to secure market access into Europe, it has the potential to act as a catalyst for change in the peanut sector in Malawi. International trade in groundnuts only accounts for around 6% of the global production. In Malawi, 15% of the crop is exported and entry into Europe is mainly via processing in South Africa. 25% of the crop in Malawi is distributed via formal local markets while 60% is not formally traded. The review is also informed by CODEX standards and previous quality management systems analysis on smallholder groundnut supply chain carried out by Twin and NASFAM, which led to the establishment of Afri-Nut 1. The review resulted in preliminary 1 5

6 recommendations which were reviewed by a stakeholder workshop in Malawi. Potential interventions were prioritized and submitted to SATH in an interim report. Recommendations In order to have a significant and long-lasting effect on levels of aflatoxin contamination in Malawi s groundnut value chains, two phases of interventions are proposed. Phase 1 It is recommended that a set of cluster interventions are implemented at a nodal point in the supply chain encompassing sorting, shelling and storage. This has been chosen as the optimal place to introduce a set of cluster interventions, hereafter referred to as a shelling, sorting and storage cluster intervention (SSSCI). In essence application of SSSCI would entail: Trade in groundnut from farmer to depot in-shell, Mechanical shelling, Sorting under ultra violet light, Storage of shelled nuts in natural fiber bags. The SSSCI will result in groundnuts being mechanically shelled in a control environment rather than by hand on the farm. This would allow groundnuts to be stored in shell for longer and avoid the shell soaking practice prior to hand shelling. Groundnuts will also undergo additional sorting under ultra-violet light and be stored in clean jute bags. These interventions make it less likely that produce will be contaminated by aflatoxin species while also increasing the likelihood that contaminated produce is removed. A positive health benefit for smallholders is that the groundnuts they intend to use for domestic consumption can undergo the same aflatoxin control and management practices as groundnuts destined for international markets. Phase 2 Phase 2 will establish the business case for a groundnut value chain that removes aflatoxin contaminated nuts from the food chain and maximizes the returns from the grade outs. The proposed cluster intervention also paves the way for the establishment of a warehouse receipt in the future. If feasible, a warehouse receipt system could prove a profitable intervention with the possibility of storing additional commodities other than groundnuts. The commercial benefits to Afri-Nut and its partners come from taking control of the crop quality as early as possible in the value chain leading to significant improvements in the conditions for the quality control at point of purchase, through storage, shelling, sorting and processing. These changes are expected to result in a considerable reduction in grade out percentages during processing at Afri-Nut and an increase in the quantity of produce that can be sold to the higher value markets where stricter aflatoxin regulations apply. The suggested approach falls under the four pillars of the Comprehensive Africa Agriculture Development (CAADP) while also operating within Partnership of Aflatoxin Control in Africa (PACA) and the Paris Declarations guiding principles. As no single 6

7 intervention to reduce aflatoxin emerges as being the most feasible, a holistic and multidisciplinary approach is required. Acknowledgement: We would like to acknowledge the input to this report provided by key stakeholders in Malawi from Afri-Nut, NASFAM, Ex-Agris and the International Crop Research Institute for Semi-Arid Tropics (ICRISAT). In particular to Andy Stephens who made significant contributions to the writing of this report; Ian Barney, Doreen Chanje for facilitating feedback from stakeholders. SA Groundnut provided feedback on the report from a South African production and trading perspective. Twin would also like to thank the USAID South African Trade Hub for their support and active contributions in the spirit of the Memorandum of Understanding (MOU) between the two organizations which aims to find commercial incentives to manage control and remove aflatoxin from the human food chain. 7

8 1. Aflatoxin and Groundnuts 1.1. Aflatoxin as a Barrier to Groundnut Trade Aflatoxin is a highly toxic metabolite produced by the ubiquitous Aspergillus flavus and parasiticus fungi. According to the Food and Agriculture Organization (FAO), 25% of the world s crops are affected by the fungi. Countries situated between 40 N and 40 S are thought to be at greatest risk from aflatoxin mainly due to climatic conditions. Regulations against mycotoxins, such as aflatoxin, started in the late 1960s and have steadily grown to the point where roughly 100 countries have now established regulations (van Egmond and Jonker, 2006). The majority of these countries have sufficient financial resources available for the analytical methods required to enforce such legislation. In a World Bank report, Diaz Rios and Jaffee (2008) argue that the evolution of stricter regulations on aflatoxin were not responsible for the decline of Sub-Saharan Africa (SSA) as an exporter of groundnuts in the global market as SSA was losing its competitiveness for decades before the implementation of stringent standards in the late 1990s. They suggest that African countries were unable to cope with need for consistent volumes and quality of groundnuts due to factors such as climatic shocks and sector policies. They go on to say that the stringency of European Union (EU) standards acted as neither a trade barrier nor catalyst for improved aflatoxin management for SSA. Weak supply chain organization and inferior technology are alternative reasons given for SSA s lack of competitiveness. There are those who believe otherwise, none more so than Otsuki et al. (2001). They claim that the regulations put in place by the EU resulted in an 11% decline in EU imports of edible groundnuts from Africa and a trade flow 63% lower than would of have occurred if CODEX international standards had been enforced. One area that is not addressed by Diaz, Rios and Jaffee (2008) is the potential impacts early un-harmonized regulations could have had on trade. In 1982, Coulter had already pinpointed stringent aflatoxin regulations as the most important factor stopping Malawi from selling groundnuts to European countries 2. At this point, the United Kingdom s (UK) acceptable aflatoxin level was 30ppb while in West Germany and the Netherlands it was 5ppb. It is likely that those in the industry would have been aware that regulations were likely to become stricter in the future, prompting them to seek a reliable supply of good quality groundnuts before these regulations came into play. With the first international inquiry into mycotoxins in food and feed occurring in 1981 and actors within the sector aware of the issue since the 60s, it is likely that aflatoxin levels in groundnuts did have a significant role in the decline in SSA exports from the 1970s onwards. Though the role that aflatoxin regulations played in the decline of groundnut exports from SSA is debatable, there is no doubt that current regulations act as a trade barrier for countries like Malawi, especially when produce grown by smallholders often struggle to achieve the strict thresholds put in place. International standards for allowable levels of aflatoxin in groundnuts intended for direct human consumption vary between 4ppb and 20ppb, with the strictest regulations in place in Europe. The United Nations (UN) requirement for aflatoxin content is 5ppb while the United States (US) standards are relatively high at 20ppb. 2 Coulter, J. P. (1982) Survey of selected European markets for processed groundnuts, nut butter and macadamia nuts, Tropical Products Institute 8

