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Terral

Senegal

Terral brings fresh rice, locally produced by smallholder farmers, to the urban West African market which is traditionally supplied by the global market

  • Supplying urban markets in a professional way
  • Year-round market presence
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Name Family Name, Function

Key Figures

  • 626 tonnes:
  • 0,3 M: Sales
  • -0,1 M: Workers FTE
  • 650: Smallholders
  • 23:   
  • XX : Workers headcount

Worker salary

  • 2011 : 10 81
  • 2012 : 25 141
  • 2013 : 19 118
  • 30
  • 20
  • 10
  • 0
  • 160
  • 140
  • 120
  • 100
  • 80
  • 60
  • 40
  • 20
  • 0
Number
Low. sal. (€/month)
Year
  • Number of workers
  • Lowest salary in the company

Farmer revenue

  • 2011 : 200 0
  • 2012 : 700 436
  • 2013 : 650 586
  • 800
  • 600
  • 400
  • 200
  • 0
  • 1000
  • 900
  • 800
  • 700
  • 600
  • 500
  • 400
  • 300
  • 200
  • 100
  • 0
Number
Av. rev. (€/year)
Year
  • Smallholders
  • Average revenue (€)

TERRAL IN A NUTSHELL


Product range

Long grain rice 

  • is perceived as better quality and sold at higher prices

Broken rice

  • is traditionally used for most dishes in Senegal

Impact

Employement generation

  • Terral is a small employer, but striving to comply with all national and international legislation

Income/Prouctivity growth

  • Terral is one of the few formal rice buyers in Senegal building long term relationships with its grower
  • Buying immediately after harvest provides farmers with cash for immediate financing reimbursement and relieves them from storage problem

Agricultural productivity 

  • In-the-field demonstrations of improved production practices
  • Close production follow-up and advice

Access to information

  • Supplier inclusion through transparent contracts, quality reports and payments to farmers

Food security 

  • The local rice supply covers only 25% of the needs, while 800.000 tons are imported every year
  • Rice is a strategic sector for the Senegalese government as part of its food security ambitions

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Name Family Name, Function


Main markets

Senegal, Dakar

Main challenges

Managing considerable volume expansion throughout the entire value chain: 

diversifying and reinforcing paddy rice sourcing

fine-tuning transformation

processes and boosting sales diversifying and reinforcing paddy rice sourcing, fine-tuning transformation processes and boosting sales


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Name Family Name, Function

CHALLENGES AND OPPORTUNITIES


Consumers
  • Growing quality awareness amongst Senegalese consumers. They appreciate fresh and long grain rice and are increasingly prepared to pay a premium price


Customers
  • Customers value the professional approach and year-round availability of Terral rice
Competitors
  • Largest part of available paddy is processed artisanally. Rice production is largely overshooting processing capacity
Workers
  • With employment in Senegal scarce, the establishment of formal employment means
    a lot to the community
  • The country’s employment conditions are not entirely in line with national or international legislation


Smallholders
  • Farmers produce mainly for own consumption, but seek a market for part of their production so as to reimburse the pre-financing of inputs


Environment
  • The traditionally high-input rice production in the Senegal Valley has a significant impact on the local ecosystem


Community
  • Large infrastructural investments in rice sector resulting from the state government’s objective
    of being self-sufficient in rice by 2018

Investors
  • Company in start-up phase
  • Considerable working capital needed for paddy sourcing

STRATEGY

Building on lessons learned since 2011, Terral will expand its volumes considerably during the coming years: 

  • Investing in own rice mill 
  • Expanding sourced volumes by diversifying producer base
  • Exploring expansion to Mali and Burkina Faso

Outlook for 2014

In August 2014 the own rice mill becomes operational. The improvement in equipment will mean a quantum leap for the processing KPIs and profitability. 



Outlook beyond 2014

Gradually, current investments will be taken to their limit. An investment in additional drying capacity is planned in 2016. Limited rebranding efforts will boost Terral’s already tangible popularity in order to keep sales up with growing rice volumes.


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Name Family Name, Function

DEVELOPMENTS IN 2013


Formalization of SFA

In 2011, Durabilis started a rice project in Senegal aimed at boosting the supply of local rice for the urban bottom of the pyramid. After in depth stakeholder and supply chain analysis and agronomic research, Durabilis got involved in managing the entire supply chain, assisting the farmers’ cooperatives, managing a rented rice factory, marketing and selling in Dakar. In March 2013 SFA (Sénégalaise des Filières Agricoles) was created as a 100% subsidiary of Durabilis, covering all Senegalese rice activities.


