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SHEA BUTTER A Guide to Production and Marketing

Peace Corps Ghana

Peace Corps Ghana

Version 1, March 2008

This manual was developed for Peace Corps Volunteers, by Peace Corps Volunteers, in an effort to preserve the knowledge we have gained from working with groups at the producer level, companies who buy and export shea butter, and the various organizations and government agencies that you may encounter when working with shea. • • • • •

Sarah Brabeck, PCV Fiang Upper West Region (2006-07) Michael Fravel, PCV Hian Upper West Region (20006-07) Bill Reinecke , PCV Savelugu Northern Region (2006-07) Paul Sari, PCV Tamale Northern Region (2006-07) Jennifer Schneidman, PCV Nangodi Upper East Region (2006-07)

David McNally APCD/SED March 2008

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Table of Contents 1: The Biology of Shea ..................................................................................................4 Where do Shea trees live?..........................................................................................4 Life Cycle...................................................................................................................4 Cultivation and Transplantation.................................................................................5 How to Make Shea Butter..........................................................................................5 A Little Shea Chemistry.............................................................................................6 2: Uses of Shea..............................................................................................................7 Traditional Products7 Other Traditional Uses of Shea butter .......................................................................7 Traditional Non-Butter Uses......................................................................................8 Industrial Uses ...........................................................................................................9 3: The Shea Market......................................................................................................10 4: The Shea Value Chain .............................................................................................11 5: Working at the Producer Level................................................................................12 Group Dynamics ......................................................................................................12 Roles Within a Group ..............................................................................................13 Identifying Your Market ..........................................................................................13 Processing Equipment & Machinery .......................................................................14 Cooperative Registration .........................................................................................14 6. Stories from the Field..............................................................................................16 Shea Butter Extractor’s Women’s Group: Lessons Learned ...................................16 AN EXAMPLE OF COSTING ...............................................................................19 Break-Even Analysis from a UNDP study based near Tamale ...............................20 7: Supporting Actors in the Shea Industry/Contacts....................................................21 NGOs and Companies Involved in the Ghanaian Shea Industry.............................21 Major International Companies in the Shea Industry: .............................................21 Local Buyers in Ghana (Nuts & Butter) ..................................................................21 8. Appendices..............................................................................................................23 Appendix 1. Value-added to selling price of shea butter cosmetics. ......................24 Appendix 2. Ghana Shea SS MAP (from SNV Ghana)..........................................25 Appendix 3. Traditional Shea Processing (adapted from Dr. Peter Lovett). ..........26

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1: The Biology of Shea Where do Shea trees live? Ghana is lucky. Ghana and Burkina have the best shea butter in the world. Why? Because the shea nuts here have the most desirable chemical balance, and the traditional processing methods create a very clean butter.

The shaded areas depict rainfall values. The small grey dots show areas of shea trees (Vitellaria paradoxa) in West Africa. The white dots are a different variety of shea trees in East Africa.

Life Cycle As deforestation becomes a bigger problem in Ghana, the availability of shea nuts and butter is directly impacted. Bushfires, cutting of trees for firewood and destructive farming methods are all factors that affect the availability of shea nuts. Currently, local people and NGOs are more interested in protecting and cultivating shea trees. Understanding the life cycle of shea is essential to the survival of the shea butter business. The number of years for a tree to reach maturity, and therefore produce fruit, is up for debate, but it is generally accepted to be 3-5 years. Many people will argue that it requires 15 or even 20 years to fruit, but ask them how many trees they have planted. Information on lifespan of shea trees is sparse. The shea fruit is generally ripe from mid-May through the end of July. There is some variation due to location and rainfall. The fruit is edible and tasty. Mature nuts come from fruits that have fallen to the ground, so women will forage for fallen fruit, either

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from the farm or any nearby forest. Butter processing is usually performed from June through August.

Cultivation and Transplantation It has not been a common cultural practice to plant shea. Even some areas have strong taboos against planting shea, but families’ financial needs are beginning to overturn those beliefs. You can now find many people who are eager to propagate shea. And here’s how:

The whole process takes time. Usually around 9 months the seedling will be visible above ground. And after one year, the seedling can be transplanted into the field. Transplanting should be done during rainy season, so the roots can fully develop before the dry season.

How to Make Shea Butter* The shea nut is chock full of so many things- some desirable, some not. So the harvesting and post-harvest processing affect which of those things, desirable or not, are in the butter. As quality is the key factor to selling shea butter, it is important to understand the chemistry behind shea butter. Most women who process shea butter know all of this practical knowledge, so to learn how to make shea butter, it is best to go watch these local professionals. Here is a brief summary of the 12 steps to make shea butter from harvested shea nuts: *

(see Annex 3 for a more detailed presentation) Page 5 of 28

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1. 2. 3. 4. 5. 6.

