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Investing in small and growing businesses is key to reducing post-harvest loss and making nutritious foods more accessible

Posted By Teale Yalch, GAIN, Friday, October 11, 2019

The rationale for a nutrition focused organization like GAIN to become a member of an entrepreneurship support network like ANDE might not be immediately obvious, but the fact is that SMEs are estimated to deliver around 70% of the food consumed in low income countries and if we are going to succeed in improving diets and tackling malnutrition, we must do more to support the growth of small businesses, who are key to ensuring that nutritious, safe food is more available and affordable for local populations. 

One key area of action to ensure greater availability of nutritious, safe food is to reduce post-harvest loss.  According to the Rockefeller Foundation, small farmers and retailers currently lose 45% of their vegetable harvests, 35% of their fruit harvests, and 25% of their incomes due to post harvest losses each year.

Small businesses have a key role to play here.  Take for example, Coolins FoodBank, located in Orlu in South East Nigeria. Coolins Foodbank is a food logistics and processing business owned and operated by Collins Edwards and his wife Oluchi. Last year, with support from GAIN, Coolins Foodbank adopted a solar powered cold storage facility that they have placed within a local market. Local farmers and market retailers pay a fee to store their fresh produce in the cold room.  One of Coolin’s customers, Love Maduka, who sells fresh fruits and vegetables to customers in the local market, no longer loses the estimated 50% of her tomatoes through spoilage and the subsequent revenue because of the access to cold storage that Coolins Foodbank provides. 

Through its work supporting the growth of nutritious food SMEs, and more specifically businesses like Coolins Foodbank through its Postharvest Loss Alliance for Nutrition (PLAN), GAIN has identified many examples of innovative small companies producing and distributing nutritious food with real potential to grow. 

However, they are all too often stopped in their tracks because they cannot attract the financing they need to grow as they are perceived to be too small or too risky by traditional sources of lending like banks.  In the post-harvest loss context, this means they are not able to procure improved post-harvest technologies like refrigerated trucks and processing equipment needed to reduce loss of perishable nutritious food.

The Business and Sustainable Development Commission, in a study of the market potential of food-related SDGs, estimated that reducing food loss and waste could be worth an estimated $155 – $405 billion a year by 2030.  Although donors and investors are starting to wake up to the opportunities, the options for impact minded investors interested in investing in nutrition and improving food systems are currently limited.

I attended the ANDE Network Annual Conference a couple weeks ago in Virginia and was surrounded by like minded organizations that were supporting SMEs or as ANDE calls them, Small and Growing Businesses (SBGs) with a range of technical and financial assistance. There were also a variety of impact investors like Alphamundi and development investors like the Overseas Private Investment Corporations (OPIC) that are including gender, jobs and environmental sustainability in their investment criteria, but nutrition indicators were no where to be found.

To help fill this gap, GAIN will be introducing a Nutritious Food Financing Fund at the end of the year, which will offer a unique platform to direct investments into nutritious food SMEs, including those involved in processing, distribution and storage of nutritious food.  Our goal is to demonstrate their potential to achieve both a financial return and greater nutrition impact and to highlight important criteria for investors interested in investing with a food system lens. Every company considered for inclusion in the fund will have their nutrition potential vetted by GAIN and companies that are good candidates for reducing food loss will be prioritized.

Of course, we need to remember that finance is only one constraint that small businesses face.  There is little point in enabling access to finance if they still have to contend with burdensome policy environments, poorly functioning infrastructure and lack of management capacity, skills or support networks.   Greater collaboration between sectors to address these challenges collectively remains crucial to overall success.

Investing in the growth of small companies like Coolins FoodBank is one of the most sustainable and scalable ways to make nutritious foods more directly available and improve diets, especially among the poor. It is also an opportunity to invest in a new generation of innovative, well-managed and competitively positioned SMEs that are transforming food value chains and selling safe, nutritious food to communities most vulnerable to malnutrition.

Tags:  Acceleration  accelerators  Access to Finance  Africa  Agriculture  Business Models  capacity development  East Africa  emerging markets  entrepreneurship  impact investing  impact investment  innovation  Investors  missing middle  small and growing agrobusiness  supply chain  sustainability 

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