Preparations for building own rice mill

Because the rented rice factory and old Chinese equipped factory did not offer the drying, storage and cleaning possibilities needed for high-quality long grain rice, the decision was taken to invest in a new rice factory with a capacity of 8000 tons of paddy a year. Negotiations for a land concession were started in October 2013 and successfully completed in February 2014. In the meantime, project planning and negotiations with shed and machinery suppliers were started.



Grameen Crédit Agricole entering the capital of SFA

Grameen Crédit Agricole accepted to enter SFA’s capital for 20% of the shares, and provided a long term credit line for an amount of € 200.000. This will allow the construction of a new rice factory with a capacity of 8000 tons of paddy a year. Additionally, Alterfin, a Belgian Social Investment Company provides working capital funds.


CHALLENGES FOR 2104 AND BEYOND


Diversifying producer base

In the past Terral has been providing micro-credits to its farmers in collaboration with the Pamecas Bank, created between the Senegalese and Canadian governments in order to promote economic and social well-being. Since growth through Pamecas is limited but Terral’s producer base needs to follow its increased processing capacity, alternatives need to be developed. Financing through CNCAS, the Senegalese state bank with a large stake in the rice sector, will be the first complementary source. 

Building the rice mill Moving from a rented, underperforming rice mill to a company-owned one was essential for the future of Terral’s activies. The building was ordered from Belgian supplier Frisomat, while a low-budget but adequate Chinese machine was bought for Terral’s initial years. In August 2014, the first lots were processed with satisfying results.
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Name Family Name, Function


Improving paddy quality

Senegal historically being a rice importer, rice production practices are far from optimal today. Since good paddy quality is the basis for cost-efficient processing, technical support to the farmers is essential. With the current small agricultural team, technical assistance has been limited to enforcing a nationally promoted rice growing calendar. Terral is looking into different options for subsidies or donations that could allow for better research and support in the form of a farmer field school.

Becoming the price maker

In order to impact the rice price and be able to increase the return to its producers, Terral’s ambition is to double sales every year and become the number one brand in Senegal. The sales team and marketing efforts will be gradually reinforced in order to achieve these objectives.

COMMITMENT TRACKER

Commitment tracker

  • Work in Progress
  • Reconsidered
  • New
  • Achieved
Commitment
Due Date
Status
Comment
New Due Date
Investors
Commitment
Due Date
Status
Comment
New Due Date
Improving transparency on impact data regarding the commitments below
0
New

Terral being a start-up, has been able to guarantee strict data management from the beginning. The challenge is now to translate this information to clear-cut KPIs.

2015

Planning construction of own mill

2013
Achieved

Although not built in 2013, the own mill was deployed in the second half of 2014.

Workers
Commitment
Due Date
Status
Comment
New Due Date

Ensure 100% compliance with the worker aspects of Durabilis' Social Responsibility 

2013
Work in progress
With limited resources available, all efforts have gone to securing the harvest and building the new mill. Now that it is up and running, a gap analysis will be performed and the recommendations
2015
Suppliers
Commitment
Due Date
Status
Comment
New Due Date
Gaining production experience on an experimental plot
2013
Achieved
A small scale experimental field was started in collaboration with a local farmer. Results are expected end 2014.
Establishing a social profile of the supplying farmers
0
Reconcidered

A socio-economic study of the rice producers and their communities will provide better insight in their needs and concerns.

2015
Environment
Commitment
Due Date
Status
Comment
New Due Date

Developing a sustainable production plan for smallholders

2015
Work in progress

Exploring environmentally friendly practices on the nucleus plantation, in order to implement them in smallholder production through technical assistance programs & farmer field schools

Finding ways to valorize waste from milling

2013
Reconcidered

Energy from husk forms part of the terms of reference of an own mill. However the plans have not been executed yet. Feasibility study is pending.

2016
Customers
Commitment
Due Date
Status
Comment
New Due Date

Including small entrepreneurs

2011
Reconcidered

Since Terral's impact is mainly linked to its suppliers and national food security, this ambition has been postponed for future revision.

Consumers
Commitment
Due Date
Status
Comment
New Due Date

Further examining possibilities for introducing new innovative products such as baby-food, whole-grain rice or fortified rice

2012
Reconcidered

Remains an important objective, however focus is first on the development of white rice

2015