Tag: Pyxus Agriculture Malawi

  • USAID and Pyxus Partner in Malawi

    USAID and Pyxus Partner in Malawi

    Photo: PAM

    The U.S. Agency for International Development (USAID) will award Pyxus Agriculture Malawi (PAM) $14.6 million over the next five years, Pyxus announced on its website. The money will support the company in maximizing its operational effectiveness and minimizing its exposure to financial risk as it continues to drive sustainable agriculture developments in Malawi.

    The USAID award compliments PAM’s investment to date and offsets certain company expenditures going forward as both entities work to increase the availability of high-quality, climate-smart groundnut seed varieties, boost groundnut production and processing, support improved farmer livelihood and counteract the nation’s high rate of deforestation.

    “Our company has a 30-year history of operating in Malawi and has one of the largest networks of smallholder farmers—most operating on two hectares of land or less—in the country. We have worked diligently to help our contracted farmers successfully grow and market high-quality, sustainable crops, thus improving the livelihood of the farmer, their families, their communities and the country as a whole,” said Pyxus President and CEO Pieter Sikkel, during the partnership signing ceremony at PAM’s state-of-the-art groundnut processing facility in Lilongwe, Malawi.

    “Pyxus is honored to receive this $14.6 million award from USAID, which helps our company to further build capacity, expand impact throughout the legume and forestry value chains, and unlock value for Malawi and its farmers,” added Sikkel.

    Pyxus is honored to receive this $14.6 million award from USAID, which helps our company to further build capacity, expand impact throughout the legume and forestry value chains, and unlock value for Malawi and its farmers.

    Pieter Sikkel, president and CEO, Pyxus

    The agreement aligns with Pyxus’ global environmental, social and governance goals and identifies five focus areas to achieve success: improve Malawi’s legume seed production system through the acceleration of PAM’s current research, breeding and distribution of new high-yielding, climate-resilient, market-demanded and more nutritious legume seed varieties; increase farmer access to high-quality crop inputs and hands-on training of good agricultural practices while simultaneously working to diversify PAM’s contracted farmer base—these efforts enable farmers to increase yields, sales and incomes, driving the development of the country’s commercial agriculture sector; help address smallholder farmer financing roadblocks, which currently put a significant limitation on crop production and overall market success, through fair and affordable crop input financing—minimizing financial roadblocks can help farmers increase yields and improve their overall livelihood; enhance the quality and value of Malawi groundnuts through increased processing capacity of PAM’s groundnut facility, driving job growth, the country’s export opportunities and value addition, resulting in a more impactful private sector contribution to Malawi’s economic growth; and combat deforestation and forest and soil degradation by further developing PAM’s sustainable forestry operation and the introduction of new, innovative energy solutions and soil health amendments to the farmer.

    PAM Managing Director Ronald Ngwira (right) with employees at the company’s groundnut facility in Lilongwe (Photo: Taco Tuinstra)

    “The partnership we’ve launched today, with USAID and Pyxus, will invest in Malawians to accelerate opportunities for more sustainable, inclusive and resilient economic growth,” said USAID Deputy Administrator Isobel Coleman during the signing ceremony.

    Coleman added that the partnership contributes to soil health improvements, utilization of clean energy generated from recycled agricultural waste and increasing availability of nutritious food for the Malawian people. 

    The PAM operation was founded in 2019 under Pyxus’ Value-Added Agricultural Products division. Since its inception, PAM has opened one of the largest groundnut processing facilities in Africa, gained government approval to commercialize five new legume seed varieties, cultivated and maintained more than 7,000 hectares of forestry, and unlocked additional income potential for over 20,000 smallholder farmers.

    Tobacco Reporter visited Pyxus Groundnut factory in the first half of 2023 and reported on the operation in its June print edition (see “A Gamble on Goobers“).

  • A Gamble on Goobers

    A Gamble on Goobers

    PAM Managing Director Ronald Ngwira (left) examines fuel pellets created with leftover shells from the company’s groundnut operations. | Photo: Taco Tuinstra

    Pyxus has great expectations of its Malawi groundnut business

    Like many of their customers, tobacco merchants in Malawi have been exploring supplemental lines of business—not only to ensure their future as cigarette consumption stagnates but also to help their contracted farmers develop supplemental sources of income.

    Pyxus Agriculture Malawi’s (PAM) contracted tobacco farmers often cultivate nontobacco crops, including groundnuts, maize and sunflowers. Measured by weight, its growers already produce four times more food than tobacco. As part of its efforts to improve farmer livelihoods and the communities in which they live, Pyxus has been working to find markets for some of these crops.

    The company has high expectations, especially for groundnuts, which are nutritious sources of protein, vitamins and dietary fiber. Among other health benefits, groundnuts are credited with preventing heart diseases, lowering bad cholesterol and improving fertility. Common products made from groundnuts include cooking oil, herbal supplements, butter and snack items. Groundnuts are also used as a source for animal fodder. There are three categories of groundnuts: the Hausa groundnut, the Bambara groundnut and the peanut.

