Angry gorilla

My name is Oskar Jönsson. I'm 32 years old and I work at gebana, a company that processes and exports fair and organic fruit and nuts. I am the co-lead of a greenfield investment project in Burkina Faso, where we're building a new processing unit for cashew nuts and dried mango.

Shortening the value chain

In the countries we do business, money is usually lost early in the value chain, on the regional level. A lot of the bigger traders don’t want to spend too much time on the ground so they rely on local middlemen. This way, produce will pass through several levels of aggregation before arriving at the company that actually moves the product from the continent. Each intermediary takes a margin, which is usually taken out of the money paid to the producers.

By bringing the end consumer as close as possible to the farmer, gebana is leading the way in changing the rules of trade. Basically, we cut out the middlemen. We replace the intermediary levels and become the single trader, allowing us to pay better margins to family farmers. We also share the profits with our employees, customers, and shareholders.

Risks and rewards

There are many risks involved in investing in local food production in developing countries, such as the unstable business environment and the difficult framework conditions, such as a lack of reliable electricity, clean water or even accessible roads. In the time it takes to get a fresh product from rural Togo to an export port, it might be ruined when it arrives. A business idea that looks good on paper may be less so in practice.

Another issue is the financial situation of a lot of our producers. It can lead them to make short-term decisions which are not in their long-term business interest. They often simply can’t afford a long-term vision. If they can sell something for an additional 5 cent per kilo, they will do it, even when they know we would pay them a euro more per kilo three months down the road.

This is a challenge for us because we invest a lot in certification, farmer training, and so on. If they don't sell to us, we are not getting a return on our investment. Even though we have contracts with all our producers, we cannot enforce them in practice. That is why we are developing incentive mechanisms. The more loyal you are and the more you deliver until the end of the season, the bigger your bonus will be. But changing the mindset takes time.

Despite the difficulties, however, working in these sectors and regions can be very rewarding. You have a profound impact on the people you work with and on the local economy.

Adding value locally

In Burkina Faso, we processed cashew nuts ourselves, on a small, artisanal scale, and we sourced our dried mango from partners that processed them for us. Now we have built a factory that allows us to move on from artisanal manufacturing to an industrial scale, setting an example for dried mango processing and inspiring our partners.

And of course, while we act as a middleman, we ensure that our products are transformed locally, so their value is captured there, which creates and maintains local jobs. In Burkina, for example, we are one of only two industrial scale processors.

While this strategy is better for the region, it is riskier for the middleman. It is safer to move your produce out of the country and store them somewhere safe, where political, economic and meteorological risks are lower. gebana is able to take on this risk thanks to our patient shareholders, who do not insist on quarterly dividends, thanks to our loyal customers, who are willing to pay a premium for an impactful product, and thanks to our partners, like BIO and EDFI, who want to support us in our long-term vision.