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Harvest the nuts from the farm Accumulate in piles or pits Heat the nuts – boil (preferred) or roast Dry the whole nuts (if boiled) De-husk the nuts to get kernels (usually cracked by hand!) Dry the kernels & store in a secure place STOP HERE IF END PRODUCT IS NUTS, FOR BUTTER – CONTINUE STEPS 7-12

7. Crush the kernels 8. Dry roast the crushed kernels 9. Mill or pounded/grind into a paste 10. Kneaded (water-boiled or pressed) to form an emulsion to separate fats 11. Boil the oil (fat) to dry and clean by decanting to clarify the butter 12. Prepare for use, sale , or storage (cooled oil will congeal into solid white/cream colored butter) Typically the ratio of butter to nuts is approximately 3-to-1.

A Little Shea Chemistry What are the important chemical components in shea Butter? • Free Fatty Acids • Peroxides • Impurities • Moisture Free Fatty Acids are undesirable. FFAs cause too much variation in the shea butter, and makes it difficult for production in factories. How can we insure less FFAs? Time and heat are both our friends. Producers should select mature nuts instead of unripe nuts. Women know this, that’s why they forage for fallen ripe fruit instead of picking them from trees. Heat also denatures FFAs. Boiling is part of the shea butter process, so it is also important not to under boil the butter. Once again, the women know this. The downside of boiling is an increase in peroxides. Why are peroxides bad? They denature the antioxidants, which are the natural protection of shea butter. But don’t fear, most women know how long to boil the butter so that the FFAs and peroxides are both minimized. Impurities such as water, metal, and dirt can be difficult to keep out. Some precautionary measures include using sealed containers, taking care when grinding, and filtering butter. A little extra work can go a long way. Moisture is another enemy. Fungus can easily grow and spoil vast amounts of butter from just a small amount of moisture. This can be prevented by boiling, storing nuts in jute sacks instead of fertilizer bags, and not adding water to the finished butter.

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It may seem like a lot of hard work, but in the end it pays off when you see a container of beautiful creamy, pure shea butter.

2: Uses of Shea Shea has so many uses that we turned to the experts at Cocoa Research Institute of Ghana. The following is an excerpt from a case study done in 2002: The shea nut serves as one of the main sources of livelihood for the rural women and children who are engaged in its gathering. Shea butter is the main edible oil for the people of northern Ghana, being the most important source of fatty acids and glycerol in their diet. It is an unguent for the skin. It also has anti-microbial properties, which gives it a place in herbal medicine. It is also used in the pharmaceutical and cosmetic industries as an important raw material and/or a precursor for the manufacture of soaps, candles, and cosmetics. Shea butter is used as a sedative or anodyne for the treatment of sprains, dislocations and the relief of minor aches and pains. Other important uses include its use as an anti-microbial agent for promotion of rapid healing of wounds, as a pan-releasing agent in bread baking and as a lubricant for donkey carts. Its by-products, the brown solid that is left after extracting the oil and the hard protective shell, are used as a water-proofing material on the walls of mudbuildings to protect them from the eroding forces of the wind and rain. Poor quality butter is not only applied to earthen walls but also to doors, windows, and even beehives as a waterproofing agent (Marchand, 1988). In a traditional setting, shea butter of poor quality is used as an illuminant (or fuel, in lamps or as candles).

Traditional Products Oil has played an important part in the local economies in west and central subSaharan Africa for centuries. It is reported that the initial traditional roles have not changed significantly since 1830, when the French explorer Roger Caillie described them during his trek across West Africa. In Roger Caillie’s own words as reported in Hall et al., 1996, “the indigenous people trade with it, they eat it and rub their bodies with it; they also burn it to make light; they assure me that it is a very beneficial remedy against aches and pains and sores and wounds for which it is applied as an unguent�. Today the shea tree produces the second most important oil crop in Africa after oil palm (Poulsen, 1981), but as it grows in areas unsuitable for palm, it takes on primary importance in West Africa, and in regions where annual precipitation is less than 1000mm of rainfall. However, it loses popularity in urban areas within these regions due to the pungent odor it emits, should it become rancid (Ayeh, 1981b).

Other Traditional Uses of Shea butter As a cosmetic, it is used as a moisturizer, for dressing hair (Dalziel, 1937, Ezema & Ogujiofor, 1992) and for protection against the weather and sun. It is used as a rub to relieve rheumatic and joint pains and is applied to activate healing in wounds and in cases of dislocation, swelling and bruising. It is widely used to treat skin problems

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such as dryness, sunburn, burns, ulcers and dermatitis (Vuillet, 1911; Bonkoungou, 1987) and to massage pregnant women and small children (Marchand, 1988). Having a high melting point of between (32-45°C) and being close to body temperature are attributes that make it particularly suitable as a base for ointments and medicines (Bonkoungou, 1987). It is also used to treat horses internally and externally for girth galls and other sores. The healing properties of shea butter are believed to be partly attributable to the presence of allantoin, a substance known to stimulate the growth of healthy tissue in ulcerous wounds (Wallace-Bruce, 1995). It is used as “white oil” to anoint the dead in Niger (Castinal, 1945), and is placed in traditional ritual shrines. Refuse water from production of shea butter is used as a termite repellent (Dalziel, 1937). In Burkina Faso, shea butter is used to protect against insect (Callosobruchus maculatus) damage to cowpeas (Vigna sp.). Research has shown that after treatment with shea butter a reduction occurs in the life span and fertility of the insects and hence the infestation rate. Shea butter, however, is not as effective as cottonseed or groundnut oil (Pereira, 1983; Owusu-Manu, 1991).

