REPORT. Preliminary Go-to-Market Options for Portable Shallow Bed Batch Dryer. AflaSTOP: Storage and Drying For Aflatoxin Prevention

Transcription

1 REPORT Preliminary Go-to-Market Options for Portable Shallow Bed Batch Dryer AflaSTOP: Storage and Drying For Aflatoxin Prevention This report is an initial snapshot and reflects findings through July The strategy and data may change based upon additional testing and pilots. Please contact AflaSTOP Chief of Party, Sophie Walker for up todate information.

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3 Prepared by: Marius Rossouw Design Engineer In collaboration with: Sophie Walker Project Manager catapultdesign.org Billions of people lack access to life's basic needs. We design and implement human-centered products to help them thrive. This work was carried out as a partnership between Catapult Design and ASI through the AflaSTOP project to identify potential drying technology suited to support post-harvest handling devices for maize smallholder farmers. 3

4 TABLE OF CONTENTS 1. Background Target Market Target Customers Smallholder farmers Climate (Rainfall and/or humidity) Harvest size Agricultural service provider Potential profit margins based on operational cost and service charges Upfront investment of the service related equipment Product Offering Description Product attributes Manufacturing Requirements, Material Breakdown and Proposed Fabrication Sector Drying air supply unit estimated material cost breakdown Shallow-bed estimated material cost breakdown Possible Nairobi manufacturing outlets Product Financing & Profitability Product financing Profitability - expenses Transportation of the dryer to the client Labor costs - dryer vs. traditional methods Fuel cost associated with the drying air supply unit power source Fuel cost associated with firing the furnace (maize cobs) Equipment maintenance cost Estimated cost and proposed service charge breakdown (per 90 kg bag/day) Profitability savings/income Drying dynamics Willingness to Pay smallholder farmer Willingness to Pay agricultural service provider Proposed Marketing Strategy Major Risks, Issues or Obstacles Inflated fabrication cost high risk Selling dried maize at market for seed high risk Unachievable precision required for fan fabrication low risk Conclusion...15

5 LIST OF FIGURES Figure 1: Portable Shallow-bed Batch Dryer operating principles... 4 Figure 2: Drying air supply unit component breakdown... 7 Figure 3: Shallow-bed component breakdown... 8 LIST OF TABLES Table 1: Portable Shallow-bed Batch Dryer attributes... 5 Table 2: Dryer beta prototype fabrication requirements and Jua Kali capacity... 6 Table 3: Drying air supply unit material breakdown... 7 Table 4: Shallow-bed material breakdown... 8 Table 5: Informal vs. formal production cost comparison... 9 Table 6: Power source fuel operating cost during testing (for the Kenyan audience)*...11 Table 7: Estimated cost and service charge breakdown as informed by prototype testing....12

6 1. Background This report is an initial snapshot and reflects findings through July The strategy and data may change based upon additional testing and pilots. Please contact AflaSTOP Chief of Party, Sophie Walker for up to date information. 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 (henceforth referred to as the dryer ) as having the highest potential for further development and possible commercialization. The purpose of this document is intended to highlight insights into possible factors that could influence the dryer s go-to-market strategy as informed by lessons learned during research, design, development and prototyping. It is recommended that the enclosed information be validated against an extended pilot before considered as reliable inputs into a full-fledged commercialization and go-to market strategy. 2. Target Market Kenyan maize farmers have historically recognized the need to dry their maize down postharvest to safe long-term storage moisture levels to prevent losses due to mold, discoloration and in extreme cases, germination. Smallholder farmers typically farming one (1) to eight (8) acres - have traditionally done so by laying their maize out in the sun first as cobs and then as shelled maize for around eleven (11) to thirteen (13) days, reducing the moisture content from around 18-22% to around 15%. Research has however shown that the recommended safe storage moisture level for maize is 13.5% and with the recent introduction of hermetic storage bags (e.g. PICS), a greater emphasis is placed on getting moisture below 13.5% since in reduced oxygen conditions at higher moistures over time yeasts can start to flourish. Achieving this lower moisture level is challenging using traditional drying methods since more moisture has to be evacuated from the core of the kernel, requiring additional time in the sun or an external heat source. Certain weather patterns where rain coincides with the harvest often means that farmers are unable to achieve this moisture level using traditional drying methods. Currently no on-farm drying alternative for smallholder farmers exist with the only option being very limited commercial drying operations located in major cities/government facilities. Even with commercial drying establishments offering competitive pricing at the point of service, the logistical considerations and expenses associated with transporting maize back and forth from the homesteads to the dryers has proven to be a barrier to adopting this solution. Smallholder farmers are for the most part unwilling to store their maize off their farms and unwilling to mix their maize with another farmer's maize to share associated drying costs. This shortcoming has identified a need for an affordable on-farm drying solution. Even though most of the smallholder farmers currently rely on traditional methods to dry their maize, the possibility of offering a small scale drying alternative shows promise. The best analogous to reference is their adoption of mechanical shelling over the past decade. Historically farmers shelled maize by hand by beating maize cobs contained in a sack at no cost. This has however changed over the past decade with close to 95% of smallholder farmers in the North Rift region of Kenya adopting and paying for mechanical shelling (offered by a shelling service provider) as their preferred method of shelling. 1