9 1.2. Groundnuts and Smallholders In Malawi, groundnuts account for 25% of household agricultural income, while the agricultural sector contributes 63.7% of the total income for the rural population (Diop et al., 2003). Groundnuts are one of Malawi s the fastest growing export industries; though from a low base. Over a 5-year period ( ), groundnut exports have grown by 271%. However, they still only account for a 0.14% share of the market value of the products exported by Malawi. Malawi is currently 9 th largest exporter of groundnuts in SSA (Simtowe et al., 2009). South Africa is the largest importer of Malawian groundnut, it accounts for almost 70% of Malawi s exports in the Southern African Development Community (SADC) region (CYE Consult, 2009). According to the available information (CYE Consult, 2009), confirmed by NASFAM and ICRISAT, only 40% of groundnuts are channeled to the main processing, wholesale and retail markets. The other 60% is locally consumed by farmers or sold directly by the producers on local markets. On the basis of 2006 production (200,000 mt) and export data (30,000mt), it means that from the total marketed products 37.5% are exported, or 15% of the total production (CYE Consult, 2009). Groundnuts produced in Malawi are distributed in the following way. Table 1: Malawi Groundnut Market Segments (2009) Production 100% Domestic consumption/local markets 60% National markets 25% Export markets (the majority sold in South 15% Africa) 1.3. Groundnuts and Aflatoxins Aflatoxin is a sensitive public health and food industry issue, but awareness and understanding of aflatoxin is not widespread. As a result, smallholders have limited knowledge of suitable aflatoxin control and management strategies. Many factors can contribute to the levels of aflatoxin in groundnuts. Research has shown that certain varieties of groundnut are more resistant to aflatoxin contamination and that good varietal selection is crucial. Selection is dependent upon a number of key factors including climatic conditions (e.g. rainfall reliability and duration) and soil type. Information on suitable varieties and their availability is a key problem. A lack of smallholder understanding of good agricultural practice (e.g. planting timing and density, soil ph) combined with groundnuts not being seen as a smallholder s most important crop contributes to aflatoxin contamination. Exposure to moisture is a key contributing factor to aflatoxin post-harvest. Poor handling and inadequate storage conditions, prevalent in many villages and collection centers, along with poor processing, can detrimentally affect crop quality. Risks of contamination are exacerbated by slow evacuation and processing of the crop post-harvesting. A major constraint to farmers and farmer organizations addressing these challenges is poor crop quality information and analysis exacerbated by informal traders who contribute little quality feedback. This prevents the identification and monitoring of key risk control points and swift action to reduce or control risk. 9

10 There is a lack of clear market incentives for value chain actors to address the problem of high aflatoxin levels in groundnuts. Apart from exceptional circumstances, the market at farm gate has been unwilling to pay the significant premium needed to drive improvements in groundnut quality. As the majority of groundnuts are consumed locally where aflatoxin regulations are not strictly enforced, local traders place more emphasis on quantity than quality. With no price differentiation based on the quality of produce, smallholders have little incentive to improve their aflatoxin management and control strategies, assuming they are aware of the issue at all. Since the Afri-Nut supply chain operates within this context, these challenges will be have accounted for to develop a cost effective intervention plan that can drive positive change by reducing aflatoxin contamination in the value chain. 2. The Groundnut Value Chain Figure 1 shows the movement of groundnuts through the Afri-Nut, Malawi value chain. The points at which groundnuts receive aflatoxin testing are highlighted along the chain Ikuru The groundnut value chain in Mozambique in which Ikuru is involved has many similarities to the value chain illustrated in Figure 1. Ikuru markets a range of products both locally in Mozambique and for export to niche markets such as the EU. Only small quantities of Fairtrade groundnuts are traded with Europe. This is largely because the dominant variety in Mozambique, Nametil, has a small kernel. The groundnuts marketed by Ikuru are produced by smallholder groups called Fora s, these groundnuts are predominantly hand shelled at the household level. Ikuru s current business plan is focused on making improvements to the input and supply offered to smallholders, with particular attention on the supply of improved seed. Processing facilities available in Mozambique are not to the standard of those provided by Afri-Nut in Malawi. For this reason, the interventions at the post-harvest level recommended in this report are less relevant to Ikuru at their stage of development. It is intended that findings from any subsequent projects from this report will help to inform Ikuru s future strategy in the area of post-harvest practices. In Malawi, ongoing research by NASFAM, Ex Agris and ICRISAT is focused on making improvements to the preharvest phase of the value chain, including inputs and supply of improved seed. Findings here are also likely to prove useful to the Ikuru value chain. Figure 2 shows different areas of the value chain in which Ikuru, Twin, NASFAM, Ex Agris and Afri-Nut are engaged and will be focusing their attention on when attempting to mitigate the risks of aflatoxin. 10

