PICS Bag Commercialisation Strategy Bell Industries Ltd

Commercialisation Strategy for the Portable Shallow Bed Maize Dryer or Easy Dry M500

AflaSTOP: Storage and Drying For Aflatoxin Prevention

June 2016 Easy Dry M500 Commercialisation Strategy

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Commercialisation Strategy for the Portable Shallow Bed Maize Dryer or Easy Dry M500 Contents

1 Introduction

The AflaSTOP: Storage and Drying for Aflatoxin Prevention (AflaSTOP) project is identifying the most promising storage options to arrest the growth of aflatoxin and designing viable drying options that will allow smallholder farmers to dry their grain to safe storage levels. The project works to ensure that businesses operating in Africa are able to provide these devices to smallholder farmers. It is jointly implemented by ACDI/VOCA and its affiliate Agribusiness Systems International under the direction of Meridian Institute. For more information on AflaSTOP and other key reports and resources, visit: www.acdivoca.org/aflastop-publications. Agribusiness Systems International (ASI) contracted Catapult Design to research, design and field test a new maize drying technology suitable for commercialization that is adapted to the needs of Kenyan smallholder farmers, permitting them to confidently, easily, and cost-effectively dry maize down to safe, long-term storage moisture content regardless of weather conditions. Performance testing of various maize drying prototypes identified the Portable Shallow-bed Batch Dryer or Easy Dry M500 (M refers to the commodity maize, and 500 to the capacity of the bed 500kgs) (henceforth referred to as “the dryer”) as having the highest potential for further development and possible commercialization. 2 Commercialisation Strategy Objective

Full commercialisation of the dryer requires that, in the long term, the dryer is produced, purchased, financed, promoted and utilised without any subsidy or intervention by a publicly funded entity (an exception to this may be that, from a public health/domestic food security perspective, farmers are incentivised to dry their grain before storage). The commercialisation strategy must therefore:  plot a path to this situation from the present where the dryer has been designed, developed and championed by the AflaSTOP project to the future situation summarised above  outline a range of possible business models and investigate what is required to identify, inform and support key stakeholders Ultimately the aim is that a business model or range of business models will develop independently based on private sector innovation. Nonetheless, at this stage it is necessary to investigate where donor funded interventions at key action points are most likely to produce positive impacts. At present, no targets have been set for dryer sales, timing or the number of farmers to be serviced but it is understood that there is considerable regional interest in the dryer and an estimate of the likely total market may influence the method of production of the dryer. 3 Problem Statement

Work begun in 2008 by the AflaSTOP project has highlighted the prevalence of aflatoxin in Kenya and surveys have shown that smallholder farmers in effected areas are mostly aware of its health effects. They are concerned about the development of aflatoxin in maize that they feed to their families and sell into the market and yet, despite this widespread knowledge, there is currently no market premium for low aflatoxin grain since there is no easy or cheap way of testing for aflatoxin. Stored grain is often damaged by grain moulds and aflatoxin when stored ‘wet’ and therefore, to avoid post-harvest losses and the reduction in the amount available for consumption and sale, grain needs to be adequately dried before storage. At harvest, moisture levels in grain are typically between 18-23% and traditional methods of drying in areas which are not very dry usually reduce this to 15-16% providing that there is adequate drying time. Any maize shelled above 16% will begin to deteriorate if not dried immediately

of 22 Easy Dry M500 Commercialisation Strategy normally by lying it in the sun, significant rotting and moulds can develop if left at higher moisture levels. Ideally shelled maize needs to be dried to 13.5% moisture content to make effective use of PICS bags, or to be sold into premium markets such as NCPB, Unga Mills etc. Grain drying is a particular problem in some climatic regions of Kenya where there is a high possibility of rainfall during and after harvest which make traditional drying difficult. In these areas there are very few to no commercially available dryers to help farmers and these may be some distance away. The majority of individual farmers cannot afford to purchase dryers themselves and therefore any grain drying must be provided as a service to these farmers at a level that is affordable and convenient. An added complication is that most farmers are reluctant to mix their grain with that of others for the purpose of drying and therefore any commercial service must be able to handle relatively small amounts of grain or be able to clearly separate grain from different farmers during the drying process. Another significant issue is the cost and inconvenience of transporting grain to be dried, therefore, drying services for each individual farmer need to be carried out ‘on farm’ or relatively close by. An issue in the Kenyan situation (and other parts of Eastern Africa) is the consideration of whether the involvement of the informal or formal sectors is most likely to lead to the successful commercialisation of the dryer. A summary of the tensions considered, with particular reference to manufacturing, is shown below.

