From Cotton to Cooking Oil
The Nyakatonzi Cooperative, one of Uganda’s largest cotton producers, is using 2SCALE expertise to brand its newest product: cottonseed cooking oil.
The Nyakatonzi cooperative aggregates cotton from its 15,000 members for processing and resale. The cooperative has been a 2SCALE partner since 2015 and the support initially focused on farmer training and crop diversification. Nyakatonzi farmers expanded from cotton to soybeans, sunflower and other oilseed crops, grown in rotation with cotton. In 2016, the emphasis shifted towards value addition: increasing processing capacity and efficiency and upgrading the quality of cooking oil produced at the Nyakatonzi factory in Kasese district, western Uganda.
A new production line was designed with technical assistance from other project partners. The cooperative acquired a new oil press, which is now being shipped and will be installed in early 2017. The factory building has been renovated to accommodate the new equipment. The new mill will increase Nyakatonzi’s processing capacity to 20 tons per day, increase oil extraction rates from the current 8% to above 12%, and allow the mill to operate year-round. By 2017, revenues are expected to increase seven-fold, from 212 million Uganda Shilling (EUR 55,769) to 1.5 billion shillings (EUR 394,592) per year – with the profits shared, through dividends, to the smallholder farmers who own the cooperative.
2SCALE worked with experts from the Uganda Cotton Development Organization to set up more than 100 demonstration plots to showcase improved varieties and crop management methods. Coaches from 20 primary cooperatives have been trained, and are now working with farmers to improve not only farming methods but also financial literacy and record-keeping. Farmer mobilization is ongoing; the number of farmer-suppliers increased substantially in 2016, and six new cooperatives have come on board.
In parallel, 2SCALE teams helped sharpen the business strategy and identify markets and customer profiles for different products. They used the ‘business model canvas’ to identify what exactly the cooperative could offer, and how it could build on its strengths – a secure supply line, well-recognized commitment to smallholder farmers, and most important, demand. Nyakatonzi is the only oil mill in a region with a population of 10 million. Markets have been identified in various segments, such as households, restaurants and bakeries for cooking oil, animal feed processors for cotton seed cake, mushroom growers for seed husks. The next stage was branding. 2SCALE marketing specialists are working with Nyakatonzi to design new packaging material, overcoming challenges such as cost of materials, product differentiation and price points (the primary target is low-income households).
Much of the cooking oil in Uganda is imported, but with locally sourced raw material and help from partners, the cooperative is confident of cracking the market, providing low-income families with affordable cooking oil, and smallholder farmers with additional income.