7 3. Target Customers Target customers for a new drying technology within the above mentioned target market can be divided into two main categories: (1) the technology acquired as an on-farm investment by the farmer vs. (2) the drying technology acquired by an agricultural service provider offering a mobile drying service to the farmers. Each target customer will have different factors at play that influences the value proposition of the new technology and if purchasing the technology offers a better return on investment than paying for a drying service. Below follows a brief discussion around what was learned during prototype testing as it relates to potential customer s desirability for a new drying technology and willingness to pay for the device or the service Smallholder farmers Prototype testing revealed that two main factors influence a smallholder farmer s decision around desirability and willingness to pay for a new drying technology; climate and the size of their harvest. Climate considerations often drive the decision on where or not an alternative drying technology is required/desired with the harvest size playing a bigger role in how this technology will be implemented Climate (Rainfall and/or humidity) Post-harvest maize processing is often influenced by the weather conditions during and after harvest and how it impacts the farmer s ability to dry maize using the traditional sun drying method. Farmers that had harvested during historical rainy periods were much more interested in an alternative drying technology and willing to pay for it as they have a clear understanding of post-harvest losses associated with not being able to dry their crop down to safe storage moisture levels. Farmers have been noted as willing to pay close to triple for a drying service if the weather forecast for the next few weeks after harvest indicated rain Harvest size The size of a farmer s harvest often influences a farmer s decision on whether a new or alternative drying technology is desired and whether it makes sense to procure it as an on-farm investment vs. paying for a service. Some smallholder farmers (1 acre and under) are of the opinion that their harvest is small enough and that they are able to store maize cobs or shelled maize effectively until the weather clears and they can dry using traditional methods. These are often farmers who shell their own maize by hand and are for the most part reluctant to spend anything on post-harvest processing since they have historically done all the labor themselves and place little to no value on their time spent on these activities. Larger smallholder farmers (1 to 8 acres) currently pay day laborers to tend their maize as it is drying in the sun. The labor cost associated with this varies from area to area as well as the quantity of maize being tended. Another factor which pre disposes the farmer to paying for a rapid service is if that farmer has off farm employment and the farmer considers it more profitable to return to this employment than to sit watching maize dry (workers need to be supervised or maize disappears). Even with larger harvest, paying for a service may still be a better financial decision than investing in an on-farm solution. The transition point of what harvest size will determine which direction to go is geographically sensitive and currently unknown and will require a proper analyses of all the factors at play. 2

8 With this said, larger smallholder farms in historically wet harvest season areas are considered to be the most promising prospective customers for adopting a new/alternative maize drying solution, either by investing in a dryer or paying for a drying service Agricultural service provider Similarly, two main factors influence an individual s desire or ability to get involved in a new agricultural service offering. Below follows a brief discussion around these factors, highlighting top level considerations and how they may affect the dryer s go-to-market strategy Potential profit margins based on operational cost and service charges Supply and demand greatly influences the profitability of an agricultural service with service charges proportional to the value of the commodity. The demand from the above mentioned smallholder farmers will ultimately influence if agricultural services are needed and therefore closely tied to their determining factors. Service charges vary also from area to area with some areas charging double due to higher labor rates. The distribution of potential client will also have an effect on profitability since transportation related expenses are often the major determining factor on profitability Upfront investment of the service related equipment The investment associated with the transportation requirement to offer an agricultural service is often the biggest barrier to entering the market. Individuals often find the expenditure of acquiring both the machine and the transportation simultaneously too great of a challenge and will often acquire transportation first and use it to generate an income that will fund the purchase of additional equipment at a later stage. Where possible, equipment is purchased with the expectation that it will pay for itself within 2-3 years. When taking the abovementioned factors into account it becomes evident that the most promising target customer for purchasing the dryer as part of a service offering is an agricultural service provider that is already operating (or an individual with the required transportation already acquired) in a densely populated, wet maize harvesting area. 4. Product Offering 4.1. Description The dryer is a portable, on-farm drying solution that enables smallholder Kenyan farmers to dry their maize down post-harvest to the recommended moisture levels. It offers a solution that closely resembles the traditional method of lying maize out in the sun to dry, with the major difference in that forced hot air is used as the drying mechanism and is capable of operating under inclement weather conditions since it relies on burning biomass to generate the required heat and not the sun. The dryer is either transported to (as a service) or stored at the location (as an on-farm investment) where recently shelled maize is being stored and assembled within 10 minutes by erecting the modular shallow-bed and connecting it to the drying air supply unit. Five (5) to six 3