11 Figure 1: Organized Smallholder Value Chain in Malawi 11

12 Figure 2: Ikuru s and Afri-Nut s Optimum Areas of Focus for Supply Chain Aflatoxin Risk Mitigation 3. Critical Control Points The first edition of the Mchinji Area Smallholder Farmer Association (MASFA-Malawi) Quality manual was produced in November 2008 which developed flow charts from farm production to dispatch to MASFA customers. The manual identified four key priorities for buyers as: 1. Low aflatoxin levels 2. Traceability 3. Good quality, and 4. Timely delivery Fourteen control points (Table 2) were identified (some but not all of these quality management systems (QMS) have a direct impact on the management and control of aflatoxin). The quality manual has since been summarized to produce QMS working instructions, QMS at farm level and QMS during groundnut processing, dispatch and traceability. NASFAM developed the material with the intention to have it printed as an A5 booklet that can be distributed to end-users. It is likely that the material may need further modification to accommodate the recommendations of this report. 12

13 Table 2: Critical Control Points Critical Control Points 1 Analysis 2 Warehousing 3 Buying from members 4 Farm storage 5 Field drying 6 Machine shelling 7 On-farm shelling 8 Dispatch 9 Seed selection 10 Planting 11 Weeding 12 Selection of buying center 13 On-farm sorting 14 Bagging for temporary storage Relevant Critical Control Points 1 Buying from members 2 Grading and sorting 3 Bagging for storage 4 Machine shelling 5 Warehousing Not all of the critical control points identified by MASFA are relevant to the intervention plan being recommended, as many of these are concerned with pre harvest practice. Interventions in the pre harvest phase operate in a complex heterogeneous environment, e.g. rainfall, soil type and smallholder education levels. Work such as NASFAM s Rural Livelihoods and Economic Enhancement Programmed (RLEEP), which started recently, include improving access to training and extension support on groundnut production. Interventions relating to establishing good agricultural practice require lengthy periods of extension work in order to reach a significant number of smallholders. Smallholders must perceive they are benefitting from any change in practice or increased financial expenditure and require greater levels of understanding relating to the threat of aflatoxin than are currently in place. This work is needed to improve the overall pre-harvest standards within the sector and should have a long-term impact on the quality and levels of aflatoxin of product supplied to businesses such as Afri-Nut. Recent research in Ghana shows that, where aflatoxin levels were low immediately after harvest and drying, aflatoxin levels increased significantly by the time they reached urban markets with levels 2 to 3 times higher than recommended by the World Health Organization (WHO). This supports the notion that post-harvest handling can be responsible for marked increases in levels of aflatoxin and that measures are needed to take post-harvest control of crop quality in order to keep aflatoxin levels low and to minimize cross contamination and build up in storage. Afri-Nut s experience and expertise mean it is in a strong position to influence post-harvest practice. The greatest benefit for Afri-Nut can be achieved by taking control of post-harvest crop quality in shell, ensuring safe storage and handling conditions of groundnuts can be achieved and that the costs of handling and transporting contaminated groundnuts can be reduced. Changes in the supply chain post-harvest do require smallholder buy-in but fewer of these changes rely on smallholders investing their limited finances and are designed to address the heterogeneity of the product in the smallholder supply chain. This 13

14 post-harvest intervention is designed to have a rapid transformative influence on the smallholder groundnut value chain. Beginning an intervention program at the critical control point, where interaction with smallholders takes place, is considered to be important as it is the point at which Afri-Nut can take control of the crop quality but there is also an opportunity to raise the profile and smallholder awareness of aflatoxin. The commercial viability of interventions were examined at each relevant critical control point with findings being based upon a literature review, stakeholder workshop and value chain experience. 4. Analysis and Possible SATH Interventions In order to have a significant and long-lasting effect on levels of aflatoxin contamination in Malawi s groundnut value chains requires the implementation of a set of cluster interventions. By focusing attention on a few complementary interventions at the critical post-harvest phase in the value chain, a platform from which to drive future change in the supply chain can be established. As well as being financially viable for Afri-Nut, these interventions will achieve positive results that are tangible to the smallholders in the short term. On this basis, positive and trusting relationships can be built that have the ability to bring about significant future progress in Malawi s groundnut sector and influence regional strategies. A nodal point in the supply chain, encompassing sorting, shelling and storage, was chosen as the optimal place to introduce a set of cluster interventions which from here on will be referred to as a shelling, sorting and storage cluster intervention (SSSCI). Each intervention, in its own right would result in positive outcomes for the value chain. When combined, a cumulative affect is achieved where aflatoxin rich groundnuts are identified and removed from the value chain. The risk of further aflatoxin ingress is then mitigated as groundnuts will be stored and shelled in a safer environment that restricts contamination by aflatoxin species Priority Intervention SSSCI Figure 3: Groundnut Flow through the Current Value Chain 14

15 The current groundnut value chain has a number of weaknesses when it comes to aflatoxin management and control. SSSCI can result in improved efficiencies in these post-harvest practices. A more efficient value chain, producing a greater volume of groundnuts suitable for external markets in South Africa and Europe will help stimulate an increased demand. Figure 4: Groundnut Flow through the Value Chain after the Cluster Intervention Figure 4 shows how groundnuts would flow through the supply chain from point of purchase to factory gate under the proposed SSSCI. These recommendations are made based on information gathered from key stakeholders in the Afri-Nut value chain, a cost benefit analysis and a detailed literature review of sources including peer reviewed publications and previous value chain analysis. 5. Commercial Viability at Each Relevant Critical Control Point 5.1. Buying from Members Commercial viability of a change in buying practice Wu et al. (2008) touches upon an important point concerning aflatoxin contaminated groundnuts within a supply chain: As peanut growers do not derive direct benefit from aflatoxin management, there is little incentive for them to implement these control methods. A differential pricing system, based on aflatoxin levels, has the potential to change this. A barrier to such a system is that produce is not currently tested for aflatoxin at the point of purchase, primarily because of the cost of the tests, the sample size required to undertaken them and training required to carry out the tests. Rapid aflatoxin tests are being improved and present the groundnut value chain operators with the potential to test at point of purchase. Grain Pro have developed the AFB1 precise test kit which can be carried out during field inspection or at the point of purchase and 15