Figure 1 Issues relating to informal vs formal sector routes to market

4 The Product

The dryer uses heated clean air blown through shelled maize suspended on a raised bed. It uses a heat exchange to ensure that the smoke filled air leaves through the chimney and clean air is heated up and passed through the maize. It is designed to be easy to operate and utilises only petrol (for the engine driven fans) and maize cobs (as a heat source) as fuel. The design has been made simple as possible and is capable of being manufactured using simple tools and procedures and without drawings (although these are available).

It is designed to be collapsible and one dryer can be transported on 2 motorbikes (one for the furnace and one for all the other equipment). It can be erected on quickly on-site in around 10 minutes. 5 The Market Opportunity/Value Proposition

Through careful design, proto-typing and discussions with informal (jua kali) fabricators, the indicative sales price of the dryer has been reduced over time to a figure of KShs 75,000 (including adequate profit for the fabricators). Even this modest price is thought to be too high for purchase by individual smallholder farmers. It is, however, considered well within the affordability of small individual entrepreneurs who are typically purchasing maize shellers for around this price. These entrepreneurs would then provide drying services to farmers at a fee. Surveys have established a farmer’s willingness to pay for drying services  Medium size smallholder farmers (4 - 10 acres) already pay labour to carry out sun drying  In North Rift, 95% of farmers hire mechanical shellers These surveys, indicated that farmers were initially willing to pay around KSh 100 per bag ($1) for drying but this is before the drying service had been demonstrated, after seeing the service they indicate a price around Ksh150 / bag ($1.50). This figure is expected to vary considerably by region and will be strongly dependent on weather conditions immediately after harvest and labour costs. For example, it was reported by farmers that costs for sun drying were approximately KSh 20 per bag per day ($0.20) if the weather was good but rose to KSh 200 per day ($2) in wet conditions. The same report indicated that commercial drying services charge according to moisture content at a cost of Ksh42 per % dropped per bag ($0.42), which would equate to Ksh 182 / bag ($1.82) to drop from 18% MC to 13.5%. Simple financial modelling (see below) suggests a break-even price at KSh 110 per 90 kg bag ($1.10) assuming 3 dryers working together drying maize to 15% MC, with 80% of the initial cost financed at 20% interest over 3 years and the 20% cash deposit recovered over the first two years of operation. If the charge to the farmer is per bag dried, the operator and the farmer have to agree the point at which the grain has been dried to the agreed moisture content. This could create problems as there is no affordable equipment or reliable method to accurately measure starting and ending moisture content. An alternative method of pricing the dryer service would be as a rental charge per day. This would avoid issues with variability of initial moisture content and the assessment of final moisture content i.e. the farmer decides when each batch of maize is dry enough and the variability of drying times per batch would be less of a concern for the operator. For the above example, the equivalent break even price would be around KSh 1,830 per day ($18.30) for the use of a dryer and operator. It is expected that pricing methods and prices will be adjusted through private sector experimentation and according to supply and demand (and particularly dependent on weather and the availability of drying services). This ‘dynamic pricing’ is considered normal in several sectors in Kenya e.g. for provision of shelling services and matatu fares which rise in bad weather. 6 Competition

The current alternatives for drying harvested grain are as follows  Large drying facilities available at commercial grain silos (only Lesiolo Grain Handling, Nakuru), or NCPB who charge Ksh 41 per 90 kg bag ($0.41) per % moisture reduced (this would work out at KSh 205 per bag ($2.05) for reducing MC from 20% to 15%)  Sun-drying on tarpaulins / ground The dryer is, at present, the only mobile technology addressing the requirement to dry maize quickly on farm and in less-than-ideal weather. For this reason it is attracting widespread interest.

