Saturday, June 30, 2012

63a – Value chains – another example, soap

Let us explore another value chain related to the manufacture of soap. The theme sounds a bit simplistic but I think it can be of value to our rural communities. 
Soap is made out of one or more oils or fats mixed with an alkaline chemical such as lye, also known as caustic soda. These oils and fats can be of animal or vegetable origin. And lye can be obtained from hardwood ashes when properly treated with rainwater.
All these ingredients can be obtained in our rural communities and the resulting soap can be sold in all sorts of market places. Homemade soap is highly valued by many people. 
An example of a value chain related to the manufacture of homemade soap could be like this:
  • someone raises cattle, produces and sells animal waste to farmers
  • this person sells cattle to the local slaughterhouse
  • the butcher buys carcasses and sells meat
  • the butcher has a lot of excess animal fat that people do not want
  • a local person collects this animal fat to make tallow
  • the local baker uses firewood to bake bread
  • someone collects the ashes from the baker and other places
  • these ashes are used in the community latrines
  • with rainwater and ashes this person also makes lye
  • someone uses tallow and lye to make homemade soap
  • this person sells soap in the community and at the city market
Here we have a value chain, a sequence of activities that make use of existing resources, such as rainwater, ashes and tallow, to develop a new product, homemade soap, which in turn provides work for one or more people. This new product for this community, soap, has value. It has value to be bartered for other products and has value to generate monetary income when it is sold to other communities or at the nearby city market
In addition, certain local resources had no value or very limited value in the community, such as the case of ashes and unwanted animal fat, but now gained value for the local soap maker. Homemade soap is very valued by many people because it does not contain unwanted additives as is often the case with industrially manufactured soap.
Some of these activities may be performed by the same person in one community and by different people in another community. Each individual and each community will pick and choose what will make sense. Each one will choose what activities will be performed by one or more people. In some cases some experimentation will be necessary to find out what makes sense.  
It is very important to know what a community needs and consumes because that is what will sell. In some situations we may feel inclined to make what we know how to make, but that may not be what the community, the marketplace, needs or wants. Soap is always needed although there is already soap in the marketplace. But if this homemade soap is better, if it smells better, if it does not irritate the skin or if it will make the skin softer, this homemade soap will sell better than the commercially available soap. 
The price of the homemade soap is very important so it can compete with the commercially available soap. The price has to cover the cost of the raw materials, the manufacturing costs, and the distribution costs in order to generate profit. These costs will vary from community to community and from situation to situation. But with such low raw materials costs there is a lot of opportunity for doing business at a profit. 
A value chain is the sequence of various activities for the benefit of various participants.
In this series of blogs we will explore various manufacturing processes for lye, for tallow and for the manufacture of homemade soap. We are going to explore various recipes for making soap not only with animal fats but also vegetable oils such as peanuts, avocado, cashew, coconut and other plants that grow in our climate.

Sunday, June 24, 2012

64 – Value chains – how they work

Let us now look at how a value chain actually works. 
A value chain is based on market demand. It is based on market demand at each level of the chain. Market demand is based on people willing to buy a product at a given price. We may have a good product but it may be too expensive, or nobody is willing to buy it because there is no need for it. Or there may be too many people already selling similar products or the same product. Or it may not be the right time of the year for that kind of product. All these factors influence market demand. 
Let us take our example of the peanut products value chain as outlined before:
  • someone grows peanuts and sells for food
  • someone buys some of the peanuts and makes cooking oil
  • someone sells cooking oil locally
  • someone sells cooking oil at the city market
  • someone collects ash from fireplaces
  • someone buys cooking oil and ash and sells soap
  • someone buys the soap and runs a clothes washing business
Let us take peanuts as they come out of the ground. There may be a market demand for raw peanuts. And another market demand for cooked peanuts or for roasted peanuts. People who buy raw or roasted peanuts may be different people. And the demand may not be the same every month.
A value chain is formed by a sequence of activities. In this case the activities are selling and buying peanuts that provide revenue to the producer. But the activity may be variable or temporary and in this case the producer does not have a dependable source of income.
In large cities there may be a large demand for peanuts, but in a small community the demand may be small and the producer may need to plant very few peanuts or find buyers from other communities. Finding buyers requires knowing people.