9 (6) bags (+/- 500 kg) of wet maize are loaded onto the shallow-bed and the furnace is ignited. Heated clean air needed for drying is generated through convection heat transfer by blowing ambient air over heated heat exchanger (HX) channels. The HX channels are heated by drawing hot furnace exhaust gasses through them and out the chimney. The hot exhaust gasses are constantly generated by steadily burning fuel (maize cobs) in the downdraft furnace. The heated air is blown into a canvas plenum with maize suspended on a perforated mesh bed above it. The air pressure builds up in the canvas plenum and forces heated air past the maize kernels with surface moisture drawn away. The maize is stirred at regular intervals to allow the moisture trapped in the lower layers closest to the heated air to escape. Once dry, the maize is offloaded via an offloading canvas chute for storage. The dryer can dry the 500 kg wet maize (+/- 20% moisture content) down a safe storage moisture content of +/- 13.5% in around four (4) hours (+/- an hour depending on the actual moisture content of the maize). Shallow-bed Drying Air Supply Unit Combustion Exhaust Warm Drying Air Combustion Air Cool Ambient Air Figure 1: Portable Shallow-bed Batch Dryer operating principles 4.2. Product attributes A product s attributes are the characteristics that define a particular product and may affect a consumer's purchase decision. Product attributes are often divided into two main categories - tangible (physical in nature) or intangible (not physical in nature). 4

10 Table 1: Portable Shallow-bed Batch Dryer attributes Attribute Complete Dryer Drying Air Supply Unit Shallow-bed Unit Tangible Size - Operation 3 m x 2.5 m Footprint 1.65 m x 0.6 m x 1.4 m 2.4 m x 2.4 m x 1.2 m Size - Transportation 1.4 m x 1.3 m x 0.9 m 0.9 m x 0.6 m x 1.3 m 1.0 m x 1.0 m x 0.5 m. Attribute Complete Dryer Drying Air Supply Unit Shallow-bed Unit Stock PVC White - Color/s Various Bed Agricultural colors Heat Canvas resistant Agricultural colors - Weight 295 kg 160 kg 135 kg Material composition Finish Intangible Efficiency/Capacity Replication Ease of Use/Transport Projected Material Cost (KES) Projected MSRP - Formal (Nairobi) Projected MSRP - Informal (Jua Kali) Projected Durability/Longevity* Projected Maintenance Schedule Local, low cost material to promote sustainability Stock, Painted/ Painted Heat Resistant Dry 500 kg wet maize (+/- 20% moisture content) down to 13.5% in +/- four (4) hours (+/- 1 hour depending on actual moisture content of the maize) Simple design requiring minimal fabrication skills and tools Modular and collapsible. Set-up and teardown in under 10 min respectively Mild Steel, Cast Iron, Plastic, Copper, Aluminum Stock, Painted/ Painted Heat Resistant Consumes 10 kg cobs and 400 ml petrol/hour. Sheet metal and structural steel fabrication knowledge Operation requires only adding cobs to the furnace Mild Steel, Canvas, Rubber, Leather, Plastic Stock, Painted, Galvanized Recommended capacity of 500 kg Structural steel and fabric fabrication knowledge Processing similar to traditional methods 55,627 39,942 15, , , years** 15 years 15** years Lubricate bearings weekly, Service engine monthly, Replace HX panels every 2 years. Repair lesions in canvas and coffee mesh as they occur, * Durability/Longevity with proper maintenance and associated cost. A longer pilot is needed to confirm the estimation. **The PVC canvas is prone to degradation over time (exposure to environmental factors and wear and tear) and will most likely need to be replaced with in 3-5 years. 5

