Global Trade in a Nutshell

June 29, 2011 by Thomas Leonhardi

SAP TV went to Ghana to report on SAP's role in the African Cashew Initiative (photo: SAP TV)

SAP TV went to Ghana to report on SAP’s role in the African Cashew Initiative (photo: Thomas Leonhardi)

The Ghanaian cashew sector is an essential source of income for about 70,000 smallholder farmers. The African Cashew Initiative (ACi) aims to help these small-scale farmers increase productivity and income by offering training programs and materials. It is co-funded by the German development organization (GIZ) and the Bill and Melinda Gates Foundation.

One partner of the ACi project is SAP Research in Karlsruhe, Germany. Project lead Christian Merz and his team are exploring how mobile business applications can support smallholder cashew farmers and their cooperative in bringing the cashew nuts to market.

SAP TV spent one week in Ghana filming a video about the ACi project. On the following pages, SAP TV reporter Thomas Leonhardi describes the experience, from visiting a rural cashew buying station to touring the processing plant.

Check out the SAP TV video below. And be sure to take a look at the SAP TV web site for more videos about SAP.

Next Page: SAP TV visits a rural cashew buying station

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The buying station is actually just a scale in a small village where the farmers meet (photo: Thomas Leonhardi)

Visiting a rural cashew buying station

From Ghanaian capital Accra it is a 10-hour drive to reach Wenchi, which lies in the north-west part of the country. There we meet SAP researcher Tirdad Rahmani, one of the software developers for the ACi project.

With Rahmani, we drive another two hours on dirt roads until we reach the buying station in a small village called Paninamisa. The local farmers’ union put a scale in the village, and now cashew farmers come here, carrying 90 kilogram bags of raw cashews on their backs.

Using smartphones instead of motorcycle messengers

Each of these bags is labeled with a barcode. Using a smartphone in conjunction with the software prototype from SAP Research, the local buyer scans the barcode, which makes it possible to record every transaction and track each bag. The data is sent directly to the farmers’ union via smartphone. And the union, which controls the daily price for cashews, sends price information to buyers on their smartphones.

Farmer Alhaji Amadu Mahamad likes knowing that he’s getting a fair price on his cashews, negotiated by the union. Immediately after his bags are weighed and priced, he gets a receipt via SMS on his mobile. Mahamad tells me that for many years he worked as a tailor, but since he started harvesting cashews, his income has increased significantly. He plans to buy cattle to expand his farming business.

Yahya Abu Baro, secretary of the farmers’ union, points out that the software from SAP Research helps him avoid a lot of paper work. And he no longer has to use motorcycle messengers to inform farmers about price changes.

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SAP software allows local buyers to record transactions via smartphone (photo: Thomas Leonhardi)

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The software prototype, Cashew Manager, provides reliability and transparency (photo: Thomas Leonhardi)

The benefit of software

Using the software prototype Cashew Manager, Yahya has an overview of all the transactions on his laptop. Cashew trading is becoming more transparent and reliable in rural areas, which means better forecasting and planning ability for multinational retailers and traders like Kraft or Olam. And they can also offer more transparency to consumers who are interested in fair trade and the traceability of food products.

With SAP software in place from the very first transaction of the raw nuts, they can essentially track the exact origin of each bag of cashews.

“The goal of this research project is to connect small-scale farmers and local buyers with processors and multinationals,” says Rahmani. He underlines that SAP´s involvement is driven by the viable business opportunity, and not only a sense of corporate social responsibility.

Entering the market at the bottom

Project lead Christian Merz explains why the ACi project is strategically important to SAP: “Cashew trade is a typical representative of agricultural value chains that involve business partners across the globe. We are improving the business collaboration between informal economic participants like smallholder farmers and the established economy that also comprises existing SAP customers. Considering similarities and overlaps with other crops like coffee, cacao, and shea-nuts, the project offers an entry point to an attractive future market for SAP at the bottom of the economic pyramid.”

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Most of the workers who process the raw nuts are female. (photo: Thomas Leonhardi)

Cashew processing at MIM Cashew

To see what happens to the raw cashews we drove about three hours to MIM Cashew, a processing plant in the small town of Mim. Here, in the building on a former chicken farm, around 600 mostly female workers are drying, peeling, kernel grading, sorting and packaging the cashews. Peeling is a hard and dangerous job: The juice between the shell and the nut is acidic. “The women have to put oil on their hands to protect them,” explains finance manager Joseph Yeung.

MIM Cashew delivers its high quality cashew-kernels to multinational companies like Kraft Food. Not long ago, Yeung and his colleagues decided to implement SAP Business One. “It´s a smart tool to steer finance, inventory, logistic, sales and payroll,” says Yeung. Last year, MIM Cashew processed 1300 tons of raw cashews. And this year, the rate is increasing.

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Processed cashews are sold to multinational companies like Kraft or Olam (photo: Thomas Leonhardi)

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