Ashoka
When famine strikes, as it did last year in Somalia, international agencies begin asking for funds to feed starving and malnourished people. But where does the food itself come from?
Most food aid is basically peanut butter—it’s a paste made of peanuts, dried milk, oil, sugar, vitamins and minerals, distributed in small, ready-to-eat packets, called Ready to Use Therapeutic Foods (RUTFs), that have a long shelf life. And ironically, much of it is grown, processed, and manufactured in the developed world, says Steve Collins, Ashoka Fellow and co-founder of Valid Nutrition.
It’s not as if there aren’t any farms in neighboring regions that could provide the raw materials and labor to produce these life-saving packets. There is local capacity, Collins said, but there is no guaranteed customer—a client to ensure the product does not go to waste. Valid Nutrition is attempting to reinvent the business model of RUTFs by setting up local manufacturing hubs in Africa that can employ local residents and use locally-sourced materials.
Traditionally, the World Food Program, UNICEF, and other international agencies are in the business of humanitarian aid. UNICEF is responsible for more than two-thirds of all procurements of RUTFs globally. The majority of these premade packets come from the French manufacturer Nutriset and its franchises. In the past couple years local procurement has increased, but slowly, according to Paul Murphy, Valid Nutrition co-founder
One significant barrier is the access to capital. Even though Valid Nutrition has been able to get manufacturing plants in Malawi up and running (and certified), they’ve faced challenges in accessing certain materials, such as imported milk powder; while the majority of RUTF ingredients can come from African farmers, finding high quality milk powder has been difficult. It often must be purchased in bulk, requiring more capital than the organization can sometimes afford.
To work around the challenge, Valid Nutrition has decided to experiment with other ingredients such as chickpeas and soya. A paste developed from these materials could eliminate the need for the foreign milk powder—and make production more cost effective.
Valid Nutrition’s plan to build local businesses that supply international development organizations’ efforts emerged gradually from Collins’ years of experience in the field. Trained as a doctor, he worked on famine-related efforts for more than 20 years, where he saw the obstacles to delivering aid, especially in regions of political strife.
The emphasis was on taking malnourished and ill patients to hospitals or clinics, Collins said—which was too great a distance, wasting the valuable time of local residents that could have been spent on the farm or working. So, Collins developed a more community-based approach that shortened distances and simplified treatments.
Called Community-based Therapeutic Care, it was ultimately adopted by U.N. agencies and scaled to multiple afflicted regions. Similarly, Collins says, Valid Nutrition, the social enterprise arm of Valid International, is about simplifying and localizing the treatment of malnourishment. By purchasing raw materials from farmers in a region, it provides them with a customer, allowing them to invest in their farms.
This model caught the attention of two San Francisco-based entrepreneurs who adopted the one-for-one model for their new venture. Launched in early 2011, Two Degrees, which sells energy bars, decided that for each bar sold in the United States, they’d provide a RUTF packet to a malnourished child.
Support from the business sector has provided Valid Nutrition with more capital, but Murphy says there’s room for more food-based social enterprises in the industry. He’s keen to point out that this is not just a corporate social responsibility effort, but a shift that is restructuring business so that it doesn’t just generate revenues—it also impacts lives.
Collins agrees about the limitations of short-lived corporate social responsibility (CSR) schemes: “Despite all the hyperbole, CSR tends to be peripheral in most organizations, and is not woven into the fabric of the business,” he said.
“It’s not always transparent, and there are often strings attached. Sometimes it’s driven by a need to buy profile. Even worse, CSR has been used as a type of moral counterbalance to business practices that have had direct negative impacts on the poor.”
What is needed to break the donor model and build more lasting growth is greater investment at the agricultural level, Collins argues. That, he says, will get to the root of the problem.