And so an important activity for the producer is to find and maintain reliable buyers.

Another important activity is to produce good quality peanuts and on time for the market.

We want value chains that are dependable. We need to have a marketplace for our product and we need to know the marketplace for our product. And we want to create associations with other producers or with buyers who can help us and on whom we can depend.

In a small community the producer may have to plant peanuts and other produce because the local demand will be limited. But this can be a good thing. The farmer will then plant some peanuts, some potatoes, some corn, some other crop, and with all these products provide, on a regular basis, the community with the produce it needs.
In small communities a farmer may not be able to produce just one crop. The farmer may have to be good at many things.

Saturday, June 23, 2012

63 - Value chains - examples

Let us look at some more examples of value chains that can be developed in our rural agricultural communities.

Generically speaking a value chain should have as many activities as there are specific skills or capabilities in a community. 

Another way of looking at it is - where can I best make use of my time and my skills? I may be able to do many different things but all these things may not be a good use of my time. Someone may be able to do them better than I can or at a lower cost.

It will be different for each community and for each situation.

One value chain example could be:
  • someone who raises cattle and produces manure
  • a farmer who specializes and produces seeds
  • a farmer who buys seeds and manure and sells grain
  • someone who grinds the grain and makes flour and bread
  • someone who takes flour and bread to sell at the city market
  • someone who buys farming tools at the city market and sells to the farmers
  • a farmer who teaches farming to children at the local school
Another value chain could be:

  • someone grows peanuts and sells for food
  • someone buys some of the peanuts and makes cooking oil
  • someone sells cooking oil at the city market
  • someone collects ash from fireplaces
  • someone buys cooking oil and ash and sells soap
  • someone buys the soap and runs a clothes washing business
We could go on and on. Some activities may make sense in some communities but not in others. Each community will know what will work and what will not work. In many cases one needs to experiment. Rural and agricultural communities have an advantage - many of the products needed are readily available. This is not the case in cities or even in larger communities.
The following articles have a number of examples. Look them up if you have the chance:

62 - Value chains from scratch

In general value chains do not exist in small communities, in the agricultural communities in remote areas of our country. And if a value chain exists it is most likely small, not very strong, and does not support the whole community.

There may be a small store where the farmer can buy seeds and fertilizer. And this store is probably the same one where the farmer sells its product. This store may provide some services but not all or not enough.

In small communities this creates a situation of dependency which is not good in the long run and is very vulnerable to price fluctuations.

If only a small community could produce more of the things that it needs then its dependency in the small store will be reduced and the community will be stronger because of that.

Let us look at an example. A farmer may sell beans to the store and buy seeds and fertilizer from the store and maybe this will be fine. But where will the community buy clothes, or cooking oil, or soap, or meat, or vegetables? Most likely from the same store which will only increase its dependency and its vulnerability to changes in prices and availability of any of the products.
But if someone plants peanuts and starts making cooking oil from these peanuts then the community will be less dependent on the store and someone will now have a new activity where money can be made. 

And if someone gets some of the cooking oil uses ash from the cooking fires and makes soap then that person now has another new money making activity and the community will become less dependent on the local store. That person can actually sell some of the soap to the store.

In this small example where someone plants peanuts for food but also for cooking oil which will be used for cooking but some will also be used to make soap. Three people now created a value chain to which we can add someone who will go once a week to the city market and sell some of the peanuts, the cooking oil and the soap that the community does not need for itself.   

There are many value chains in an agricultural community. Some we already use but some can be developed. The result will be beneficial to all in that hard working community.

Let us look at some more value chains in the upcoming blogs.