11 5. Manufacturing Requirements, Material Breakdown and Proposed Fabrication Sector As a starting point to better understand where the dryer could possibly be manufactured, analogous agricultural equipment supply chains (shellers, posho mills, cob grinders, etc.) were analyzed to better understand how a new technology came to the Kenyan market and what happened beyond its initial introduction. It was soon clear that new technologies are often introduced from abroad (often India or China) where it was manufactured in large numbers, bought in Kenya (second hand) and reverse engineered (copied) by the local informal Jua Kali fabricators, establishing a locally manufactured Kenyan market. Customers would then buy directly from the local fabricators and return equipment for maintenance when needed. This reality was greatly considered during the development phase of the dryer design with fabrication processes chosen to enable a similar approach. With this in mind, a material cost breakdown and manufacturing processes and equipment used to fabricate the major components of dryer beta prototype follows below with an assessment made on whether it is replicable by the Jua Kali fabricators in a similar manner as other agricultural equipment as mentioned above. It was thought that having representative fabrication numbers will paint a clearer picture on the projected final overall cost of the dryer vs. having a potential fabricator underbid the device to win the tender, potentially impacting the commercialization strategy negatively. Table 2: Dryer beta prototype fabrication requirements and Jua Kali capacity Component Material Cutting of material Shaping of material Drying air supply unit Joining of material Jua Kali capability Outer body and chimney 1 mm Mild steel plate Plasma cutter*/ Angle grinder/metal guillotine shear**,metal snips, Hand drill Angle grinder, Metal break*** MIG****/Arc welder, Pop rivet machine YES Inner dividing walls 2 mm Mild steel plate Plasma cutter/angle grinder Metal break MIG/Arc welder, YES HX channels 1 mm Mild steel plate Metal guillotine shear, Metal snips Metal break N/A YES, attention to tolerances important Custom fans 2 mm Mild steel plate, 50 mm shaft Plasma cutter/angle grinder, Hacksaw, Drill press/lathe Angle grinder, Sheet metal roller MIG/Arc welder YES, elevate skill level required Shafts and bearings ¾ shaft Hacksaw Angle grinder /Metal file Wrench set YES Pulleys 2.5 and 3 pulleys with pilot holes Drill press/lathe N/A Wrench set YES 6

12 Component Material Cutting of material Shallow-bed unit Canvas plenum Shallow-bed frames and panels PVC Canvas 25 mm Square tubing, 25 mm Angle iron, 20 mm Flat bar, 2.5 Wire mesh, Coffee mesh Scissors Hacksaw/Angle grinder, Metal snips, Hand drill Shaping of material N/A Angle grinder Joining of material Industrial sewing machine MIG/Arc welder, Pop rivet machine *Plasma cutters are not common. Angle grinders are and can easily perform the same function. ** Metal guillotine shears are not common. Angle grinders are and can easily perform the same function. *** Metal breaks are not common. Railway tracks and hammers are and can easily perform the same function. ****MIG welders are not common. ARC welders are and can easily perform the same function Drying air supply unit estimated material cost breakdown Jua Kali capability The drying air supply unit consists of a v-belt driven custom fabricated 450 mm blower fan and an off-the-shelf 300 mm exhaust fan driven by a 5.5 HP petrol engine. YES YES Chimney Heat exchanger/hx 5.5 HP petrol engine operating at 2200 rpm 300 mm Furnace exhaust fan Cob drying basket V-belt and pulleys Downdraft furnace 450 mm Drying air supply fan Figure 2: Drying air supply unit component breakdown Table 3: Drying air supply unit material breakdown Major Components Material Quantity Material Unit Price (KES) Total Material Cost (KES) Main drying air supply body 1 mm Mild steel 4 x 8 sheet (Black plate) mm Mild steel 4 x 8 sheet (Black plate) x 20 mm Mild steel 6 m flat bar Mild steel expanded metal mesh (4 x 8 ) Heat Exchanger 1 mm Mild steel 4 x 8 sheet (Black plate) mm Custom blower fan 2 mm Mild steel 4 x 8 sheet (Black plate) mm Mild steel custom fan hub mm Custom exhaust fan 2 mm Mild steel 4 x 8 sheet (Black plate) mm Mild steel custom fan hub

