Client: World Bank, Government of Mali and Burkina Faso
Mali and Burkina Faso are full of delicious mango’s, which cannot be exported fresh. Processing is thus a logical step to create employment in some of the world’s poorest countries. Over the past decade hundreds of small mango drying factories were set-up that produce this snack for the European market. Small-scale juice processing for the local market was also stimulated, and in Burkina Faso a modern factory has been installed for the production of mango pulp for the European juice industry.
However, after a decade of strong growth that reached its peak in 2007, the dried mango export plummeted two years in a row to only one third of the 2007 record. Despite successful juice sales in the region the pulp factory did not manage to export a single container of pulp. With thousands of farmers, factory workers, traders and exporters depending on the industry, the question was asked: what is the future of the industry?
Phase 1: the initial study (2009-2010)
In 2009 The World Bank commissioned a study and a detailed market study was done, together with a study of the current production process and production methods utilised elsewhere. The goal was to come with a number of strategic options for the industry and proposals for pilots.
The study showed that the market for dried mango was still promising, but that Mali and Burkina Faso were loosing market share because of poor quality. This in turn was caused by obsolete drying technology and poor pre-treatment, storage and transport conditions. Furthermore marketing capacity was poor and by limiting to organic production, the industry limited itself to a small and decreasing niche. Even the most loyal organic consumers are generally not willing to by a poor quality product just because it is organic.
The strategic option that was defined was to conquer the conventional market for dried mango by drastically improving product quality.
The first pilot that was proposed was to support the most professional mango drying businesses with the purchase and test of South African drying technology. South Africa was the market leader due to their high product quality, and had more modern dryers. Experienced companies who invest in dryers themselves and test them over a whole season are also more committed to getting results.
A second pilot was that was proposed was to test the effect on quality and shelf life of various combinations of humidity of the product with pre-treatment with preservatives, cold storage and refrigerated transport. The goal was to find the most cost-effective combination that would improve quality and shelf life.
It was also proposed to see if a partnership could be formed with a South African company to speed up the innovation process.
The market study revealed that the market for mango pulp (an ingredient for the juice and food industry comparable to orange juice concentrate) was dominated by India and its varieties. The difference in price between the cheapest and most expensive variety was 600$ per ton. The factory in Burkina Faso had done no proper market research and did not know how their mango varieties compared with the Indian varieties. Importers also did not know as they had never heard of the varieties. The team proposed to support the pulp factory with market research and set-up cooperation with importers to find out which market segment they would fit in.
Finally, two feasibility studies were proposed:
- Individually Quick Frozen (IQF) mango cubes for the European food market, because the need for new suppliers was much higher then for mango pulp, and there was no low-cost producer like India in the market
- Mango bars for the local market made from a mix of ingredients or inferior quality mango, because the low cost price compared to the dried mango snack developed for the EU would make the product more competitive in the local market.
Phase 2: implementation of the pilots (2011-2012)
When the local programs ran into difficulties with the implementation of the proposed pilots, support was offered for the implementation.
A list with selection criteria was drawn up to help the programs select the most appropriate entrepreneurs who would be co-investing and working the new South African equipment. Finally the best 6 companies were selected, quotes for equipment obtained and mango drying equipment was ordered, delivered and installed.
Via importers in the EU we got into contact with the largest dried mango producers in South Africa and started to assess their interest in cooperation. The largest, MPAK was intrigued by the opportunity because they lacked fresh mango to increase the production capacity and deliver their clients. The low cost of labour, mango and the complementary season were enough to convince them to visit Mali and Burkina Faso.
After months of negotiations and several visits of the West African and South African companies to each other a partnership was brokered. MPAK would provide training for the usage of the new dryers, training in good manufacturing practices and support with HACCP certification. MPAK would also buy all the produce manufactured in the new ovens for sale to its own clients.
This partnership has the potential to revolutionise the mango processing industry. The goal of MPAK is to produce 500 tons after five years, which would triple the size of the industry. The combination of cheap top-quality mango, low cost labour and South African production efficiency and marketing skills is likely to increase profitability for all actors in the chain.
At the end of the 2012 season, the dryers operated for a month in Burkina Faso, and a few tests were done in Mali. In total 12 tons of product was produced and sold to MPAK. Though several issues emerged, the companies were convinced these dryers were a major step forwards. Energy consumption, a key cost driver, was much lower, and the quality of the product much better. Clients in Mali who had never before purchased dried mango were now willing to even buy second grade product from the new ovens.
To tackle the issue of the rapid loss of quality after production a series of samples were manufactured, using 2 methods of preservation (blanching and ascorbic & citric acid), storage under room temperature and cold storage, regular packaging and nitrogen filled packaging and regular versus refrigerated transport. A Swiss, English and German client did a blind evaluation of the samples once they arrived at their premises. The results showed a strong impact for nitrogen packaging and a cold chain, while pre-treatment was abandoned.
Qualitative market research was done in Mali and Burkina Faso to understand the snack market and test the interest in various mango products. During 4 consumer focus groups of urban middle class people in Burkina Faso, a large number of mango bars and other mango snacks from Brazil, Europe, South Africa and Thailand were tested.
The conclusion of the consumer research was that mango rolls developed by MPAK in South Africa offer the best opportunity. Local consumers enjoy mango flavour, but want to know what they are eating and do not like to processed bars with too many ingredients. Like Europeans they are also looking for an attractive high quality product of consistent quality. Finally, they are prepared to pay for a good product. Because the rolls are made from by-products of dried mango production, their cost price is lower, allowing for a competitive product in the local snacks market.
Finally, the feasibility study for individually quick frozen mango cubes (IQF) clearly showed the profitability of such a factory. With the help of engineers a rough factory plan was drawn up to estimate the investment cost. Samples of frozen mango cubes were manufactured with mango from Burkina Faso to test the suitability for machine cutting, calculate production losses and test the acceptability of the colour, flavour and texture in the EU market. A business model was built and profitability calculated for 8 different scenarios that differed in investment cost, sales price, production efficiency, and length of the season. The conclusion was that if by-products are used for dried mango roll production the activity has a net profit margin of 20%-30%. If the season can be lengthened by adding other frozen products, profitability will increase further.
Because the aim of the project was to develop the mango-processing sector as a whole and public funding was used, there was a need to share the findings with the other stakeholders in the industry. The information could not remain only within the six pilot companies. During workshops in Mali and Burkina Faso findings were presented and discussed, and planning for activities for the coming season was made.
Phase 3: up scaling (2013)
A third contract was awarded by the World Bank to support the industry with the implementation of the activities defined during the 2012 dissemination workshops. The aim is to take advantage of the opportunity to triple the size of the drying industry with MPAK from South Africa. The project has the following goals:
- To ensure production of 80-100 tons of dried mango and mango rolls for sale to MPAK, to ensure their long term commitment
- To finalise the adaptations of the South African tunnel drying technology for operation in Mali and Burkina Faso
- To provide HACCP and staff management training for the 6 pilot companies, and to develop HACCP certification planning
- To help the 6 companies to develop business plans and introduce them to investors, in order to access structural finance for the expansion of production capacity over the next five years
- To provide market research training to a delegation of the world bank, exporters and dried mango producers
- To assist a local entrepreneur to access finance for the construction of a frozen mango cubes factory
- To support a local fresh fruit exporter to develop a business plan for a frozen mango cubes factory and access funding