How direct sourcing of shea nuts helps smallholder farmers and the environment
By: Jon Goriup Dermastia
Tags: Phy2app, Value Chain, Impact, Shea Butter, Smallholderfarmers

Shea fruits are without a doubt, an important raw ingredient for food and cosmetics. Shea fruit (Nilotica Species) grown in Uganda has especially high concentrations of Oleic acids, fatty acids, and vitamins, making it an ideal ingredient for cosmetics.

Whereas the benefits of shea butter for consumers are well known, little information is given on the importance of shea fruit for smallholder farmers and the environment. This is especially true in East Africa, where shea butter production is far less developed than in West Africa.

Smallholder shea farmers in Uganda

How do smallholder farmers benefit from the direct sourcing of shea nuts?

Let’s take a look at an area called the Ajia sub-county within the Arua district (West Nile). This is an area where over 10,000 shea trees are growing well and are shaping a beautiful wild landscape. The shea trees in this region produce their first fruit when they are about ten to fifteen years old. By the time trees reach the age between twenty and thirty years old, they start bearing fruit at full capacity and can maintain that capacity for about two hundred years!

Wild-growing Shea

Smallholder farmers in this area sell their shea kernels directly to agribusinesses like PELERE GROUP, woman-led agribusiness with 40 employees. The impact of the agribusinesses and their direct sourcing strategy on the livelihoods of smallholder farmers and the environment in this area is impressive, despite the fact that the agribusinesses buying from the farmers are still relatively small.

PELERE: Example of the impact

PELERE sources about 250 tonnes of shea kernels from the smallholder farmers every year to produce 80 tonnes of high-quality Shea butter cosmetics.

PELERE pays the smallholder farmers about 4 times as much for the shea kernels compared to the local traders!

Thus, the cooperation with PELERE provides sufficient, stable annual income for 850 farmer households or about around 5.100 people. The same amount of kernel would only provide the same level of income to 215 farmers if sold to local traders.

Since shea nuts production allows intercropping the farmers involved can also continue growing cassava, beans, simsim (sesame), and maize for consumption of the household, also known as subsistence farming.

Contract negotiations between smallholder farmers and PELERE TEAM

Besides sustainable income for farmers, direct sourcing of shea nuts can also provide a significant number of jobs. PELERE is considering new contract farming with landowners owning over 10,000 Shea trees. If both sides succeed, it will result in hundreds of new jobs for workers caring about the shea trees and the related shea kernel production.

But why is shea nut production good for the environment?

Cutting down trees for charcoal production is common in many regions like in Ajia. Shea trees are especially very suitable for charcoal production. Because only a very small amount of shea trees are utilized for shea butter production, the value of these trees is mostly unknown. However, this value can be easily quantified:

Cutting down a typical shea tree results in 4–6 bags of charcoal worth each 30,000 UGX, thus in total about $ 40 USD per tree.

Such trees produce around 250 kg shea kernel per annum, resulting in about $ 140 USD income each year → One single shea tree provides $ 700. USD of steady income over 5 years compared to the one-time $ 40 USD when turned into charcoal.

Ajia: One region, two landscapes

Shea trees mainly used for charcoal production

Shea trees utilized for commercial shea kernel production

How do smallholder farmers benefit from increased transparency?

PELERE is a growing business with an increased focus on attracting international bulk buyers. For such buyers, direct sourcing, environmental protection, and social responsibility of raw material matter a lot. Thus, PELERE is using phy2App to communicate the information that potential buyers are looking for. An increase in sales of at least 20% is expected, due to the ability to assure transparency of Pelere Group shea butter products, despite the troubles caused by COVID-19 time.

What does a 20% increase in sales of the agribusiness mean for the smallholder farmers in the Ajia region?

Additional annual off-take of 50 tonnes Shea kernels, worth about $ 25,000 USD

Additional 165 smallholder farmers receive a sufficient annual income, assuring sufficient livelihood of 1000 household members

Allowing kids of these households to go to school instead of working in the field

Group of smallholder shea farmers in Uganda

Let’s summarize the key fact