13 Major Components Material Quantity Material Unit Price (KES) Total Material Cost (KES) 5.5 HP WASP WSP160 4-STROKE 25' inclined, single cylinder, air cooled petrol engine Drive mechanism Type A v-belt Pulleys with 10 mm pilot holes (2 x Type A, 1 x Type B) /4" Mild steel shafts Bearings (2 x F204, 2 x P204) Total Material Cost KES 39, Shallow-bed estimated material cost breakdown The Shallow-Bed consists of a four (4) 0.9 m x 0.9 m shallow-bed panels placed inside a PVC canvas plenum on top of four (4) interconnecting collapsible frame supports. The canvas sidewalls are suspended by a rope sewn into the canvas and clipped onto the top edges of the side stanchions. The PVC canvas is secured around the perimeter by pinching it between the bed panels and the frames, avoiding maize leaking into the plenum. PVC canvas rainfly Offloading chute 0.9 m X 0.9 m Panels Collapsible interlocking frames Rainfly stanchion Perimeter rope Connecting duct PVC canvas plenum Figure 3: Shallow-bed component breakdown Table 4: Shallow-bed material breakdown Major Components Material Quantity Material Unit Price (KES) Total Material Cost (KES) 1.8 m x 1.8 m Shallow-bed (4) x 0.9 m x 0.9 m Bed and Frame sections 25 x 25 x 3 mm Mild steel 6 m angle iron x 25 x 1.2 mm Mild steel 6 m square tubing /4" Galvanized steel coffee mesh (4 x 0.9 m x 0.9 m) x 20 mm Mild steel 6 m flat bar " Mild steel wire mesh (4 x 8 ) PVC Canvas Plenum PVC Canvas Rainfly Total Material Cost (KES) 15, The table below highlights the cost comparison of hand tool vs. projected automated fabrication production when purely considering the material cost as a baseline as outlined by one 8

14 representative local fabricator that falls in the middle between formal and informal Kenya Stove. Table 5: Informal vs. formal production cost comparison Informal Fabrication Sector (Local Jua Kali) Formal Fabrication Sector (Nairobi) Material Costs 55, , Workshop Overhead 10, , Machining Time 5, Labor 18, , Profit 41, , VAT 17, Total Manufacturing Cost (KES) 125, , * This is an conservative estimate since there is doubt that Jua Kali fabricators are paying VAT on material and that since the formal sector will have paid VAT on materials, only additional VAT will be added the other costs. With the assumption that hand tool fabrication is representative of the informal Jau Kali sector and automated production the formal sector, one would think that having a formal fabricator manufacture the dryer makes the most business sense. The reality however is that local formal fabricators often have to overinflate the price of goods sold to try and maximize profit before their designs are copied in the field by the informal sector. It is unclear at the moment if this will be the case for the dryer since little to no design investment is required and formal fabricators will be able to compete with informal fabricators based on production numbers. Another factor to consider is the fact that the informal Jua Kali sector build to real demand (cash deposits), while formal fabricators build on specification, placing the devices on distributor's floors and sell to walk in customers. There is however a risk associated with the informal Jau Kali possibly leading the manufacturing charge since no physical model of the dryer currently exists to be replicated as per the current practice. The concern is that they may attempt and fail to produce the dryer referencing only soft copy manufacturing documentation (an uncommon practice) as minor misinterpretations can potentially impact the dryer s performance in a grave way. The recommendation therefore is to initially commission a number of seed dryers using more formal fabricators within Nairobi, supplying them with detailed engineering drawings and Computer Aided Design (CAD) models. These dryers would then be used to entice and possibly train the informal Jua Kali sector to confidently and accurately reproduce the design. Since minimal additional design effort and no special tooling is required to produce the dryer, profit will be immediate and there will be no delayed breakeven point for the manufacturers Possible Nairobi manufacturing outlets Kenya Stove (Catapult Design s fabrication partner) was contracted to explore and identify a limited number of possible dryer manufacturing outlets in Nairobi with the following establishments in the Kariobangi area of Nairobi identified and visited. 1. Nyaweco Engineering Works/Kariobangi Light Industries 2. Special Fabricators 3. Jarongo Metal Works 4. Elvo-Tech Engineering Works 5. Fathmos Engineering 9