16 gives results within 5 minutes. This test does not give a specific value but indicates whether the sample exceeds 5, 10, or 20ppb. Each kit costs US$10 and allows 24 samples per kit (it cannot be used on oil seeds and their products). The Gates Foundation and Diagnostics For All are investing in cheaper, simpler diagnostics that can test quickly at the field level. However, this is in the initial development stages and is currently focused primarily on maize production. A rapid aflatoxin testing kit suitable for groundnuts has the potential to be a commercially viable intervention. Assuming kits are available at or below the Grain Pro AFB1 test price of US$10, and the kit is capable of assessing 24 samples; one kit could test up to 1,200kg if one sample is taken for each 50kg bag of groundnuts. Such an intervention would therefore cost $0.008/kg. This is the equivalent to a 0.5% reduction in grade outs. There are a number of potential financial benefits associated with testing at point of purchase. The purchase of inferior crop at standard price will cease, resulting in savings. In a scenario where punitive pricing is employed, the saving made through purchasing a 50kg bag of groundnuts with a relatively high aflatoxin level, say 20ppb, at US$0.56 rather than US$0.74 (25% reduction) would be around US$9. Secondly, testing will also allow groundnuts with no sign of contamination to be processed separately from those showing low levels of contamination. This could prove commercially viable as overall levels of contamination could fall, resulting in lower processing costs. Finally, identifying contaminated produce at an early stage in post-harvest practice could lead to additional financial benefits of lower grade out percentages and lower transport and processing costs, as contaminated groundnuts will not enter into the storage and processing stage. Changing to a buying system that takes quality into account could also provide the financial incentive that smallholders need to improve their aflatoxin control and management practices. At a recent workshop, stakeholders ranked buying practice as the second most important ingress point for aflatoxin control. This supports the idea that changes here lead to significant positive results. Concerns were raised in the stakeholder workshop over punitive pricing, with price incentives favored over creating disincentives as it is feared that penalizing smallholders would reduce the overall production of groundnuts. Stakeholders also suggested that incentives may be a difficult way to improve on farm practices and reduce aflatoxin levels in the long term, especially if the financial incentive is small and the smallholders are only producing small quantities or groundnuts Alternatives to aflatoxin testing Testing moisture level of groundnuts at the point of purchase has been identified as an alternative to aflatoxin testing. Groundnuts should be stored at levels below 7% moisture if shelled and 9% if un-shelled, above this level condition are suitable for the growth of fungi, including Aspergillus sp. Currently, moisture levels are tested by touch at point of purchase. If this less accurate method were to be replaced by a moisture meter test, then the condition of the crop entering storage could be improved. While introducing more thorough moisture level tests would help reduce the aflatoxin levels of groundnuts as they will be stored in better conditions, the use of rapid aflatoxin testing at the point of purchase would be preferred. Similarly, ultra violet (UV) light may be used in a quality grading process. Using UV lights in the sorting process will be discussed in section

17 Fourier trans-form infrared (FTIR) spectroscopy is being promoted by Mirghani et al. (2001) as a rapid, easy and convenient analytical method for determining aflatoxins and a possible alternative to standard wet chemical methods. Christie (2011) developed a methodology where fungal growth, rather than aflatoxin alone, was measured in terms of FTIR spectra. Using this technique, with the limiting detection level set at 20ppb and automated separation of peanut kernels individually as acceptable or moldy or toxic, 100% correct separation of clean peanuts from moldy ones was achieved. Further, 91% of moldy stream was correctly distinguished as either only moldy, non-toxic or both moldy and toxic. For bulk quantities of groundnuts, a rapid method using transient infrared spectroscopy (TIRS) has potential, but requires more research for commercialization Key stakeholders in the buying process Organizations such as NASFAM and Ex Agris have experience in directly purchasing from smallholders. Neither currently use an aflatoxin quality based system, but discussions suggest both are interested in doing so. ICRISAT, in association with NASFAM, used to have a system in place where MASFA members produce was tested for aflatoxin for research purposes; both will therefore have useful input. The Gates Foundation is undertaking work developing aflatoxin testing and therefore may be interested in trialing new technology in the field. We recommend engaging with these stakeholders during phase 1 in order to facilitate a move to a quality based buying system. The role of local buyers should not be underestimated as the majority of Malawi s groundnuts are informally traded. Local buyers seem to be happy to purchase from smallholders with little consideration to sorting or quality at the same price being offered by NASFAM. If this practice continues, it is unlikely that smallholders will be happy to sell groundnuts with high levels of aflatoxin at a reduced price when they could receive full price from local buyers. A shift by agencies such as NASFAM and Ex Agris to buying inshell may help to combat this problem as the labor intensive task of shelling groundnuts will be taken out of smallholders hands Grading and Sorting Commercial viability of improved grading and sorting techniques Pre-sheller Grading Waliyar et al. (2007) state that crop residues mixed with groundnut pods are often sources of contamination. For this reason, the process of pre-sheller grading is important. CODEX (2004) also recommends that harvested nuts should be promptly cleaned and sorted to remove damaged nuts and other foreign material. Density separators or air legs can be used to remove light pods, while slotted screens can remove pre-shelled kernels. Both these processes remove non-compliant groundnuts, i.e. those that are more likely to be contaminated. Carrying out grading before groundnuts are placed in pre-shelling storage will increase the efficiency of the shelling process, it will also mean that non-compliant groundnuts such as pops, that are more likely to have high levels of aflatoxin, are removed from the system before the groundnuts are stored. The removal of broken or shriveled groundnuts at this point will also reduce the chance of aflatoxin species spreading; this could lead to lower grade out percentages at the processing plant. 17