61 - Value chains

What is a value chain? A value chain is a sequence of activities or services related to some product or service that are necessary or valuable for the profitable marketing of that product or service.
Let us use an example. Let us say we are planting beans for sale. 
To produce beans we need tools, we need seeds, we need water, fertilizer, we need sacs, a storage place, we need buyers, we must transport the beans to the buyer, we need a bank where we can borrow money and we need a bank account where we can save the money from the sale of the beans. And we probably need a few more things. 
Each and everyone of us could try to provide all these things. And in some cases it may be possible, but when we are trying to grow seeds we may not be able to leave and take our product to the market. 
At some point we will find that it is better if we provide for some of our own needs and buy the other needs from someone else. For these services we pay someone. And this forms a value chain.
What one person sells another will buy. A service that I need will be provided by someone else. This sequence of activities and services creates opportunities for people to make money. This sequence is the value chain.
Most of us know this. But when we decide to produce something, like the beans in our example, it is important to understand the value chain that will support our work.
If we do not have tools, if we do not have a place where we can buy our tools, or our seeds, or our fertilizer, and if we do not have buyers for our beans our work will not be properly rewarded.
In communities where there is an active and well established market place most of these services are available and we only have to find someone who will do this or that specific job.
But in communities where there is no market place, like in most rural areas of our countries, the community needs to develop its value chain.
So, in a small community, an agricultural community, we need to be smarter. We need to know what each person can produce and that can be sold in the community, and we need to know what we can sell outside our community.

Each community needs to figure out what its own value chain needs to be.

We will look at this in another blog.

Tuesday, June 5, 2012

50 – A kanga backpack

Kanga or khanga. We all know kanga cloth. It is a piece of cloth with lots of uses. It is colorful and always goes well with any other color. These kanga cloths are beautiful.

Today we are going to use kanga cloth to make a simple backpack that can be used by children, young people, adults and even our older people. Why not?

These backpacks can be made by almost anyone with some basic sewing skills. These backpacks can be sold in the market or in shops. They are very easy to make and do not use a lot of material.
First, we cut a rectangle of kanga cloth with about 80cm by 30cm. When cutting this rectangle we can follow the design on the cloth or not. This piece of cloth will be for the body of the backpack.

Now we cut two small pieces of cloth. These can be of the same cloth or of a different cloth, like some remnants from some other sewing job. These pieces are about 12cm by 8cm and will be used to make the small loops on each side of the backpack where the shoulder straps will be tied.

Finally we cut two pieces of chord, or thin soft rope, with a length of about 150cm each. These pieces of chord will be used to make the shoulder straps of our backpack.
That is it. This is all we need. We can now start sewing all the pieces together.

We will start with the small loops. These are a bit narrower in the middle and a bit wider at the two ends. This way the shoulder straps will move easier and the loops will have more support from the stitches that fix them to the backpack bag.

After sewing as shown by the temporary white stitches we turn these loops right side out leaving the hems on the inside.

We fold the large piece of cloth in a half and we fix these loops to the bottom edges of the bag, one on each side of the bottom of the bag.
Now we can sew both edges of the backpack bag all the way but not quite to the top. We need to leave some space to form the hems at the top of the backpack. These hems will receive the shoulder strap chords.

Once finished, these hems should look like this:

And the bag of the backpack is finished!

We turn the bag inside out and thread the chords for the shoulder straps.

Like in the picture, these chords for the shoulder straps should be threaded one on each side.

The end result is like this:
The shoulder straps should be tied to the loops with a simple knot. That way we can remove them to be washed or replaced, and when we want to wash the backpack. It is much easier to wash, dry and press, if you are so inclined, the backpack without the shoulder straps.

In the end we have our kanga backpack. It is ready!

Came out pretty nice, didn’t it?

Now go and make your own.

You can make them for yourself, to give away to friends as presents, or to sell them!
I wish I had some kanga cloth. The model would have come out much nicer!