Traditional Non-Butter Uses The shea tree is sacred to many ethnic groups and plays an important role in religious ceremonies (Vuillet, 1911; Millee, 1984).

Flowers, Fruits, and Nuts Some ethnic groups make the flowers into edible fritters (Chevalier, 1949). The fruit pulp, being a valuable food source, is also taken for its slightly laxative properties (Soladoye et al., 1989). Although not widespread, shea nut cake is used for cattle feed (Salunkhe and Desai, 1986), and also eaten raw by children (Faegri, 1966; Farinu, 1986). The residual meal, as in the case with shea butter, is also used as a waterproofing agent to repair and mend cracks in the exterior walls of mud huts, windows, doors and traditional beehives. The sticky black residue, which remains after the clarification of the butter, is used for filling cracks in hut walls (Greenwood, 1929; Marchand, 1988) and as a substitute for kerosene when lighting firewood (Wallance-Bruce, 1995). The husks reportedly make a good mulch and fertiliser (FAO, 1988b), and are also used as fuel on three stone fires.

Foliage Leaves are used as medicine to treat stomachache in children (Millee, 1984). A decoction of young leaves is used as a vapor bath for headaches in Ghana. The leaves in water form a frothy opalescent liquid, with which the patient’s head is bathed. A leaf decoction is also used as an eye bath (Abbiw, 1990; Louppe, 1994). The leaves are a source of saponin, which lathers in water and can be used for washing (Abbiw, 1990). When a woman goes into labor, branches may be hung in the doorway of her hut to protect the newborn baby. Branches may also be used for covering the dead prior to their burial (Agbahungba & Depommier, 1989).

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Roots The roots are used as chewing sticks in Nigeria, most commonly in savannah areas (Isawumi, 1978). Roots and root bark are ground to a paste and taken orally to cure jaundice (Ampofo, 1983). These are also used for treatment of diarrhoea and stomachache (Millee, 1984). Mixed with tobacco, the roots are used as a poison by the Jukun of northern Nigeria. Chronic sores in horses are treated with boiled and pounded root bark (Dalziel, 1937).

Bark Infusions of the bark have shown to have selective anti-microbial properties, as being effective against Sarcina lutha and Staphylococcus mureas but not mycobacterium phlei (Malcolm & Sofowora, 1969). Macerated with the bark of Ceiba pentandra, and salt, bark infusions have been used to treat cattle with worms in the Tenda region of Senegal and Guinea (Ferry et al., 1974). The infusions have been used to treat leprosy in Guinea Bissau (Dalziel, 1937) and for gastric problems (Booth and Wickens, 1988) as well as for diarrhoea or dysentery (Soladoye et al., 1989). A bark decoction is used in the Cote d’Ivoire in baths and therapeutic sitz-baths to facilitate delivery of women in labour, and is drunk to encourage lactation after delivery (Abbiw, 1990; Soladoye et al., 1989; Louppe, 1994). However, in northern Nigeria such a concoction is said to be lethal, (Dalziel, 1937). A bark infusion is used as an eyewash to neutralise the venom of the spitting cobra (Soladoye et al 1989) and also, in Ghana, as a footbath to help extract jiggers. Greenwood (1929) noted that the stripping of bark for medicinal purposes may have a severe impact on the health of shea trees and may even be fatal. The wood is only used when individual trees are not valued for butter production. The latex is heated and mixed with palm oil to make glue (Hall et al., 1996). It is chewed as a gum and made into balls for children to play with (Louppe, 1994). In Burkina Faso, Bobo musicians use it to repair cracked drums and punctured drumheads (Millee, 1984). It contains only 15-25% of carotene and, therefore, is not suitable for the manufacture of rubber (AndrÊ, 1947a,b).

Industrial Uses Research into the properties and potential industrial uses of shea butter began in the first few decades of the last century. Previously, it was used in edible fats and margarine, and was only beginning to attract the soap and perfume industry when interest ceased because of the 2nd World War. Revival of the shea industry after the war suffered serious setbacks from an insufficient pricing mechanism, logistical problems of transport (low availability and unpredictable) unable to cope with the supply of the nuts, thus making the ventures economically non-viable. During the mid 1960s shea trade re-emerged when Japanese traders joined their European counterparts, which saw a considerable expansion of the industry, particularly in the cosmetics and confectionery industry barely a decade thereafter. Shea butter has several industrial applications, but the majority of kernels (approximately 95%) provide an important raw material for Cocoa Butter Replacers (CBRs), and are used for manufacturing chocolate and other confectionery. Minor Page 9 of 28

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uses include cosmetics and pharmaceuticals. The export market for CBRs is shared by Unilever (UK), Arhus (Denmark), Fuji Itoh and Kaneka-Mitsubishi (Japan).