However, there are other products, e.g. maize shellers, which are competing for resources and capabilities of manufacturers and service providers.

7 Stakeholders

The following is an outline of possible actors in the commercialisation process 7.1.1 End users  Small farmers (or groups of farmers) with a need to dry between 35 and 150 bags (3,150 kg and 13,500 kg) in a single location  Located in regions which experience wet or overcast weather following harvest 7.1.2 Manufacturers  Medium scale businesses in the formal sector  Jua Kali fabricators in the informal sector  Trade schools or other manufacturing training institutions  Off-shore manufacturers 7.1.3 Product Buyers  Owner/operators – purchase the equipment using their own resources or through microfinance  Businesses – purchase the equipment using their own resources or through finance  Leasing companies – purchase the equipment using their own resources  NGOs/Social enterprise  Farmer groups  Medium sized farmers 7.1.4 Service Providers  Owner/operators – operate their own equipment  Operators – operate the service on behalf of the equipment owners (including farmer groups)  Lessees / renters – lease / rent the equipment from a leasing / rental company and operate their own business  NGO/Social enterprise – operate the dryers using their own staff on a cost recovery basis 8 Key Issues

For any of the business models to be sustainable, the drying service has to be affordable to farmers and generate adequate profit for those who own and operate the dryer. It must also be profitable for the fabricators of the dryer. For success in these areas, the following key issues must be adequately addressed:  How to establish confidence in farmers that this is a service worth using and to potential buyers that this is an interesting business opportunity when compared to other options  How to assess the size of market for the service and dryers

 How best to test business model assumptions  What discounts/promotional financing may be appropriate to encourage early adopters?  How to plan and time support activities and raise funds for these activities  Who is most likely to buy the dryer and operate the drying service at a profit?  How will the price be set for the service?  How farmers/service providers estimate the moisture content of the grain before and after drying  How to ensure the correct operation of the dryers to ensure effectively dried grain  How the businesses will operate in practice to generate maximum income for the machine owners without compromising the quality of the service provided  Who is best placed and most likely to be interested in manufacturing the dryer?  How can quality control of the manufactured dryers be assured in order to avoid undermining confidence in the design?  Who is best placed to provide additional finance for buyers/manufacturers? 9 Constraining Factors

Service providers/entrepreneurs generally require new investments (e.g. mechanical shellers) to have a payback period of one or two seasons. Both service providers and fabricators are reluctant to take on loans due to high interest rates and other factors relating to working in the informal sector. Small fabricators will only produce items for specific orders and require a large deposit up- front (usually to cover the cost of the raw materials). Investment in new equipment by small service providers/entrepreneurs is generally from cash flow/savings. It is unlikely that there are many entrepreneurs who have KSh 75,000 ($750) readily available and it would take time for any potential purchaser to acquire the cash required, possibly as much as two harvest seasons. To promote more immediate uptake therefore, there needs to be a finance mechanism in place to assist early adopters. There are only certain geographic areas in Kenyan where drying services are most likely to be successful and in addition, there is a limited time of usage for the dryer each year (depending on region) and the dryer has to generate sufficient income within this period (estimated in the financial model at 40 working days per year). Different regions of Kenya do have different harvesting seasons which could extend the working days per year, however there is no example of service providers who move location. 10 Key Success Factors

Extensive prototyping and testing has ensured that the basic dryer design is sound and can achieve the requirements of the design brief. However, the successful introduction of the dryer to the market requires solutions to the issues highlighted above. The following table is a summary of the key success factors, risks related to these factors, and measures that can be taken to mitigate those risks.

