December 15, 2021

Covid-19 and small businesses: the birth of a new peanut burger

Across Nigeria, groundnuts-also known as peanuts, play a significant role in the lives of farmers, traders, processers, and consumers. Overall, Nigeria is the third largest producer of groundnuts in the world, and accounts for 41% of the total production in west Africa. However, there is a lot of untapped potential in groundnut value addition, despite the high and increasing demand for this nutritious oil seed worldwide.

In 2019, 2SCALE initiated a partnership with Ladipo & Lawani (L&L) Foods Nigeria Limited, a small-scale groundnuts processing company. One of the main ambitions of this partnership is to improve access to nutritious groundnut-based products for at least 30,000 Base of the Pyramid (BoP) consumers. To achieve this, the partnership is building the capacity of smallholder farmers to produce quality groundnuts, which L&L uses to develop quality, improved groundnut-based products.

First, a little history of the groundnut sector in Nigeria.

Groundnut farming in Nigeria dates back to the 1900s when most farmers were motivated to farm groundnuts due to its demand and competitive market prices. During harvesting, farmers sold their produce to a stable market in Kano city. With a central storage area, huge piles of sacks were staked on top of each other, taking the shape of a pyramid. The aggregated produce was then transported to local and regional markets. The groundnut pyramids were not only a symbol of wealth from this cash crop, but they were also a sight to behold for visitors.

However, factors such as climate change, diseases and dissolution of groundnut marketing boards led to the rapid decline of production of groundnuts in Nigeria. (https://www.icrisat.org/what-we-do/crops/PigeonPea/Archives/pyramids.htm)

Reviving the groundnut sector in Nigeria: Ladipo & Lawani Foods Ltd

Ladipo & Lawani (L&L) Foods Nigeria Limited is a small-scale processing company based in Lagos. The founder, 32-year-old Ladipo Lawani says that he ventured into groundnut processing after realizing that this was an untapped market in Nigeria.

A lot of people sell groundnuts here in Nigeria. However, a general observation is that most of it is unbranded and often sold in its raw form. Groundnut-based products are uncommon, creating an untapped opportunity for value addition. I thus settled on processing after realizing that it is a viable and sustainable business. Demand for ground-nut based products was also a key driver for me,

says Ladipo.

With the little savings he had, coupled with financial support from family and friends, L&L was born. This was in 2014, when Ladipo was 25 years old.

The first product we developed was a sugar-coated peanut burger, bearing the brand name Mr. Ekpa. Been a relatively new product, acceptability levels by consumers were low, but gradually it became a highly sort out for product. However, we often experienced challenges with the quality of groundnuts we would get from farmers.

One of the main objectives of the partnership between L&L and 2SCALE, is to enhance the productivity of smallholder groundnut farmers by improving productivity and agronomic practices. So far, 3,465 smallholder farmers have received trainings on Good Agronomic Practices. The target is to empower at least 4,000 smallholder framers to produce high-quality aflatoxin-free groundnuts by 2023. For L&L, receiving quality nuts is a key priority since they aim to process high quality and nutritious groundnut products, especially for low-income consumers.

2020: running a business in unusual circumstances

Like most businesses, the onset of the Covid-19 pandemic caused immense economic effect on the day-to-day operations of L&L. Surprisingly, demand for Mr. Ekpa peanut burger was high, but the major challenge was the surge in the cost of raw products to formulate the burger as Ladipo explains:

2020 was tough on us. Due to the uncertainties and measures put in place by government officials to curb the spread of the virus, we closed the processing factory for seven months! Production thus significantly reduced. In addition, the price of raw products went up as inflation rates went higher. The production cost of our peanut burger consequentially went up, putting us at a critical moment to innovate and build resilience.

As most businesses around the world came up with innovative ways to survive and build back better to continue operations, L&L was not left behind.

The birth of an improved peanut burger amid the Covid-19 crisis

A 50 grams pack of Mr Ekpa peanut burger pack costs 50 Naira ($ 0.12) an amount affordable for Low-income consumers. With an increase in the cost of production, a possible solution was to increase the price of the product. However, this would have an implication on the purchasing power of low-income consumers, who were equally strained by the effects of the pandemic.

With 2SCALE’s support, the Business Champion found a viable solution to this challenge-reducing the cost of production by formulating a new recipe for an improved, more nutritious product. Initially, L&L lacked a partner who would provide technical support while formulating the value-added groundnut-based products. The sugar-coated peanut burger was thus improved to a burger coated with wheat flour, milk, vanilla flavor, sugar and vegetable oil. It is rich in Vitamin E and protein. Ladipo comments :

The taste of the peanut burger is the same and consumers can’t quite tell that the formulation of the product is different. Unlike the initial formulation, which was developed without the technical assistance of experts, the improved peanut burger was formulated with the support of a food scientist. With reduced production cost, we retained to initial price of 50 Naira for a 50g pack. All this was achieved thanks to the partnership we have with 2SCALE. Such operational efficiency is pivotal for the company, even as we work to develop more value-added products in future.

With its commitment to avail nutritious food-products for BoP consumers, L&L is currently in the process of developing more groundnut-based products such a peanut butter and Kulikuli-a groundnut cake common in West Africa.

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