18 The process of pre-sheller grading is rare so there is little data available relating to specific effects on aflatoxin levels or grade out percentages. An accurate cost benefit analysis is therefore not possible. The process of pre-sheller grading is mechanized and therefore not labor intensive. New machines costing in the region of US$1,000 would be needed. One issue associated with the introduction of pre-sheller grading is that individual lots of smallholder groundnuts will become mixed during the grading process, traceability of produce back to an individual farmer will therefore be lost. Traceability can be maintained to a Market Action Committee (MAC) level if groundnuts from the same MAC are put through the graders at the same time. With sufficient data management and traceability systems in place, the individual farmers who have contributed to the groundnut batch from a specific MAC can be known Sorting Sorting is the final chance for removing defective kernels before processing. According to CODEX, sorting should occur both before and after blanching takes place. To remove mold contaminated nuts effectively, using hand sorting and grading, the process should occur in good light with groundnuts on the belt no more than one layer deep. The sorting belt must also be moving at a reasonable speed to ensure there is time for the removal of foreign material and moldy groundnuts. Work by Galvez et al. (2003) shows that hand sorting has been shown to substantially reduce aflatoxin contamination in groundnuts. Cilliers (2002) also found that hand sorted groundnuts are of a lower aflatoxin risk than machine sorted ones. It has been discovered that aflatoxin species fluoresces bright blue or green under ultraviolet light. This finding has seen the development of fluorescence sorting instruments; here groundnuts exhibiting unwanted fluorescence properties can be physically rejected. UV sorting is thought to work best when used in association with traditional hand sorting. Screening by ultraviolet light is not a conclusive test for aflatoxin so would have to be used only as a preliminary mechanism to help with hand sorting, followed by more accurate testing. Introducing UV sorting would be inexpensive, with the main cost being the UV lights and installation of a structure that is able to allow the sorting to occur in dark conditions. There would be no additional labor requirement and sorting would become more effective. Recent innovation has seen the introduction of electronic and laser sorters; these are designed to use sensor-based opto-electronic sorting technology to eliminate aflatoxincontaminated nuts and foreign material from a lot. These are used before hand sorting takes place. These technologies are not considered to be cost effective at current prices as the sorting process being discussed will be taking place at individual buying and shelling stations. Each of these stations is unlikely to sort sufficient volume of groundnuts to warrant the purchase of this expensive machinery. Where large stakeholders such as Ex-Agris is undertaking this operation then their economies of scale may, in time, justify the use of this technology. Improved sorting and grading, including the use of UV technology The use of UV light in the process of aflatoxin management and control is growing in popularity. As a cheaper alternative to color sorting, the technique is used in the fig and cotton industry while studies have begun investigating its suitability to dealing with groundnuts (for example, with Ikuru). The financial benefits of this intervention are likely to 18

19 be experienced by the companies dealing in peanut processing as improved recognition of groundnuts with high aflatoxin levels will result in lower grade out percentages. Although the test is only presumptive and detects kojic acid rather than the aflatoxin molecule itself, it can result in the removal of groundnuts contaminated with aflatoxin species and other fungi. The removal of contaminated groundnuts at this point of the value chain aims to reduce the spread of the contamination after shelling. More thorough sorting at this point could help reduce grade out percentages and the chance of groundnuts shipments being rejected when going through customs or upon arrival at the buyer organization. Knock on benefits of this include an improved reputation in regional and international markets for a supplier of quality produce which could potentially lead to increased sales in international markets as more produce has an aflatoxin level below the required threshold Key stakeholders in grading and sorting In the current system, smallholders are responsible for grading their groundnuts before hand shelling. As this takes place at the household level, there is little possibility for a uniform quality control system to be put in place. Extension services at NASFAM and Ex Agris do offer training on this process, but it is difficult to monitor the extent to which best practice is followed. The first formal quality control takes places at point of purchase, where trained buyers will check the grading and sorting of the groundnuts being purchased. Upon inspection, produce is either accepted and purchased, or rejected and returned to the smallholder for further sorting. NASFAM and Ex Agris are both undertaking RLEEP projects that involve improving smallholders post-harvest practice that includes specific training on aflatoxin management. These studies have the potential to improve the current understanding of smallholder s initial grading and sorting practice and highlight potential concerns or opportunities. These projects also include some mechanical shelling and in-shell storage. Once again, the practice of local buyers has the potential to influence smallholder practice. If they are capable of offering competitive prices while continuing to employ low levels of quality control, it is likely they will remain a popular point of sale for smallholders. Phase 2 of the proposed interventions includes investigating markets in which groundnuts with high levels of aflatoxin can be used. In order to drive this process, actors in animal feed and groundnut oil supply chains should be engaged Bagging for Storage Commercial viability of a move to jute bags CODEX (2004), states that all groundnuts should be stored and transported in clean, dry containers/bags, with no visible growth of mold. At all points in storage and transport, groundnuts should be protected from moisture and temperature fluctuations. Under current value chain conditions, smallholders are transporting shelled groundnuts to buying stations in old bags, usually polypropylene, that have undergone no official quality control and are unlikely to have undergone any cleaning as smallholders are generally unaware that they could be harboring dangerous fungi. Safe groundnuts can therefore be contaminated while being transported to buying stations. 19