Key Success Factor Risk Suggested Risk Mitigation Market for drying Lack of awareness of the dryers as Promotion of drying services to services develops a drying solution farmers and SMEs sufficiently Purchasers of the dryers are not Discounts for early users of the generating sufficient income service If dryers fail to provide sustainable Endorsement by MOA extension services farmer losses due to the workers storage of wet grain remain Risk mitigation for early purchasers of dryers (could be buy back) Work with selected ‘companies’ who will develop the service at no cost to them Adequate margin for Business is not attractive for Trials service providers service providers/entrepreneurs Modelling Quick acceptance and Uncertainty about margins and Develop business models that uptake by service field operations may slow uptake show that adequate margins are providers Written business models are not achievable Realistic business persuasive for the informal SME Organise operational scale ‘model’ sector demonstrations to inform potential owners and vindicate models Sufficient funds/cash Interested buyers wait 1-2 years to Promotion and demonstration to availability throughout save purchase price leasing and microfinance the chain organisations Discounts or promotional financing for early adopters Correct assembly and Poor dryer performance leads to Training and monitoring of effective operation of poor or slow drying operations in the field dryers Lack of confidence by both farmers Training fabricators to undertake Adequate maintenance and operators major maintenance, and inform of the dryers buyers of minor maintenance needs ‘Fair’ pricing of the Farmers don’t have confidence that Near market trials and service to farmers the drying work is being done for a demonstrations to get better fair price picture of business models Daily hire rate so that farmers decide when grain is dry enough Dynamic pricing likely to be the norm ‘Fair’ assessment of Arguments between farmers and Develop more accurate low cost starting and finishing service providers over moisture methods of assessing moisture moisture content content and price for service content Daily hire rate so that farmers decide when grain dry enough

Key Success Factor Risk Suggested Risk Mitigation Good quality Poor quality from authorised Training fabricators manufacturing fabricators External quality control Unethical copy-cat fabricators Branding and certification supplying cheap and badly made Promotion of recognised brand copies Formal sector manufacturing No consumer protection Importation Sufficient supply of Seasons missed Timing of promotions dryers when required Dryers not generating adequate Timely promotion to potential by buyers cash from drying season if supplied buyers partway through the season Pre-finance for fabricators Tying up cash of fabricators if Timely importation manufactured too early Initial NGO/donor Slowed uptake rate if no support Preparation of project plans and support Possibility of dryer design getting funding proposals shelved if not actively promoted

11 Financial Model

A simple business model has been created to assess the likely costs and income from owning and operating the dryer. It is obviously important that all actors in the chain generate sufficient income to make it worthwhile financing/manufacturing/owning/operating/using the dryer. The model enables the key operating parameters: drying time, fuel consumption and cost, transport costs, labour costs, number of operating days per season etc.to be investigated It is immediately apparent that labour and fuel costs make up more than 50% of the operating costs. While it is difficult to reduce fuel costs one way of spreading labour costs would be to operate several dryers together under the supervision of one operator. Transport costs are based on transport using two motorcycles and will depend on how many times during the season the dryer(s) will move and how much maize requires drying in each location. Included in the operating parameters is a variable for ‘profit expectation’. Assuming that the owner(s) of the dryer expect to make a return on their investment in the dryer, this indicates a minimum charge out price necessary to generate this profit providing that all the other parameters hold true. This is above and beyond the payment to the operator, however, for owner/operators this daily payment may be considered as part of the ‘profit’. The finance costs will depend on the individual circumstances of the buyer and the finance options which are available: cash purchase, asset finance, and financial or operating lease finance. Of particular interest is the payback period either for cash purchase (most buyers of shellers expect a one or two year payback) or for the cash deposit required in association with other financing options. This model is unlikely to be accessible or of interest to the operators or buyers but it is important to know the likely cost to the farmer of the drying service. As previously stated, the cost charged to farmers is likely to change depending on the availability of the service and particularly the weather conditions – rain at harvest time can make it almost impossible to dry maize effectively. is also a useful guide for the collection and analysis of information during the proposed pilot. Of vital importance is what charge for the drying service is acceptable to the farmer under different circumstances (weather etc.) once the service is available and established. It will also be useful to know whether farmers find it more acceptable to pay a charge for each bag dried or whether they would prefer to hire the dryer by the day (or half day). A summary of one scenario generated by the model is shown below. The key variables are highlighted in pink.

