Cracking into the kola nut business: Mission to Cameroon
|Slideshow: Adventures in Africa|
Editor's note: This summer, four graduate students at UC Berkeley's Haas School of Business headed to Africa ... to take a look at the kola nut business. These were not would-be plantation owners. Rather, the students went to Africa to develop a business plan for local farmers to sell indigenous forest products and, in turn, to slow the slash-and-burn deforestation common throughout the tropical forests of the world.
As the students write in the following story, "The challenge of protecting the world's dwindling sanctuaries of biodiversity is immense. Providing options and answers that address the complicated reality of rural poverty is also an imposing goal. At first glance, doing both at the same time appears to either require a miracle or an exercise in wishful thinking. People all over the world, however, have begun to realize that the best way to protect the earth's precious resources and rich biodiversity is to ensure that someone's livelihood is connected to the health of the world's forests."
Deforestation, a growing population, and poverty are inextricably linked. More than a billion people now live within the world's 19 forest biodiversity "hotspots" and population growth in the world's tropical wilderness areas is more than twice the world's average rate of growth. Over 90 percent of those who live on less than a dollar a day depend fully or in part on forest products for their livelihoods.
The research performed by the Haas students extends well beyond the kola nut business. As they report, "At the end of our visit, we produced several deliverables that we hope will assist ... in furthering both the kola nut cooperative, and the larger field of sustainable and profitable agroforestry. We tried to design tools that could be adapted to a variety of products and contexts, and used the kola nut cooperative in Cameroon as a case study example."
BERKELEY – International Business Development is a class sponsored by the Haas School that sends teams of 4 MBA (Masters in Business Administration) students to a country outside the U.S. to work with a client, usually corporate. Only a few clients are non-for-profit and located in developing countries. The projects are assigned early in the spring semester, and the MBA teams work closely with the client during the entire semester. At the conclusion of the semester, the 16 teams travel to their designated countries to take on their project. This story is a look at one of those 16 teams and an overview of their experience and impact.
Our first meeting as a team consisted of a treasure hunt at Berkeley's Tilden Park organized by the International Business Development Professor. As our team bonded during the treasure hunt, we discussed our credentials and quickly realized the four of us had one thing in common: we all had specified Africa as a place in which we would like our International Business Development project to take us.
We found out a few short weeks later that our team – Steve, Jonathan, Loic and Mike – had been assigned to Africa. We were headed to Cameroon.
Our client was the World Agroforestry Centre, often referred to as ICRAF. ICRAF is a non-governmental organization headquartered in Nairobi, Kenya. The organization has regional offices throughout the developing world, and specializes in the research and development of techniques leading to more productive and environmentally-sound land uses. The organization does so by combining the growth of forest products (i.e., fruits, nuts, etc.) with agricultural crops. However, the mission of the organization does not stop at better land use: the institute strives to protect the environment by reducing poverty and by combating deforestation.
Agroforestry is widely considered to be an effective means to mitigate the decline in the diversity and health of useful forest trees and to diversify rural families' income. Recent research also shows that there is a strong demand for non-timber forest products from the humid forest areas of Cameroon. Decisions had to be made about which trees should be domesticated; the trees had to produce products consumed locally but also had to have the potential to generate income at local, regional and international markets. This exercise helped scientists and partners identify the main high-value fruit trees widely used by the farmers of the region. The species Cola was one important fruit tree targeted for cultivation, seeding this partnership between UC Berkeley's Haas School of Business and ICRAF.
Zac Tchoundjeu, director of the institute's West African regional office, was our contact prior to our arriving in Cameroon. Tchoundjeu joined the Beahrs Environmental Leadership Program (ELP) at UC Berkeley in the summer of 2003. The ELP was established at UC Berkeley's College of Natural Resources to link environmental and natural resource science and policy at Berkeley with environmental professionals around the world. Dr. Tchoundjeu developed a proposal on the marketing of indigenous fruits and plants that called for business expertise from a team of Haas students. Our program director, Sebastian Teunissen, selected us for the project and off we went!
Our project consisted of developing a business plan for the institute's first cooperative. The institute's overall objective is to organize farmers into cooperatives throughout the West African region, so that farmers can 1) increase their bargaining power in the supply chain, and 2) take advantage of scale economies to move beyond production and into some distribution services. Here, the institute's mission is clear: to diversify farmers' production away from cash crops such as coffee and cocoa and supplement their incomes with sales from indigenous products. By increasing farmers' incomes, the institute hopes to reduce the slash-and-burn activities common throughout the humid tropical forest of Cameroon and the rest of West Africa. The cooperative was created around the marketing of an indigenous product, the kola nut. The kola nut is like a Brazil nut, only smaller. It grows on tall trees, which produce pods containing three to five kola nuts. Kola nut production is very seasonal, and usually takes place from late spring to mid-fall. When kola nuts are mature, farmers climb the kola nut trees to slash the pods from the branches.
The kola nut is bitter, and supposedly provides energy when eaten (as such, it is similar to drinking coffee for the caffeine it provides). We were also told that the nut is a good agent against hunger, and some types of kola nuts even have aphrodisiac characteristics, though none of us can or will attest to that. The kola nut's greatest value, however, is cultural: people living in the West region of Africa (i.e., Cameroon, Nigeria, Gabon, Congo, etc.) traditionally "break" kola nuts when guests visit their house. This gesture is a sign of hospitality. Finally, historically, kola nut consumption was not limited to local African markets. The kola nut was one of the original ingredients used to make today's most famous soft drink, Coca Cola (cola being the other spelling for kola). Today, however, cola manufacturers do not use kola nuts in their secret recipes but rather rely on other ingredients.
Our study of the kola nut cooperative in northwest Cameroon created a business plan that is intended to be applicable to other indigenous agricultural products on which the World Agroforestry Centre is focusing its research efforts. Our business plan identified market opportunities, provided a framework for creating a sustainable competitive advantage, analyzed the cooperative's production and distribution costs, and studied the cooperative's finances.
In order to do this, we conducted many field interviews with farmers to understand the market structure they faced, their costs of harvesting and marketing their fruits, and the difficulties they faced in selling their products. We also interviewed other agents involved in the kola nut industry, such as wholesalers (called "buyam/sellam" in Cameroon because of the buying and selling activities in which they specialize) and retailers. These various economic agents' reactions to our study were mixed: farmers were, for the most part, open to the idea of talking to us, since they worked closely with the World Agroforestry Centre. On the other hand, wholesalers and retailers were much more secretive: in general, they did not want to share information with us, and the data we gathered often differed dramatically from one interview to the next. We therefore had to verify the information through multiple interviews and by seeking the institute's assessment of the information.
Next > 2 - Adventures in Cameroon including lessons in the bush country and a threat of jail