20 Once purchased, groundnuts are moved into new polypropylene bags for storage in a warehouse. Research by Hell et al. (2000) shows that polypropylene bags can facilitate fungal contamination and aflatoxin development. Discussions in the stakeholder workshop also raised the concern that polypropylene can make nuts sweat and the bags retain moisture, making conditions more favorable to the spread of aflatoxin. It is generally agreed that bags made of natural fibers such as hessian bags or jute bags would be more suited to the value chain. Replacing the current bags used to store groundnuts in value would have two main positives. Firstly, the old bags which may already be broken or contaminated with traces of aflatoxin species will be removed. Secondly, these older bags will be replaced with those composed of material that is better suited to store groundnuts due to its superior ability to ensure uniform aeration. Mutegi et al. (2010) found in their study of groundnuts in Kenya that all samples of groundnuts stored in jute bags in their study had aflatoxin levels below 4ppb. This was, however, only 1% of their sample. Data quantifying the effects of using jute bags on aflatoxin levels in groundnuts other than this is scarce; placing a financial value on the benefits is therefore difficult. The 50kg polypropylene bags currently used cost US$0.08 per bag. Bags in the value chain are currently not being reused as traceability data is being written directly onto each bag. A new jute bag retails in the region of US$1.5 and has an 8-year lifespan. If there is a shift to purchasing groundnuts in shell, separate jute bags will be needed for storage of groundnuts in shell and once they have been shelled and sorted and once they have been processed. The cost of replacing polypropylene bags with jute bags will be in the range of US$0.05per kg assuming three bags are used from point of purchase through to shipping. These calculations do not account for the loss of any bags. Afri-Nut sell processed groundnuts at roughly US$1.61/kg, therefore, if grade out percentages are reduced by 4% per kg, the financial benefits (approximately US$0.06/kg) should be sufficient to cover the cost of introducing jute bags into the value chain. A new system of buying in-shell will result in a greater number of bags being used throughout the supply chain. In-shell groundnuts require 70% more storage space than shelled groundnuts; they will also require 70% more bags. If jute bags are integrated into the system, a move to buying groundnuts in shell will result in an increase expenditure of US$0.021 per kg. The use of jute bags can act as a quality assurance system as all bags are branded and owned by the organization that processes the groundnuts. In Malawi, Afri-Nut could supply and control the cleaning and fixing of branded jute bags to different producer organizations. These bags would then be used throughout the value chain once groundnuts have been purchased to ensure that produce is kept in safe conditions. SA Groundnuts have developed a lease system where farmers who supply groundnuts in jute bags are given a clean bag in return. In this value chain, groundnuts will be stored in jute bags from the point they are dried to when they are delivered to buyers, a desirable situation when combating aflatoxin contamination. Under this system a 5% loss of bags is occurring each year. A danger in introducing such a system in Malawi is that the loss of bags could be considerably higher and may undermine the system. Hermetic storage (HS) technology had emerged as an alternative storage method for value commodities in tropical and semi-tropical regions. HS is based upon the need to achieve the three following goals: Low oxygen, high carbon dioxide atmosphere; prevent moisture entry and maintain a more constant environment; and protection from rodents. All three of these goals are complementary to the conditions that groundnuts should be stored 20

21 in. Research carried out into the storage of groundnut seed in Vietnam found that HS provided an equal or better performance compared to air-conditioned storage and cold room storage (Villers et al. 2008). As well as larger storage structures, HS is now available on a smaller scale with the development of air tight bags, such as the International Rice Research Institute (IRRI) Super bag and Super Grain Bag which develop their own high carbon dioxide atmosphere. The point in the value chain most suited to the introduction of HS bags would be post processing and pre shipping. The cost of this intervention would be an additional US$1 per bag, every six years, as the HS bags are used in association with other bags rather than as a replacement Key Stakeholders in bagging for storage The processing companies are likely to be the key players in this area as responsibility may fall on them to distribute and maintain the bags. Organizations responsible for purchasing groundnuts from smallholders, such as Ex Agris, NASFAM and Ikuru are likely to support the introduction of branded jute bags as they are provided by the processing organization and as a result will reduce their costs. Companies purchasing from Afri-Nut can also have a greater confidence in the aflatoxin control and management practices employed in the supply chain if they are confident that only clean jute bags are being used from the point that groundnuts undergo pre-sheller grading. The use of branded jute bags could be extended so that smallholders are encouraged to transport their groundnuts to the buying stations in bags provided by the processing organization. A suitable system will have to be put in place that provides the smallholders with incentives to adopt the new bags for the proposed purpose and keeps levels of bags lost to a minimum. Twin, funded by the Global Poverty Action Fund (GPAF), will be holding smallholder workshops and focus groups in an attempt to better understand how such a system would work Machine Shelling Commercial viability of hand operated mechanical shelling Mechanical damage to kernels makes them more susceptible to storage molds, including species that produce aflatoxin. This is one of the difficulties faced if common practice is to move away from hand shelling in Malawi. There are many types of mechanical shellers available; these can generally be categorized into manual and motorized machines. Work is ongoing to produce a mechanical sheller that can consistently produce low levels of wastage. Hand operated shellers are already being used in Malawi and have proven to be more effective with fewer breakages than larger motorized machines. There is also debate about when the groundnuts should be shelled. The FAO recommends that shelling should take place as and when the groundnut is needed for consumption. This is because the storage life of a groundnut is shortened once the nuts are shelled. The shell also acts as a physical barrier to the ingress of aflatoxin species into the groundnut kernel. If aflatoxin builds up on the surface of the groundnut shell, this contamination can be removed upon shelling. An advantage of mechanical shelling is that it removes the temptation for those who are hand shelling the ground nuts to sprinkle them with water to make the process easier. Wet shelling was found to result in 73% of produce being contaminated with Aflatoxin. Any practice that avoids the wetting of groundnuts should be encouraged as moisture is 21