In this scenario, farmers are charged KSh 2,700 per day for hiring one dryer and over a 3 year period this would generate a total of nearly KSh 300,000 of net cash flow for a small business operating 3 dryers as a unit after finance and operating costs are considered and the cash downpayment has been recouped.

Fixed operating parameters Unit Comments/explanation petrol usage 0.50 lt/hour fuel consumed by engine driving fan. cobs consumed 12 kg/hour heat source for the furnace bag size 90 kg standard maize bag size batch size 500 kg capacity of the drying bed on the dryer

Variables (averages) Unit number of dryers 3 dryer(s) number of dryers operated together as a 'drying unit' annual utlization 40 days estimate of the average length of the drying season batches dried per location 18 batches number of batches to be dried by the drying unit before moving distance between drying locations 6.7 km drying unit moves to service another group of farmers operating hours per batch 2.3 hours 2.3 hours to dry from 20% to 15% MC 3.4 hours to dry from 20% to 13.5% MC loading & unloading per batch 0.5 hours during loading/unloading time, the engine is not running working day 11 hours maximum number of hours available for drying/loading/unloading max no of dryers per operator 3 dryers number of dryers that one operator can effectively supervise annual dryer maintenance 15.0% %ge of dryer cost costs for mending/replacing canvas, heat exchanger, belts etc.

Unit costs KSh per dryer 75,000 dryer initial purchase cost cobs - kg maize cobs usually supplied free of charge by farmers operator daily cost 1,000 day petrol 100 lt dryer transport 20 km estimate based on transporting the dryer using 2 motorcycles

Profit expectation 35,000 year

Scenario summary number of dryers in drying unit 3 number of labourers 1 operating hours per batch 2.3

Daily operation complete batches/day 9 batches/day bags/day 50.0 bags/day total dryer operating hours 20.7 hours/day

Seasonal totals total batches dried 360 batches total kg dried 180,000 kg total bags dried 2,000 bags no. of dryer moves 20 moves

per drying per dryer per Variable costs Annual KSh per bag KSh per kg KSh unit per day %ge of Annual day KSh KSh Operating Cost cobs - - - - - fuel 41,400 20.70 0.23 1,035 345 34% labour 40,000 20.00 0.22 1,000 333 32% transport 8,040 4.02 0.04 201 67 7% Total variable costs 89,440 44.72 0.50 2,236 745 73% Maintenance 33,750 16.88 0.19 844 281 27% Annual operating cost 123,190 61.60 0.68 3,080 1,027

Total profit required 105,000 52.50 0.58 2,625 875 85% Calculated charge out cost 228,190 114.10 1.27 5,705 1,902 185% (before finance)

Input data Method of charging per dryer day bag, kg, dryer day or drying unit day Rate charged for drying KSh 2700 dryer day Percent Financed 70% Effective Interest Rate 25% Loan/lease period 3 years Deposit/downpayment recovered over 2 years

Assset Costs Dryers Purchased 3 Initial purchase price 225,000 Annual maintenance costs 33,750 Deposit/downpayment 67,500

Calculated Calculated Calculated Calculated per drying per dryer per bag per kg unit day day

Annual Income 324,000 - - - 324,000

per drying per dryer Annual KSh per bag KSh per kg KSh unit per day per day KSh KSh Cashflow year 1 Annual Income 324,000 162 1.80 8,100 2,700 Annual operating cost (incl. maintenance) 123,190 62 0.68 3,080 1,027 Loan/lease payments 80,686 40 0.45 2,017 672 Deposit/downpayment recovery 33,750 17 0.19 844 281 Net Cash flow 86,374 43 0.48 2,159 720

Cashflow year 2 Annual Income 324,000 162 1.80 8,100 2,700 Annual operating cost (incl. maintenance) 123,190 62 0.68 3,080 1,027 Loan/lease payments 80,686 40 0.45 2,017 672 Deposit/downpayment recovery 33,750 17 0.19 844 281 Net Cash flow 86,374 43 0.48 2,159 720