3: The Shea Market The Shea Market: Local and International The local and international shea markets are two very different buyers with the international market having strict specifications while the local market uses shea butter for its traditional uses. These two markets are beginning to conflict with each other as demand forshea butter increases on the international market. As the international market demand increases, the price of nuts and butter in the local market increases at the same time. The high demands have made local shea butter and nuts less affordable on the local market creating an interesting situation for local consumers and producers.

The Local Market: The local shea market exists because of the women of Ghana. There are men who trade in nuts and work in processing but women are the primary pickers, processors and sellers of shea butter in the local marketplace. The majority of shea butter consumption in Ghana is in the raw form for cooking and skin care. Some local shea butter is processed to make soaps that are sold in the market as well. The processors sell directly to the end consumer in the local market. Very little is packaged, labeled or certified before sale and it is sold in small balls or bowls in major markets throughout the country (Northern regions?).

The International Market: The world’s biggest international markets for shea butter are in Europe and North America. Shea is used primarily for skin care cosmetics and for medicinal and cooking products. The industry is extremely competitive and is dominated by about six large international companies (see section 7). Supply to the major companies on the international market is typically done by another organization within Ghana that buys nuts and processes butter to the specifications of the major buyer. These contracts are very big and have extremely strict quality requirements. Communities in Ghana generally supply the nuts to local buyers who in turn supply the international companies with bulked shea nuts or butter. There are also certain organizations buying shea butter from individual communities but standard quality is a challenge. Increasingly due to corporate responsability, certain companies like Savannah Fruits Company, although relatively small, have been working to attain quality commercial production while supporting rural women’s groups.

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The number one concern for international buyers is “perceived quality” before price. For edible products the major market is in Europe and India and the butter extraction and refining is done there. The major cosmetic and soap industry is in the United States and is known as the most lucrative global shea butter market. The majority of shea butter consumed internationally is mixed into a finished product containing a percentage of shea butter. The finished products in North America tend to have high tech containers and extensive marketing campaigns behind them and are high end products. Less than ten percent is used by the final consumer in its raw form. Shea nuts grow in 20 countries in the world, all of which are in Africa. The Export season is from August to April each year. It is estimated that 150,000 – 200,000 tonnes of nuts are exported each year from West Africa, 50,000 tonnes (approx. 33%) coming from Ghana alone. The nuts are shipped out of West Africa mainly from ports in Dakar, Senegal, Lome, Togo and Tema, Ghana.

4: The Shea Value Chain What’s a Value Chain? PCVs see shea butter at both extremes. Here in Ghana, we see it in the form of balls of local butter sold for around GH 0.50. In the US, we saw fancy cosmetic products sitting on supermarket shelves that sold for around $20. Where is that value added to the product? Who is making that profit? It will help to look at the shea butter value chain. A Value Chain includes all those groups involved at different levels of producing a single product. When considering shea, the members in a value chain are usually as follows: Nut Producers

Nut Traders

Butter Producers

Butter Traders

Nut and Butter Exporters

Producers of Food and Cosmetics

Each member of the chain affects the product. Each member also depends on the other members of the chain for supply and income. A chain is not supposed to be intra-competitive. Instead, the entire chain functions in union to compete with other chains (e.g. in other countries/markets). The value of the product is shared along the chain, meaning each member of the chain receives some income for their work. That causes the increase in price from local to foreign markets

Strengths and Weaknesses of a Value Chain Although the members of the Value Chain are not intended to compete, the system is not perfect. Each member will have needs that counter the needs of other members.

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For example, The butter buyer wants to buy butter at the lowest price. Meanwhile the butter seller wants to sell at the highest price. Still there are many benefits to a Value Chain as compared to a traditional business relationship. First, Value Chains provide for better information sharing among all members. A butter buyer will offer quality feedback or make packaging requests of the butter seller. The butter seller can ask the buyer for help with transportation. Also, the Value Chain as a whole is competing with other chains, so the focus will shift from profit to quality. If the end result is poor quality butter, consumers won’t be interested and the whole chain will suffer. As you go up each step of the chain, the level of education, time, and other resources increases. When deciding where on the Value Chain you want to be, consider the level of education and resources available to the group. It may not be possible for your group to export directly to a US company, but maybe you can connect them to a buyer of shea butter, educate producers on quality standards, provide local producers with market information, link producers to buyers, or help source funding for a grinding mill or other equipment to increase production. In rural villages, price is definitely the most talked about problem. The most important thing is to account for all costs in the production of the butter and cross check for profit or loss. Butter buyers complain more about consistency and quality. At the end of the chain there is a huge factory processing chocolate, and they want all ingredients to be standardized. And the occasional stick or dead bug may seem like no big deal to the market women, but L’Oreal will freak out.

5: Working at the Producer Level Most likely, as a Peace Corps Volunteer, you will be working with Producer Groups. This section addresses some of the issues to consider when working at this end of the Value Chain.