15 These establishments were identified based on their current production capacity of comparable agricultural equipment. Detailed information can be attained in the report submitted: Current Manufacturing of Maize Shelling Machines in Nairobi, and Recommendations for the Manufacturing of Maize Driers, 03/19/2015 A major theme prevalent in the Nairobi manufacturing scene is that few establishments offer allinclusive services with components outsourced to neighboring specialty fabrication outfits, to be assembled by the contracting manufacturer. This makes it troublesome to confidently identify single manufacturing entities capable of producing the dryer. 6. Product Financing & Profitability 6.1. Product financing Structured financing for agricultural equipment is uncommon in Kenya with interested buyers either buying equipment outright in cash by saving up for approximately two (2) years (farming or doing other work), or by reaching an agreement with equipment fabricator to take possession of the machinery on a 50% deposit with the balance paid monthly during the subsequent operating season/s. A purchasing agreement is signed by the fabricator, new owner and witnesses who know the new owner with the equipment paid for in full within two (2) seasons or one (1) year with no interest charged. This means that large equipment (tractors and some tractor mounted equipment) is bought second hand (used) from friends, family or neighboring farmers with smaller, more affordable equipment often bought new and paid for cash on receipt. This will most likely be a similar model used for acquiring the dryer Profitability - expenses The measure of profitability will differ greatly for the two target customer profiles. A smallholder farmer will need to balance upfront investment with cost saving associated with shortening drying times, decreased post-harvest losses and expenses associated with operating and maintaining the dryer. For an agricultural service provider, reconciling transportation related expenses will impact service charges. A general discussion around these factors with how they relate to each customer follows below but has yet to be analyzed for each profitability case. Even though a breakdown of the estimated operating cost (as assessed during prototype testing) is included, it is important to note that an exact profitability analyses may only be possible once accurate numbers associated with a real world scenario are assessed, best done during a pilot implementation Transportation of the dryer to the client. When asked about transportation, agricultural service providers commented that clients were often served in sequence as they appeared on a service route and rarely did an operator make a special trip to serve only one client beyond clients at closer proximities. Some services were also offered concurrently (like shelling and animal feed cutting/grinding), providing multiple income opportunities during the same transportation related expense. An estimation of 20% of the service charge would often be allocated to cover these transportation expenses. They commented that ideal situation would be to move the dryer concurrently with other agricultural services already provided, possible leaving it behind with and operator and collecting it again once drying has concluded. 10

16 Labor costs - dryer vs. traditional methods A discussion around agricultural service labor revealed laborers are hired for the season, paid daily and that labor rates are mostly tied to productivity. Total labor rates are often estimated at around 10-15% of the related service charge depending on location and intensity of the physical excursion and or the associated responsibilities. Labor rates in some areas were often quoted at twice that of labor rates in others, however, service charges were also double in the areas with higher labor rates. Common manual labor rates often ranged between KES per day with more skilled operator rates varying from 1,500 2,500 KES per day. Even though the dryer can fully be assembled, operated and disassembled by one person, the norm in Kenya is to have two (2) people associated with any given service (one operator and one manual laborer) and this will most likely be the case with offering a mobile drying service. As for the smallholder farmer, the number of laborers required will be determined by the quantity of maize to be tended. Day labor rates vary from KES/day with one laborer tending around ten (10) 90 kg bags at a time Fuel cost associated with the drying air supply unit power source The current power configuration was configured post user-testing to evaluate the fuel economy of a commonly used but oversized 5.5 HP petrol engine. An estimation based on actual drying performance achieved during field testing follows in the table below. It is possible to take this approach since the dryer s power selection has no influence on drying performance, only operating cost. Since the fan torque requirement is low the petrol engine can operate at idle (2100 RPM). Table 6: Power source fuel operating cost during testing (for the Kenyan audience)* Total runtime (hours) Fuel consumption (ml/hour) Total % MC drop Total Fuel 104 KES/liter Avg. cost (KES)/%MC drop Avg. cost (KES)/90 kg 104 KES/liter 5.5 HP Petrol Engine 6: : * Numbers in this table are accumulative over several days with the average associated fuel cost derived accordingly Fuel cost associated with firing the furnace (maize cobs) Initially it was thought that the cobs needed to feed the furnace would always influence the operating cost and had to be included in the calculations. This was however proven to be an incorrect assumption as during user testing farmers argued that money made by selling the cobs to the dryer operators ( KES/20 kg bag) would just be paid back to the operator in higher drying charges. All the farmers involved during testing had sufficient amounts of cobs and were willing to offer them free of charge, not expressing any concern over the amounts that were consumed during the drying operation (+/- 10 kg/hour). Cobs do however have a value, are generally controlled by women, and are traditionally used for animal feed and cooking fuel and could potentially influence the operating cost where alternative feed or cooking fuels are not available Equipment maintenance cost Equipment maintenance cost is greatly dependent on the equipment being used, operator care, and the maintenance associated with the selected transportation to offer the service (for the 11