Cashflow year 3 Annual Income 324,000 162 1.80 8,100 2,700 Annual operating cost (incl. maintenance) 123,190 62 0.68 3,080 1,027 Loan/lease payments 80,686 40 0.45 2,017 672 Deposit/downpayment recovery - - - - - Net Cash flow 120,124 60 0.67 3,003 1,001

Total 3 Years Income 972,000 162 1.80 8,100 2,700 Annual operating cost (incl. maintenance) 369,570 62 0.68 3,080 1,027 Loan/lease payments 242,059 40 0.45 2,017 672 Deposit/downpayment recovery 67,500 11 0.13 563 188 Net 3 Year Cash flow 292,871 49 0.54 2,441 814

12 Outline Business Model Components 12.1 Manufacturing Models Option Strengths Weaknesses Formal Sector Clear channels for quality High overheads control Expensive to tool up Branding Minimum run size Jigs / plasma cutters to Cost estimated at 50% higher standardize parts than in informal sector Bulk ordering of materials Limited interest Easy expansion of supply Fear of rapid replication in Able to produce to a informal sector consistent standard Harder to supply maintenance Marketing support (e.g. heat exchanger) Potential after sales support Informal Sector Lower cost Quality control Make to order Built to order only, no stock Closer to market No consumer protection Closer relationship with Limited after sales support purchaser Cannot build from drawings / Lower transport costs pictures. Need to have Lower inventory costs examined a physical model Ability to innovate before they can build a similar Close maintenance support model Trade Schools Quality control Time to delivery Training of new manufacturers Financing Suitable skills Manufacture overseas and Cheaper steel prices Order volume import Imported as agricultural Customs equipment Cost Bulk purchase of engines etc. Who buys? - Lease Bulk shipment cost savings companies / distributor? Quality control

The AflaSTOP project already has considerable experience of working with both informal and the formal manufacturers in Kenya and the KSh 75,000 purchase price has been set using the cost structure of informal fabricators. The initial purchase price of the dryer is an important element of the business model. It would be interesting to know what the likely cost would be if the dryer was manufactured outside of Kenya (perhaps India) and what sort of demand/order would be required to interest offshore manufacturers. Consideration should also be given to the issue of who would initially order, import and stock the dryer while demand was being established. Expansion into different countries in Africa would be simpler if it was not necessary to train the informal fabricators in each location. Perhaps an interesting example to bear in mind is that of Kickstart who began manufacturing their ‘Moneymaker’ treadle pump in Kenya and later moved production offshore due to cost, quality and export issues. IDE also investigated manufacturing treadle pumps in Southern Africa but eventually settled on importing Indian manufactured pumps which had the advantage of cheaper steel, more consistent manufacturing quality and price.

12.2 Ownership and Operations Models Option Strengths Weaknesses Company/Investor purchases Model used by some matatu New technology might take and leases to operators operators, lease finance time for acceptance by companies investors Operators do not need cash / Difficult for owners to monitor limited cash for start-up activity Aggregation of knowledge Less easy for owner to collect from owning a number of payment or repossess asset dryers High seasonality of market Better business skills No ownership for operator Faster scale up possible Machines broken due to lack of care Farmers unwilling to allow 'outsiders' (as in non locals)' onto farm Service fees need to include government taxies Owner/Operator Motivation to improve margins Time required to save for cash Entrepreneurs Taps into existing networks purchase No finance innovation required Uptake likely to be slow No finance costs Risk aversion by small Access to informal networks to operators may slow adoption reduce costs Accepted within community

Ultimately, owners and operators will be self-selecting and therefore all of the above should be targeted/informed when promoting the dryer during the pilot phase.

