Cover_Rebuilding West Africas Food Potential

388 Rebuilding West Africa’s food potential

Recommended Business Model

There are several possible configurations that could be adopted, but the one considered perhaps the

most appropriate is a company formed along the following lines:

a. Milling Investor (Lead Investor, TO) takes 85 percent equity share in consideration of the value of

the installed mill, and full management control.

b. Plantation company (Outgrower, PC), as a legally registered company, takes 15 percent share in

consideration of the existing standing palms.

c. Besides being paid cash at the going rate for their FFB supply, PC also takes a profit share of the company,

up to a maximum of 20 percent of net profit. The actual percentage could be performance-based.

d. The company takes full responsibility for repaying amounts owed by farmers for seedlings, and also

for the value of the nursery operation.

e. The company recovers the cost of seedlings from individual farmers on group terms.

The above format meets the needs of all three parties:

a. The milling investor is guaranteed continuous supply of FFB for the mill;

b. The farmers have real participation, and a fair deal for the supply of their FFB;

c. The GoG (FO) partially recovers its investment funds

The concept has long term development prospects, especially with the nursery included as an essential

element. With a continuous supply of seedlings being distributed and planted, the total planted area

can continue to expand, along with the capacity of the mill, and of the business generally. The two

main parties to the company feed off and support each other. The miller provides seedlings, credit facili-

ties, field extension services, fertilizer and chemicals, while the farmers provide an increasing quantity of

FFB as a result of increased productivity. Increased plantation areas will lead to increased yields, leading

to larger mills and thus higher CPO production.