22 considered the single most important factor for the control of toxigenic molds. Wetting groundnuts during shelling has the potential to increase moisture levels of groundnuts during storage, meaning conditions are better suited to the spread of fungi. With smallholders currently storing shelled groundnuts on farm in polypropylene bags it is likely that moisture levels will be above the recommended 7%, particularly if they have been wetted during the shelling process. There is also evidence to suggest that hand shelling can spread fungi that produce aflatoxin if the sheller has recently handled a contaminated groundnut. In countries that have progressive groundnut industries such as the US and Argentina, the shelling process is completely mechanized. Once graded, the clean groundnuts pass along a conveyor belt where they are de-hulled as they are forced through perforated grates. The kernels and shells are then separated as they pass through updraft air columns. Finally, the kernels are sorted as they pass over perforated grading screens. This could be used as an example of best practice with shelling taking place in a controlled environment. In a smallholder supply chain where small volumes are bought in multiple places, the use of such expensive machinery is not possible. Hand operated shellers that cost in the region of US$120 have been developed and are more suited to smallholder supply chains. A hand operated mechanical sheller has the capability of shelling 50kg or groundnuts per hour. Smallholders can hand shell groundnuts at a rate of 1kg per hour. If a smallholder household produces 800kg from a hectare of land, hand shelling will take 800 hours rather than 16 hours that would be required to shell mechanically. Assuming that a smallholder farmer s opportunity cost is US$0.9 a day (the same value used in CYE value chain analysis), the financial benefits of using a hand operator sheller could amount to US$89 per household. Even if these hand operated shellers are rented out at a small fee they can still be financially viable to smallholders. Successfully implementing a system where mechanical shellers are rented to smallholders would require some extension work to help smallholders understand the financial and health benefits of using mechanical shellers. The time that groundnuts are stored in unsafe conditions on farm can also be greatly reduced. It may take 3 people working 8 hours a day over a month to shell 800kg of groundnuts by hand. The more efficient practice of mechanical shelling can also mean that groundnuts are stored in shell until shelling is absolutely necessary, once again reducing the chances of aflatoxin contamination. For all these reasons, it is likely to be economically viable for processing companies to invest in a move to buying in-shell in order to enable inshell storage and mechanical shelling and their associated reductions in aflatoxin contamination. Progress is currently being made in developing best practice in mechanical shelling so that breakages are kept to a minimum. In recent trials carried out by Ex Agris breakage percentages have been as low as 5%, use of in-shell sizing machinery can further reduce this as using inappropriate grate sizes in the shellers can be avoided. In the past, in-shell groundnuts have been purchased for US$0.52/kg, this represents a loss of US$0.026/kg of groundnut shelled. The factory selling price of nuts bought in shell is US$1.61kg. Therefore, a 1.6% reduction in grade out percentage will cancel out losses that result from a 5% breakage percentage. This reduction in grade out percentage is expected to be achieved as a result of the innovations associated with a move to mechanical shelling. Alongside buying practice, the stakeholder workshops ranked shelling practice as the second most important ingress point to control or reduce aflatoxin behind the broad category of on-farm practice). This shows there is strong consensus between experts in 22

23 the field that a step change to mechanical shelling could bring about considerable financial and social benefits Key stakeholders in mechanical shelling Through their Growing With Groundnuts program, Ex Agris, are looking to encourage smallholders to mechanize post-harvest operations. As a result, they have already gained experience in the use of hand operated mechanical shellers. Collaboration and information sharing with Ex Agris on the use of mechanical shellers is recommended in Phase 1of the proposed interventions. Smallholders themselves are also important stakeholders in this process as it is essential to achieve their buy in when moving from hand shelling to mechanical shelling. The general consensus is that smallholders will welcome the removal of the labor intensive task of hand shelling. However, buying in-shell will mean that smallholders have to transport a greater weight of groundnuts to buying centers. It is recommended that smallholder engagement is necessary to better understand their point of view. Twin s GPAF project will provide an opportunity for this issue to be better understood. A long term goal of Twin is to ensure that groundnuts destined for domestic markets and consumption undergo similar process as those being sold in regionally and international markets. This shift would bring about health and social benefits as aflatoxin is driven out of the food chain. Work along this line could potentially be funded by organizations such as the Gates Foundation Warehousing Commercial viability of changes in warehousing CODEX (2004) highlights the post-harvest storage of peanuts as the phase that can contribute most to controlling aflatoxin in peanuts. The primary goal for aflatoxin prevention in storage is to prevent mold development; this depends on maintaining low moisture content, a suitable temperature and a hygienic environment. A properly ventilated warehouse with a good roof, preferably double sidewalls and a concrete floor are required to prevent rewetting of peanuts during storage. Any storage facilities should also include drainage of ground water while groundnuts are not directly in contact with the ground, for example, on wooden pallets. Uniform loading at the warehouse allows excessive heat and moisture to escape and reduces favorable areas for mold infestation. Good levels of sanitation and housekeeping within a warehouse can result in a reduction in the threat posed by pests. Groundnuts that receive pest damage are more susceptible to ingress from aflatoxin species with the chance of fungi reaching the center of the kernel in between the two cotyledons also increasing. Blanching can reduce aflatoxin levels of a groundnut that has experienced contamination on the outside of the kernel but is not effective against those with fungi between the cotyledons. The supply chain intervention that has considerable scope to reduce aflatoxin contamination is storing groundnuts in-shell. An associated benefit of this will be that groundnuts are stored in warehouses with suitable storage conditions rather than on-farm during the drawn out process of hand shelling. The volume increase associated with storing in shell is roughly 70%, there will be sufficient warehouse space in the study area 23

24 to house this increased volume as a result of Ex Agris and NASFAM securing RLEEP funding to increase warehouse capacity. The initial cost of such an intervention will therefore be associated with increased transport costs. Aflatoxin management and control of stock will be made easier with a move to groundnuts being stored centrally rather on-farm. Instead of being stored in sub-standard conditions, practices such as fumigation and stock checks can be instigated. From a commercial perspective this will contribute to a decreased grade out percentage during processing and a reduction in post-harvest loss. The quantity of groundnuts, processed by Afri-Nut, capable of accessing the high value markets will therefore increase. This should in turn result in smallholders receiving a higher price for their groundnuts Key stakeholders in warehousing NASFAM and Ex Agris are key stakeholders who will provide essential warehouse capacity for in-shell storage. There is the potential for additional income from seed programs that require storage. Other actors such as the World Food Program (WFP) are involved in improving post-harvest conditions through the provision of warehouse receipt systems. Valuable lessons for Phase 2 of the proposed intervention plan could be learned through collaboration with these players, especially as the introduction of a warehouse receipt system has the potential to result in substantial financial benefits for smallholders through securing loans from banks using their stored crop as collateral. 6. Intervention Plan By focusing on three sequential processes of shelling, sorting and storage, much broader benefits can occur in the battle against aflatoxin. The interventions are proposed to be rolled out in two phases. Figure 5: Phase 1 and Phase 2 Interventions 24