Group Dynamics Most communities have women's groups that form and come together for a variety of reasons, but most likely for economic support. When considering shea butter processing as an economic venture, forming establishing a well structured women's group is imperative. As with any group that aims to be functional and effective in its capacities, certain roles and responsibilities must first be designated to rightful people in that group. Having proper knowledge of the personalities and characters of the group is a great asset in learning who would best assume a particular leadership role. Women already have deep relationships with the other women in their communities and know who the natural leaders of the group are. Sometimes, however, members are elected to higher positions of the group based on social standing in the community (for example being the wife of a big man in the community) and not necessarily the

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leadership skills that would designate her as the right person for the position. This is a delicate issue, but may require attention to ensure the vitality of the group.

Roles Within a Group Try holding a meeting with interested women in your community and discussing the roles necessary for group management. When becoming engaged in shea processing with bigger buyers, groups should have at least the following positions to help manage the group: 1. A Chairwoman to call and facilitate meetings, communicate current information, and guide the larger decisions of the group 2. A Vice Chairwoman to assist the Chairwoman and to serve as Acting Chairwoman in her absence. 3. A Treasurer to collect and record meeting dues and money distribution amongst the group 4. A Secretary to write minutes, monitor producing groups (if in different locations), and keep records of the activities of the group.

Identifying Your Market One of the most important things to do in establishing your group is to identify your markets. Different markets require different levels of group development, skills and resources to satisfy the demands for that particular market. For example, some women come together and produce butter in larger quantities for local markets around their area striving for a reputation as having better butter quality than their local competitors. Other groups who have more resources and management knowledge may gain access to medium size buyers within the region and be able to sell in quantity at whatever desired quality. Some well developed groups have earned the trust to contract with larger private companies that might have more strict demands on quantity at quality with strict deadlines to fulfill orders. What is best is a matter of opinion and depends on whatever circumstances face your particular group and processing location. Assessing your group's capacity is vital to determining your markets. Here are some key questions to ask: • • • • •

What is the level of commitment and seriousness upon your group? Is there strong leadership? How many available processors are there and what are their time constraints? Do your women pick their own nuts during the season or do they buy them from surrounding communities? What level of quality are you capable of producing?

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Processing Equipment & Machinery Once you have assessed your capacity, you should be able to make some decisions about the needs of the group in order to serve the market you are targeting. You may consider acquiring machinery in some cases to speed up the processing, for example. Machines are expensive, but so are milling charges in many producing areas, especially smaller villages where people don’t produce commercially and competition is little. You may want to do a cost/benefit analysis based on the quantity your buyers are requesting and the price they are offering. Each situation is unique. Machinery may be beneficial, or it could be an added burden to the group.

Cooperative Registration Another thing to consider for your group/groups is cooperative registration. Acquiring the status as a legitimate cooperative offers many benefits. For instance, coop status qualifies you to receive check ups, monitoring and trainings from the Cooperative Office in your district. Every district should have a District of Cooperatives Officer who you can contact and learn about the necessary procedures to apply for coop status. They can visit and interact with the groups and walk them through the steps required for registration. Once registered, The District Cooperative Officer will come periodically or upon request to share new information and opportunities with the group. They can provide information regarding new loan programs or other forms of support that the coop may qualify for. Being listed under the Cooperative Department allows district officers to more easily identify viable communities in the district and extend the benefits that come their way. Cooperative registration can also increase the marketability of the group. Several bigger buyers require or prefer to work with coops, as it denotes a higher level of organization within the group, creditability and accountability. Coops are a legal entity of their own. Groups that register as coops also enjoy access to more forms of support. If you want to apply for a loan to acquire processing machinery or some working capital, this title will pave your way. There are some requirements to gain cooperative status. The group has to prove their creditability by demonstrating solid organization and management skills within their circle. That requires strong leadership and elected roles, an active bank account (at a Rural Bank is fine), proof of record keeping from their meetings, histories including minutes and collected dues, and a registration fee. This fee is a one time up front fee of 5 new Ghana Cedis (2007) paid to the district office. It puts you in the system and lines you up for all the perks listed above. In my personal experience, the cooperative officer in my district has been extremely helpful and responsive to our needs. Many times, very few of the women you work with are educated or literate. Developing the necessary management skills is a challenge in such cases, but organizing training on recordkeeping, financial planning, and small business management will benefit the group greatly in the long run. Start with inquiring at your local district assembly on current programs for these trainings. They often have funding for such things and links to other local organizations who work directly with

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building groups organizational capacity. I have found NBSSI (National Board for Small Scale Industries), SNV (a Dutch NGO), Technoserve and World Vision, among others, to be very active players involved with group development.