12.3 Financing Models Option Strengths Weaknesses Owner operator financed No third party funding Need time to save even for No interest payments one dryer No debt (avoided by many Limited family funds small entrepreneurs) Slows down adoption Established model of financing purchases A limited number may get differed payment terms from fabricator

Option Strengths Weaknesses Small business finance Established businesses may 3 dryer model likely to the be have access to capital the minimum Integrates well with other Requires considerable cash farmer services resources Risk aversion for new asset/business model Poor ability to produce a business plan acceptable to finance institutions

MFI Asset finance MFI’s have expressed interest Payments constrain cash flow Concessionary capital rates Client base may be limited Finance institutions unwilling to take on new services lacking proven business model Leasing company purchases, Leasing companies have Lease companies may not leases to operators (finance or expressed interest want to deal with an informally operating leases) Systems established with manufactured asset other products Lease financing still relatively Significant improvement of unknown in East Africa cash flow to operators Unfamiliar financial model Does not require debt Potential mismatch between (avoided by many lease company lessee entrepreneurs) expectation and reality of Possible option for operator to smallholder farmers service buy discounted dryer at end of providers lease. Still requires someone to sell the idea of the dryer as an investment

As has been mentioned previously, many small entrepreneurs have a negative image of finance institutions either due to high interest rates charged, stringent requirements for awarding loans or issues of trust. Lease financing has developed relatively recently with the provision of either financial leases (where the lessee becomes the ultimate owner of the goods) or operating leases (where the lessee pays a fee for the use of the equipment but ownership remains with the leasing company). However, there has recently been significant interest in the dryer from several leasing companies in Kenya. 12.4 Quality Assurance and Branding Models Option Strengths Weaknesses Fabricators receive initial Low cost after initial training Lack of follow up risks non- training only functioning product being produced Selected manufacturers Simple No quality checks after initial authorised to make the dryer Low cost samples checked Risks non-functioning product being produced

Option Strengths Weaknesses Performance testing - quality For authorised manufacturer: Informal fabricators: check on all dryers once quality is being performance testing most constantly achieved, checking likely over a longer period can reduce to periodic and since orders will be lower then to none Potential of fabricators in Relatively inexpensive to multiple locations makes it implement by an NGO within a more difficult to test multiple project dryers at the same time Short season when dryers are manufactured Needs adequate capacity to check all dryers Needs to cover the cost of checking performance Establish one brand Common recognition Manufacturers have to use Project/NGO/Government one design extension can promote a Brand holders need to ensure single brand that farmers quality parameters recognise Allow manufacturer to add More ownership by Quality checking more difficult own sub-brand manufacturer where local modifications Ability to innovate Risks non-functioning product Generic promotion only being produced Field operations monitoring Ensure that service providers Cost are using equipment correctly Expectation of intervention Timely recognition of any over disputes defects

The issue of quality assurance is vital in the early commercialisation process to ensure that the dryer purchasers are getting a product that is durable and capable of performing to the design parameters. If the dryers in use are not providing a reliable service to farmers, it could easily undermine confidence in the dryer which would be difficult, if not impossible, to correct later. A major issue is who should the responsibility for quality control in the early stages of commercialisation especially where the dryer is being produced by a number of informal fabricators. Initial training of these fabricators is important as there are some more complex key components that are essential to the correct operation of the dryer. Initially, it would be ideal if each dryer was checked for quality and operation prior to sale and this quality check made clear to any potential buyer. This is a possible role for a project/NGO in the short term. In the early years of the introduction of the treadle pump into India, IDE maintained control over quality and each pump was tested and had a numbered plate attached that also identified the manufacturer. Once the market had confidence in the basic design, individual fabricators included their own modifications and innovations and created a sub-brand that identified the fabricator responsible. 13 Additional Activities 13.1 Training Activities Training is required on two levels, training for operators and training for fabricators. 13.1.1 Training for operators Drying technology is relatively simple and straightforward, therefore the need for training on the operation of the dryer is small. However operating the furnace does require a change of behaviour,