25 6.1. Phase 1 Interventions Smallholders will now be encouraged to transport their groundnuts to a buying and shelling station in-shell. This will result in a heavier load having to be transported. However, any added inconvenience will be offset by the removal of the labor intensive task of hand shelling. As discussed previously, groundnuts remaining in-shell will afford the nut better protection against ingress by species of fungi and subsequent aflatoxin contamination. A particular benefit of this intervention is that the amount of time groundnuts spend on farm in uncontrolled conditions is removed; also the shell will continue to provide a physical barrier to pests subsequently reducing the chance of contamination. Some form of quality control, preferably aflatoxin testing, will take place at point of purchase. Assuming suitable technology is available; smallholders can receive a quality dependent payment for their groundnuts. This additional data relating to quality will be noted on the bag and entered into a data management system and used to influence the sorting and storage process, with groundnuts with lower level of aflatoxin being kept separate to those with higher levels, where possible. If aflatoxin testing technology is not initially available, then moisture testing could be used as an alternative. Here lower moisture levels, associated with lower levels of aflatoxin, would receive the higher prices. This introduction of quality control at the point of purchase is valid due to the removal of contaminated crop that has the potential to reduce the quality of other groundnuts further down the supply chain. Improvement can also be made to the traceability and data management systems as purchased produce can be labeled with a quality level which can then be added to a traceability tag after grading. Records can also be kept of the quality of produce delivered by individual smallholders so that it will be possible to know which individual farmers contributed to a final batch are known. Through the proposed Phase 1 interventions, increased smallholder awareness of aflatoxin, combined with a financial incentive, can be expected to result in improved aflatoxin control and management techniques. The physical location for the cluster interventions proposed will be around existing Ex Agris warehouses. Additional warehouse capacity will become available as both NASFAM and Ex Agris have secured RLEEP funding for the construction of new warehouses. Once groundnuts arrive at these warehouses the mechanical process of pre-sheller grading can be undertaken (at this point traceability back to an individual farmer will be lost). It is proposed that groundnuts from the same management areas are put through the grader at the same time. Similarly groundnuts of a similar quality should be simultaneously graded so quality of groundnuts can be included on the traceability tag. This way feedback can be given at a MAC level and if a second payment scheme is used, based on post grading weight, any premiums can be paid. Once graded, groundnuts will be stored in Afri-Nut branded jute bags. These bags will be reused each year (8-year life span) with Afri-Nut taking responsibility for cleaning and maintenance. Groundnuts will then been stored in the warehouse until requested for shelling and processing. Additional information included on the traceability tag will be date of grading, weight and area of origin. Providing the shelling services free of charge should go some way to providing suitable motivation for smallholders to use the new system. Initially the mechanical shellers purchased by Ex Agris, which have a current breakage percentage of 5%, will be used. Further experience of using these shellers could help reduce this percentage, alternatively research into more efficient hand operated shellers could continue. 25

26 Groundnuts will then undergo further sorting process involving both hand sorting under traditional and ultra violet light. This allows an opportunity for groundnuts contaminated by aflatoxin species to be identified and removed from the value chain. After sorting, groundnuts will be stored in another clean branded 50kg jute bag and moved back into a warehouse until they are sent to a processing plant. Groundnuts should only be sent for shelling once there is demand for them to be processed, this way the time groundnuts are stored without their protective shell is kept to a minimum Phase 2 Interventions Providing or renting branded jute bags to smallholders producing groundnuts so that produce can also be transported to buying stations in suitable conditions is an intervention that could be rolled out at a later date. Further research is required into a system that provides suitable incentives for smallholders to use bags properly so the loss of bags from the system is not too great. Additional business plans need to be developed for alternative uses of non-compliant groundnuts to identify the most financially viable options. A better understanding is also required of smallholders willingness to receive substantially lower prices for contaminated groundnuts. Here the aim is to put measures in place that remove aflatoxin contaminated groundnuts from the local food chain as well as the value chain. The proposed cluster intervention also paves the way for a warehouse receipt system to be established in the future. Further work here includes engaging with banks to ensure the receipt system is recognized and the banks are willing to lend against it. Pilot projects involving the WFP are currently underway in Malawi and Uganda and could help inform this program. If feasible, a warehouse receipt system could prove a profitable intervention with the possibility of also storing commodities other than groundnuts Concluding Remarks The interventions proposed in this report build on commercial priorities identified by Afri- Nut partners that also have the potential to catalyze socio-economic development for smallholders growing groundnuts in Malawi and across Southern Africa. A cluster of interventions have been identified that facilitate step changes needed to move to buying in-shell groundnuts from smallholders. The commercial benefits to Afri-Nut and its partners come from taking control of the crop quality as early as possible in the value chain, leading to significant improvements in the condition for the quality control at point of purchase, through storage, shelling, sorting and processing. These changes are expected to result in a considerable reduction in grade out percentages during processing at Afri-Nut and an increase in the quantity of produce that can be sold to the higher value markets where stricter aflatoxin regulations apply. The report recommends a 2 phase approach with phase 1 consolidating post-harvest handling work initiated by Afri-Nut s supply chain partners, NASFAM and Ex-Agris. Phase 2 will establish the business case for value chains that remove aflatoxin from the food chain in order to maximize the returns from the grade outs with very high levels of aflatoxin in ways that do not allow aflatoxin to return to the food chain. 26

27 Figure 6: Aflatoxin Commercial Viability 27