17 agricultural operator). Conversations with equipment owners concluded that around 20% of a service fee is often allocated to cover maintenance costs. Maintenance is often performed by the owner of the equipment themselves and when this is not possible, the equipment is returned to where it was originally fabricated or bought for repairs. Field testing was conducted over too short of a period to have a clear understanding of what maintenance schedule will be involved for the dryer and a longer pilot is recommended to asses this accurately Estimated cost and proposed service charge breakdown (per 90 kg bag/day) An estimate cost breakdown (as informed by prototype testing) over a two (2) year period follows below. Table 7: Estimated cost and service charge breakdown as informed by prototype testing. Asset acquisition and maintenance Fixed costs KES Comments Asset acquisition 126,000 Based on Jua Kali price without VAT Asset maintenance Replacement of furnace and plenum, (cost of material plus 12,801 (over 2 year payback period) 50% labor) Total cost to recoup (over 2 year payback period) 138,801 2 The desired payback period for operators Uses per 2 year Days per year Per day cost Operating cost Fixed daily costs Skilled labor 1000 Estimated according to sheller labor rates Unskilled labor 400 North Rift rates Fuel/hour power generation Average of fuel costs assessed during testing Fuel/hour heat generation* 0 Estimated at 10 kg/hour Variable costs Maize dried from 20% to 15% 13.50% Bags per day (5 bags per batch) Hours to dry maize hours to 15% and 5.5 hours to 13.5% Daily total fuel cost Cost per day per bag (90 kg) Fuel Labor Asset repayment and maintenance Total costs Costs plus 15% profit Proposed service charge * Cobs were provided free of charge by the farmers during prototype testing since ample alternative cooking fuel was available. This may not be the case in areas with limited fuels sources (with cobs being sold for around 80/KES/25 kg bag) and will need to be added to the equation. 12

18 6.3. Profitability savings/income Drying dynamics The desired final maize moisture level will have a profound yet currently unknown effect on the overall profitability of the dryer. Farmers perception on maize dryness was assessed and compared to accurate moisture readings during prototype testing and found to be inconstant and inaccurate with most farmers indicating a safe storage moisture content of around 15%, corresponding to known maize storage trends. It is assumed that this moisture content preference will impact the dryer s profitability since farmers will not be willing to pay for any drying beyond where they believe it is necessary for safe storage nor will operators to continue a service beyond what the farmers is happy with. This factor will most likely impact associated drying expenses since drying maize down gets exponentially more time consuming when a lower moisture content is desired and since the length of drying time directly effects the operating costs, it is believed that neither farmer or operator will be willing to pay or work to get maize to lower moistures than what they already find acceptable for safe storage.. Another unknown is how best to deal with one client having varying moisture content maize due to differing harvesting and shelling schedules. It is unclear how this factor may affect the dryer s profitability and possible drying methodologies and resulting expenses should be explored during a longer pilot Willingness to Pay smallholder farmer Smallholder farmers were asked during prototype testing to comment on their willingness to pay before drying commenced and after drying completed with interesting responses. Almost all farmers were hesitant to commit to a fixed number when asked beforehand and pricing ranged from 50 to 100 KES to dry each 90 kg bag. However, most farmers were willing to pay close to double their original amount once they witnessed the drying operation and the resulting dried maize Willingness to Pay agricultural service provider When asked what operators were willing to pay for the dryer, the majority preferred to have the unit to pay for itself within one (1) to two (2) years rather than committing to a set purchasing price. When pressed for a definitive number, the operators did indicate that they would pay between 70, ,000 for the dryer with this variation in price influenced by geographically sensitive factors such as labor rates and client willingness to pay for a drying service.. When asked what the operators would charge per bag to offer a drying service all of them commented that it depends on demand and the price maize is currently fetching at market. The higher the demand for services (in the event of inclement weather) and the higher dry maize price is trading (or the more farmers are penalized for supplying wet maize), the higher the drying rates will be. This is a similar model witnessed within the current shelling service provision. When pushed for answers, prices ranged from KES per bag. 7. Proposed Marketing Strategy The age old saying Seeing is believing drives a great number of successful product launches in developing economies, especially in agriculture. This philosophy often removes the potential new customer from learning the hard way, an approach that is very desirable particularly with a 13