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6. Stories from the Field Shea Butter Extractor’s Women’s Group: Lessons Learned One of my counterparts and I propositioned a private company (we’ll call it ABC Company) about providing them with high quality shea butter for export to U.S. and European markets. The owners of the company were out of the country and the company was in a crunch to fulfill an order. The field assistant agreed to meet with us about the possibilities of working together. We let the representative know that we had 30 women ready to make shea butter under their strict quality control guidelines and within the timeframe needed. The company agreed to test the women’s ability and quality of butter with a 2,000 kilogram order (that’s 2 tons or 4,000lbs) at a preset price. The women would get half of the money up front and then the rest upon delivery. The company would provide packaging and pick up the butter from the village. My counterpart and I figured the costs of production and profit desired and decided the price the company was willing to pay was worth it. Everyone seemed happy. The women were especially excited to be a part of a group (this is an understatement – they were thrilled!). The women were now the Kalpohin Shea Butter Extractors Association! More importantly, to them, they could tell other women of their village of 5,000 that they belonged to something. They were so proud. Note to self – It was time to set expectations to the group that this is a new venture and we must proceed carefully and with much caution. Who could know if this was something that would continue? Constant communication would prove to be key. As a requirement from the company, my counterpart set up a bank account for the newly formed women’s group. The bank in turn required GH¢200 to get the account up and we used the women’s own money. The account was necessary for transparency purposes for the company and made good sense to the group so they could easily receive and keep track of monies received and earned. My counterpart would act as the accountant, manager, and liaison between the group and any outside buyers for the women since none of the women spoke English. Once the money was received from ABC Company, the women went right to work. This was where problems started. Not until after the money was received and the women were well in to production was the group informed that they needed to provide their own scale to weigh the butter for packaging. My counterpart tried for two weeks to find a scale and when he did, the women were nearly done making the butter. The women even used their own money to buy more nuts to cover the total amount needed to complete the order. I was unaware they spent their own money to complete the order, but was impressed at their eagerness to finish the product in the timeframe requested by the buyer. Once the scale was in place my counterpart and the women began weighing and packaging the butter. Everything seemed on track until the ABC Company sent one of their field assistants out to check the status of the order. When they weighed the order, it was below the required amount by 25%! We concluded that the scale that the villagers used was faulty. The second blow was that the women spent all the money

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they were given and half of their own money (the money they assumed the company would reimburse them), but they only produced 1,500kgs of butter. If ABC Company paid them for only 1,500kgs the women would be at a loss! Oi! This was a crisis and the owners of the business were still out of country. What would we do!? We were in limbo for some weeks. I met with my counterpart to go over all our numbers and costs. We spent hours and hours double checking figures. Everything seemed fine with our calculations. I met with the women multiple times to talk with them about the situation. I learned that they had informed others of the village and that the whole village was on stand-by to see how the ABC Company, made up of non-Ghanaians, would handle the situation. I’m not sure what the implications were, but I know that they were not happy and it seemed like bad things could happen if things weren’t resolved amicably. After hours of pouring over the cost data I acquired from the company and our own calculations, it appeared it was really no one’s fault except for a weighing scale’s. That coupled with low yielding shea nuts (this particular season was now proving to yield low butter from nuts due to lack of rains). The good news was the women produced excellent butter in a timely manner. It was packaged neatly and ready for delivery even before the company was ready to receive it. The main lesson learned for me as a facilitator: Nothing Ventured, Nothing Gained (even if it’s just knowledge). When you go into a new venture, you take chances and even if you are very careful to reduce your risks, there are still risks. This entire issue may have been avoided had the company doubled checked the village's scale measurements upon the first batch of butter made, but would that have been a reasonable expectation? Perhaps yes, for a newly formed group such as ours, however, the company was spreading itself thin trying to cover this particular order. But then again the scale issue was uncommon; why should the company think that a scale would be off by 25% when it hadn’t happened before? Even if an issue was detected, this may have meant the order would have been cancelled because the problem then would lie with the nuts that the women purchased which were yielding low butter. Then the women would have been left with a bunch of nuts and a cancelled order. Communication with my counterpart and the women was important during this entire process. This is where I feel things went well. I stayed in constant contact with them through the process and met with them frequently to insure them that we were all in this together and my counterpart and I were working hard to represent them to this outside foreign company. I did not want them to think I was conspiring with anyone to take advantage of them. Also, my relationship with the company helped smooth things over, as well. I knew one of the owners and one of the field assistants. We discussed things thoroughly and we all came to an agreement to chalk this up to no one’s fault, but it would mean a loss for the company. They graciously agreed to reconcile the initial amount agreed to be paid to the women without making the women produce more butter, which would mean a loss to them. I knew this would provide a hit to the company, but

