Unusual Business: The Case of Yiriwa S.A. Mali

2. Unusual Business:The Case of Yiriwa S.A. Mali Presented by Bertus Wennink Development Policy & Practice Royal Tropical Institute (KIT), Amsterdam Progreso Network Expert Meeting, Amsterdam, September 14th, 2009

3. Contents • Background • Trade house Yiriwa S.A. • First experiences • Support to producer organizations • Key challenges Amsterdam, The Netherlands www.kit.nl

4. Context: a cotton sector in disarray, offering opportunities • Declining production: • 620.000 T (2004) • 210.000 T (2009) • Decreasing farm gate prices: • 210 FCFA/kg (2004) • 170 FCFA/kg (2009) • Slow advance in sector reforms with lots of uncertainties • Vast network of grassroots level producer organizations Amsterdam, The Netherlands www.kit.nl

5. Producer organizations First steps: taking the private sector (producers & traders) on board • 2006 AgriProfocus workshop (Burkina Faso) on niche • markets for cotton in West Africa (ICCO/KIT/SNV a.o.) • 2007 Prospective mission with a private entrepreneur (AKO) to probe farmers’ interest for fair trade/organic cotton • Begin 2008 Launch of the Projet Bio-Equitable • End 2008 Establishment of a trade house Amsterdam, The Netherlands www.kit.nl

6. Yiriwa S.A.: investing for organic & fair trade agriculture • Limited company in Mali for the production, processing and sales of organic agricultural products http://www.yiriwa.com/ • Yiriwa’s investment capital (2009) provided by three shareholders: • 50% 45% 5% • Personnel: 2 Staff (CEO + deputy CEO) and 15 Field Agents • Working with farmers and their organizations in 3 regions (Banamba, Fana, Sikasso) and extension to a 4th (Bafoulabé) Amsterdam, The Netherlands www.kit.nl

7. Amsterdam, The Netherlands www.kit.nl

8. Producer organizations The trade house: empowering producer organizations • Empowering producers and their organizations through: • Technical support for organic production and product quality control (developing new markets) • Their financial participation in the trade house: • by means of paying shares (directly and/or trust fund) • giving them a voice (risks & benefits) in the company • allowing them to increase benefit from the value chain and enhance marketing intelligence • The envisaged distribution of shares: • 28% 24% 24% 24% Amsterdam, The Netherlands www.kit.nl

9. The first experiences: lessons learned • Lessons learned from the first full-fledged campaign (2008/09): • Expand to other organic crops besides cotton; e.g. sesame, soybean and ground nuts ( crop rotations practiced by farmers) • On-time, full payment to farmers creates “trust” that is crucial for the future partnership POs - Yiriwa S.A. • Reduce costs of technical support and other transaction costs, particularly for threshing (monopoly by the parastatal CMDT) • Separate commercial (sourcing & trading) and non-commercial (PO capacity strengthening) activities Amsterdam, The Netherlands www.kit.nl

10. Support to producer organizations: a two tracks approach Limited company Support of: • Input supply, production, marketing & trading • Quality control & certification • Processing capacity Consortium Capacity strengthening for: • Organizational management • Intermediation with service providers (e.g. credit, R&D) • Monitoring for learning • Management of (future) shares Amsterdam, The Netherlands www.kit.nl

11. Producer organizations Key challenges for producer organizations • Become capable shareholders in Yiriwa S.A. for the benefit of their members (market intelligence, transparency & accountability) • Ensure on-time supply of quality organic agricultural products in compliance with demands (Internal Control Systems) Amsterdam, The Netherlands www.kit.nl