of 22 Easy Dry M500 Commercialisation Strategy rather than letting the cobs smoulder as in a local cooker, they must flame to get the drying temperatures which bring about more rapid drying. In the initial stages it will be important to ensure that the first adopters and users accomplish optimal outcomes. Even a small failure rate by owners and operators could drastically limit adoption. Therefore, a project/NGO should provide training to operators the first two seasons in any new area where the dryer is being used for the first time to ensure that the dryers are operated and maintained in an optimal way. This could be done efficiently by conducting a training of trainers with representatives from each area, and distributing vouchers to new buyers to receive initial demonstration and troubleshooting. This training should be conducted from mid-2016 through the end of 2017, or the first 1-2 seasons that the dryers are introduced in a new area. After this, it should be unnecessary. 13.1.2 Training for Manufacturers The technology has been designed for simplicity, and a good informal sector fabricator is able to produce a copy of a dryer with limited assistance. Nonetheless the attention to detailed spacing of certain parts is very important and will be missed if not pointed out. Furthermore AflaSTOP has learnt that the informal fabricators need to investigate a working model before they can actually build. The majority of the informal sector cannot build off drawings or pictures. Therefore it is important to have some technical assistance at the start of production for every new fabricator. We recommend that an NGO provide technical assistance to several new fabricators in each region. This could be done efficiently by training several fabricators at a time, and then supervising or at least troubleshooting initial production. The major need for this would be for the first 18 months preferable covering the periods before two harvest seasons ensuring support be provided at key manufacturing times. 13.2 Promotional Activities Three groups of stakeholders would benefit from additional promotional activities:  farmers who need to be informed about the drying service  potential owners/operators for whom this may be an opportunity  other partners such as financiers or manufacturers who may be interested in incorporating the dryer into their business models. The following outlines possible strategies for promotion.

Option Strengths Weaknesses Near commercial pilot Proof of concept and high May take more than one visibility season to establish demand Validation of business models Vouchers for service users Reduces risk and cash Requires funding and requirement for farmers administration Price setting Open to abuse Introduces subsidised service Discounts on dryer for early Reduces cash requirement Requires funding and adopters Limited time period creates administration demand Reduces risk One on one demonstration Dryer generates significant Requires substantial time for and promotion to potential interest networking and demonstration private sector partners

14 Recommended Project/Donor Role

The goal is to introduce the dryers into an enterprise-led value chain, nonetheless, during the initial stages of commercialisation, several key roles have been identified which require support for a Project or NGO. This role is summarised in the in the figure below and in the recommended activities.

Figure 2 Key roles for an NGO or donor funded project

14.1 P r o motion to Potential Financing Institutions  Can include MFI’s, lease finance companies, and SACCOs  Financial models are already developed to demonstrate viability  Various financial institutions have indicated interest and could be key players if introduced to the technology and assisted through their concerns 14.2 Initial Near-Commercial Trial  Opportunity for vindication/refining business models  Raises visibility for end users, potential owner/operators, financing institutions  Validates business model for owners and investors  Opportunity to monitor farmer willingness to pay and acceptance of service  Should be as near as possible to actual field situation including dynamic pricing but with quality control and internal to the trial moisture monitoring  Need a good number of dryers as back up should problems occur (or for immediate sale) also ensure transport availability  Invite potential financiers or buyers to see operations 14.3 Promotion and Publicity for the Dryer  Should be implemented during or immediately following the initial trial  Raise awareness and speed adoption for end users

 Selected promotions/discounts to farmers to reduce risk for first owner/operators on the market 14.4 Training and Quality Assurance  Provide initial training to first time operators  Provide technical assistance to new fabricators  Develop Quality Assurance processes for all new dryers, check for functionality and brand. Charge a fee for this which would cover a private sector company’s cost to carry out similar activities. 15 Other Opportunities

While this dryer design has been optimized for maize and uses maize cobs as the main fuel source, the principles would work very well for a number of other crops. For instance coffee husks, could be used as a fuel to dry coffee and paddy husks to dry paddy. This will require redesign of the grate and other elements of heat generation, as well as modifications which would reduce the temperature of the hot air blown through the bed e.g. coffee should not be heated above 35 degrees centigrade. AflaSTOP has already received interest in paddy, soya beans, and ground nuts. However the project does not have the mandate or funds to carry out the customisation at this point.