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luckily, the company had the vision to see that the right thing to do was take the loss and move on. The bad news is that the company will mostly likely not use this group again. While they are in a village, they are so close to a large town they have to go to markets to buy nuts, which mean they pay more, and therefore the shea butter costs more. If they were more remote, they could collect the nuts themselves, cutting out the middleman (or middlewoman) so to speak. The good news is the group is not through. We are on hold though, and we have learned quite a bit in our new experience. There is plenty of demand for shea butter. My next step is to work with my counterpart on contacting other organizations who would like to purchase shea butter where production cost is not as much of an issue. This should not be too difficult. One more lesson learned is costing the production of the butter to insure the women receive a fair price. This is not easy. I worked with my women to figure out every cost in detail. Even when I did this, I later learned there were other costs (hidden costs). Hidden costs can be a women feeding someone or paying them to assist them. Or, variable costs; for example, the price of nuts is hard to determine – are they buying a rounded bowl or flat bowl? Our buyer wanted to price things by bag of shea nuts, but the women buy in bowls – another potential issue. In addition, in leaner seasons where there may be less rain, the nuts may yield less butter and you may not know this until you produce the butter. All these factors need to be taken in to consideration. I’m wrapping up my service so I haven’t had time to resolve all these issues. One thought would be for a firm they work with to purchase the nuts up front and simply pay the women for their labor and cost of production. There is big potential for village women to get more involved in the shea butter export industry. Especially due to the rise of large and small businesses alike wanting to purchase anything from low quality shea butter to high quality certified organic or certified fair trade shea butter for use in their products. Don’t underestimate the demand from small companies willing to pay slightly higher prices for more niche markets. Opportunities selling shea butter, both in country and to exporters, is growing rapidly. It’s up to the new wave of PCVs to continue to help improve and support the women to insure they are truly getting fair prices while giving them the satisfaction and pride of being a part of a team; helping them improve the lives of their families; and passing on the shea butter production trade to future generations.

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AN EXAMPLE OF COSTING SHEA BUTTER COST OF PRODUCTION (Kalophin Shea Butter Extractors Assoc) Order = 2 TONS (4000 Lbs or 2000 Kgs) 40 WOMEN TOTAL 50 Kgs EACH = 2000 Kgs Cost breakdown to produce 1 kg of shea butter for a 2000 kg order, as of 24 July 2007 Cost Cost Item Cost Per Kg Assuming 1 bowl nuts = 1 Bowl of shea nuts 7,500.00 7,500.00 kg butter Firewood 30,000.00 15.00 Milling 30,000.00 15.00 Transportation to processing point 15,000.00 7.50 DA Tax 1,000.00 0.50 Total Cost Profit Item Profit For Administrator Profit For Women Total Profit Per Woman (40 women) Total Cost with Profit

7,538.00 Profit Per Kg 50.00 1,000.00

Total 100,000.00 2,000,000.00 50,000.00


Other possible variable: Packaging Transportation to Buyer

For those interested in creating shea butter women’s groups, this is an opportunity to develop the skill set of an administrator and/or help a group of women improve their lives and their families. Another benefit is that if the group is successful, the younger women of the village would be more likely to continue with this craft and less likely to flee the village to head south for what they think are bigger and better opportunities. The women that leave the village are at a higher risk of prostitution, becoming pregnant or getting AIDS. Overall this is a very positive opportunity, but be very aware of what you and the group is embarking on. Here are a few suggestions and general information; •

Assuming your women’s group do not speak English and/or are uneducated, you will need to look for someone to handle the management and administration of the women’s group within the community.

The administrator should be able to open a bank account, do the accounting for the income and outflow of money, be able to determine costs in detail to make sure the group is making money, etc. The administrator should receive a Page 19 of 28

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percentage of the profit (I suggest 5% - 10%). Finally, the administrator should be trusted by the women and able to communicate effectively with the women in order to set realistic expectations. •

Be prepared for the unexpected and possible major issue to occur, such as a possible loss on a particular order.

If a firm will pay 50% (for example) of the money up front so the women can get started, monitor if the women are starting to use there own money to complete the order and how much so they don’t exceed an amount that would eliminate their profit. Also, monitor what a the nuts are yielding in butter by weighing them on initial production. You may want to double check the figures as you continue production.

1 rounded market bowl of nuts (a bowl of nuts that are piled above the rim of the calabash) produces approximately 1 kilogram of butter

30 rounded bowls of nuts equals one bag of nuts

40 flat bowls of nuts (a bowl of nuts where they level the nuts off to the equal the rim of the calabash) equals one bag of nuts

1 bag of nuts produces approximately 30 kilograms of butter Be sure to measure and check your local measuring system.

Break-Even Analysis from a UNDP study based near Tamale (Personal communication via Oliver Hoellige (DED Wa NBSSI Regional Office) Preliminary findings: Sagnarigu: I started the study around May-June this year when price of shea nuts is GHc 20 per jute bag (between 90-94 kg). Daily wage rate was computed at US$1=GHc 0.92. Semi-mechanized processing. Yield=40%. Break-even is GHc 0.97/kg of shea butter. Walewale: The same activities were conducted in Walewale (100km further north of Tamale) around the same time. The price of a jute sack of nuts is GHc 25 per jute bag (between 92-95 kg). Semi-mechanized processing. Yield=33%. Break-even is GHc 1.63/kg shea butter. This higher break-even price might be attributed to transportation costs of firewood, water, and milling station. Note: Break-even price for unrefined shea butter in these two examples does not include packaging, marketing expenses, etc.

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7: Supporting Actors in the Shea Industry/Contacts NGOs and Companies Involved in the Ghanaian Shea Industry 1. 2. 3. 4.