19 population with limited disposable income. A farmer or agricultural service provider often introduces new technology into their native area after seeing it in action somewhere else. This is often true upon returning from visiting out-of-area friends or relatives or after attending agricultural expos showcasing new technology. Secondly word of mouth trumps most formal advertising efforts as trust is a big part of investing in your future. Aspirational branding (such as Kickstart International s Moneymaker water pump) does however have a part to play once awareness has been raised. Highlighting the fact that not only does the dryer offer a cost effective alternative to traditional methods but also takes the uncertainty of post-harvest losses due to mold out of the equation, could entice potential customers to inquire further. One approach to exposing potential customers to the dryer is by demonstrating it at an agricultural expo. There potential customers can interact with the product, ask operation related questions and get a sense of what the possible return on investment may look like. Since the hope is that other manufacturers will be interested in producing their own versions of the dryer, a second non-operational display unit should be available to dismantle, explore and document. It is recommended that where possible, an agricultural expo held in a historically wet harvest area, leading up to the next harvest season should be targeted as the launch platform. 8. Major Risks, Issues or Obstacles 8.1. Inflated fabrication cost high risk The risk that fabricators (irrespective of being formal or informal) will inflate the sales price of the dryer in order to maximize profits before their competitors joins the market raises great concerns around the proposed breakeven point of 2 years for the initial dryers. It is unclear if a longer payback period is a deal breaker and more research around this topic is recommended. Some seed funding may be required to assist the early adopting customers to break even within the desired 2 years. The hope is that prices will decrease over time as more and more dryers become available Selling dried maize at market for seed high risk When drying maize, it is recommended that the drying air temperature does not exceed 55 ºC for seed maize (restricted to avoid killing the germ) and 90 ºC for consumption (restricted to avoid cooking the maize kernel and cracking the outer most layer). The test data collected highlighted that there was a large variation in drying air temperatures achieved, some reaching close to 90 ºC. There are many factors that influence drying air temperatures and it is almost impossible to predict what temperature can be expected in a general use situation. The dryer was designed to minimize this possible overheating, however, as with most mechanical devices, it requires operator knowhow to run it properly and not exceed the recommended operating parameters. A major concern in areas where there is a high degree of saved seed practice is that farmers will unknowingly sell maize dried above 55 ºC at market as seed maize, resulting in failed crops for the farmer purchasing the seed. Since it is so difficult to confidently predict and maintain a constant drying air temperature due to all the influencing factors, it is recommended to limit this dryer design to drying maize for consumption only and any seed maize should be dried using 14

20 alternative methods. Buyers of seed maize should take care not to buy it from farmers who mechanically dried their maize with such information disseminated by extension officers Unachievable precision required for fan fabrication low risk A big cost saving on the dryer design is moving away from off-the-shelf imported to custom fabricated fans, cutting the potential cost by about a third. This however requires higher-level fabrication skills and some informal fabricators may be lacking that department. Balancing the custom fans are also required and takes some additional knowhow. The concern is that minor fabrication errors may lead to a drop in airflow performance, gravely impacting the dryer s overall efficiency and profitability. One solution could be to ether train one specialty fabricator supplying fans to the assembling contractor (as is often the case in Nairobi). The other would be to import fan blades only from abroad, cutting the cost by not having to pay for the electric motors, however, this is an unlikely route when demand for the dryer is still low. 9. Conclusion The proposed commercialization and go-to-market strategy is to have two dryers fabricated by formal manufacturing channels in Nairobi (one operational and the other displaying the inner workings), exhibited at an agricultural expo held prior to the next maize harvesting season in a historically wet harvest area. The dryer s inner working and related fabrication techniques should then be discussed with four (4) to six (6) informal fabricators for the target market area with the selected best informal fabricators (4-5) being given a contract from AflaSTOP to manufacture a dryer. Performance tests against the original dryers should then be conducted to asses if the informal sector is capable of manufacturing this design with changes made to the design as necessary. Once 5 8 performing dryers are available, an extended pilot should be conducted during the following maize harvest season to confirm the numbers stated within this document and to flush out any additional information still lacking to build a strong business analyses around the design and the proposed application. This information should provide the final details as to whether or not this product has real potential of wide spread adoption and scale. 15