SARI (Savannah Agriculture Research Institute) JICA – Village group training programs Africa 2000 has some Shea programs (Office located in Kalpohene Estates) SNV – shea is a focus product in their private sector development program. Chris Bakaweri is the Tamale coordinator for their Private Sector Development program working in shea. Balma also works with him at the SNV Tamale office. 5. NGO Ride – this is the social responsibility arm of the Company. Katharina Woener is the Country Director, telephone number: 020 932 2693. e-mail: Kwabena Badu-Yeboah is the Director, F&A, tel 0244 523 594 and 020 813 1258, e-mail:

Major International Companies in the Shea Industry: 1. 2. 3. 4. 5. 6.

L’OReale L’Occitane AarhusKarlshamns- in Denmark / Sweden IOI group (Loders-Croklaan in Holland) Feeds, Fats & Fertilisers in India The Pure Company

(International Market Demands high butter content, stearin rich, boiled, sun-dried, low free fatty acid & no foreign bodies

Local Buyers in Ghana (Nuts & Butter) 1. Bosbel Industries Email: Phone: 0244-864799 Tamale 2. Kassardjian Industries Limited PO Box 2246, Accra, Ghana Tamale 3. Ghana Nuts Techiman Buying Shea Nuts, Cashews, Groundnuts, and Soybeans 4. Savannah Fruits Company – Shea Butter Pre-finances groups of rural women to supply quality Butter to Company Page 21 of 28

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Peter Lovett, Production Manager Tamale (Peter): 0244292898 Accra: 0246360185 5. Ghana Specialty Fats Industries LTD. - Shea Nuts (Plant capacity: 25,000 Tonnes in 2008), Plant Near Tema K.V. Shevaa – Northern Region Agent/Buyer Address: P.O. Box TL 2178 Tamale, N/R Ghana, West Africa Contacts: Mobile: 0244 315267 Email: 6. Centre For Agriculture and Rural Development (CARD) Manager: Naresh Shukla Address: P.O. Box TL 1504 Tamale, N/R, Ghana, West Africa Contacts: Office: 071 23512/24939 Mobile: 0244 716849 Fax: 071 26566 7. K.I. Ghana – Wa (Formerly Kassardjian) Mr. Tewiah Wa, Upper West Region 027 22261 (Wa) 0243 435312 0756 22656 0209 069044

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8. Appendices

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Appendix 1. Value-added to selling price of shea butter cosmetics. Marketing

Marketing Step 1

Shea Nut 0.1 €

Step 2 Cost of the legal files to permit selling 1€

Bottle 1��� Shea Butter 0.3 €

Production 0.5 €

Other Raw Materials 0.7 €

Advertising Costs 5€

Carton 0.5 €

Bulk Finished Product 50ml 1.5 €

Packaging 0.5 €

Finished Product Sold by Producer 5€

Packaged Finished Product 3.5 €

Producer’s Margin 1.5 €

Imported Finished Product 6€

Transport and Import costs 1€

(13 times the initial price of shea butter production)

Finished Product Sold to Retailer by Importer 12 €

Finished Product Sold Tax Exclusive to the Public 21 €

Finished Product Sold Tax Inclusive to the Public 25 €

Retailer’s Margin 9€ Taxes, VAT 4€

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Appendix 2. Ghana Shea SS MAP (from SNV Ghana).

End Use?


Private Exporters

Body Shop

Secaf, Akoma SFC

Food Sector (EU)


Loders Croklaan

Indivi dual Women (rural & Urban)

Pharma ceuticals


Private Agents

Butter Trading

Butter Production (In country)

Regional? Emerging? Markets

Cosmetics (US, CD)

Kassardjian (50% NASFPB

Loders Croklaan

Women Groups

Blue Mont? (20 – 25% 3Fs:15-20%?

Nut Bulking

Small scale Nut Trading Primary Processing Production

NASFPB Individual Rural women

IBG?:(<10%) OLAM

Private local buyers, LBAs of Companies and NASFPB

Individual Rural Women

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Appendix 3. Traditional Shea Processing (adapted from Dr. Peter Lovett).

1. Harvest: fall fruit picked from the ground

2. Accumulate: Fresh fruit heaped for 1-2 weeks

3. Boil: Boil sheanuts with water for ~ 90 min. at temps >95oC

4. Dry Nuts: Whole nuts spread in the sun on a hardened mud or concrete surface

5. De-husk: Nuts are handpounded to remove husks

6. Dry Kernels: Kernels spread in the sun for storage, sale, or further processing.

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7. Crush kernels: Hand-pounded.

8. Dry-roast kernels: Dryfried in large iron. pots.

9. Milling: Milled into paste, usually by commercial operator.

10. Kneading: Vigorously, handbeaten for 30-60 minutes until fats form emulsion, washed, & removed

11. Boil fat: Cleaned by boiling on an open fire with decanting stages to clarify the oil.

12. Prepare for use, sale, or storage: Liquid is left to cool and stirred into a smooth, creamy butter

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SHEA BUTTER: A Guide to Production and Marketing