    Driven by consumers’ growing appetite for protein-rich and plant-based foods, global demand for groundnuts is increasing by 4 percent per year. Market Research Future projects the value of global peanut sales alone to reach $107.4 billion by 2030. Malawi has grown groundnuts for decades. “In the 1980s, Malawi used to be a big exporter to Europe,” says PAM Managing Director Ronald Ngwira. Currently, however, Africa is a net importer of groundnuts; global supply is dominated by Argentina, India and the United States. Malawi produces 447,421 metric tons of groundnuts—less than 1 percent of global cultivation.

    A Good Match for Malawi

    In addition to enjoying strong global demand, groundnuts are suited to Malawi’s conditions. Due to the country’s landlocked location, agricultural exports must travel long distances to ports in either South Africa or Mozambique. As a semi-perishable product, groundnuts are able to tolerate such journeys without requiring expensive cold storage.

    What’s more, groundnut plants release nitrogen as they decompose, improving soil fertility and allowing farmers to reduce their fertilizer bill. Soil health has been a major concern in Malawi, where farmers struggle with high levels of acidity and insufficient levels of organic matter due in part to deforestation and less-than-optimal agricultural practices.

    Another benefit: Leftover shells from Pyxus groundnut operations can be converted into fuel pellets and green charcoal, reducing the need to cut trees for firewood and potentially saving thousands of hectares of forest. This is a big deal in Malawi, where few people have access to electricity and the majority of the country’s rapidly growing population burns wood as fuel for cooking and energy. Wood is also used by farmers to build barns and cure tobacco. Industry typically relies on coal to fuel its activities. According to Ngwira, the use of groundnut shell-based fuel has already allowed Pyxus to reduce AOTM’s factory reliance on coal by 40 percent.

    One challenge that has been holding back Malawi groundnut production is the quality of its plant varieties, which has constrained quality and productivity. To unlock the potential of groundnuts for Malawi, PAM has been researching better cultivars. Over the past few years, the company examined 1,000 strains from around the world. Looking for varieties that are high in protein, climate-change resilient and resistant to disease, PAM selected four types and presented them to the ministry of agriculture for approval. The company then invested in irrigation, mechanization and multiplication of the improved varieties to boost farmers’ yields and incomes.

    Boosting Volumes and Quality

    Tapping into its large network of tobacco field technicians, Pyxus also started offering extension services to groundnut farmers. “We have more than 150 qualified extension officers training farmers on a daily basis to assist farmers achieve better yields and quality while also ensuring track-and-trace capabilities to export into international markets,” says Ngwira. At 1 metric ton per hectare, average groundnut yields have traditionally been low in Malawi. With better cultivars, inputs and agricultural practices, however, it should be possible to increase those yields to 3 metric tons per hectare, according to PAM. Ngwira says the company will follow the same journey it took when implementing the integrated production system in tobacco, where years of farmer training resulted in substantially improved productivity and loan recovery rates.

    PAM’s investments in groundnuts are paying off already. In 2021, Malawi’s government set the minimum selling price of groundnuts at MKW330 ($0.32) per kilogram. Owing to the quality produced by its contracted farmers, Pyxus was able to offer a minimum price of MKW440 per kilogram, according to Ngwira.

    PAM is also tackling the problem of aflatoxins, poisonous carcinogens produced by certain molds that can impact agricultural crops. Historically, Malawi groundnuts have suffered from comparatively high levels of aflatoxins, but with better agricultural practices, such as quick drying to prevent the formation of fungi, it is possible to reduce contamination to below the tolerances prescribed by export markets.

    In March 2022, PAM inaugurated a $3 million processing factory in Lilongwe’s Kanengo, where it not only cleans, shells and sorts the groundnuts but also turns the leftover shells into fuel pellets. Built in a disused tobacco warehouse, the facility employs more than 100 people and has the capacity to process 50,000 tons of groundnuts per annum. It is the largest groundnut shelling plant on the African continent outside of South Africa.

    Addressing Malawi President Lazarus Chakwera and other dignitaries attending the opening ceremony, Ngwira noted that factory was key to unlocking Malawi’s potential for agricultural industrialization—which is in line with the government’s commitment to promote exports through value addition for agricultural crops.

    Ngwira is excited about the prospects for Malawi groundnuts. In addition to growing demand from major markets such as China and India, there is also a huge appetite for the product regionally. “Currently, most Malawi groundnuts are exported to the Lake Victoria region,” he says. Already home to more than half a billion people, the area’s population is projected to grow significantly. “Malawi can help supply the protein to feed those people,” says Ngwira.

    To cater to the anticipated demand, PAM aims to rapidly expand its contacted farmer base from about 7,000 smallholders at the time of the factory opening to about 30,000 in the future. In the process, it will not only create additional sources of incomes for its contracted farmers but also provide Malawi with a welcome supplement to tobacco as a source of much-needed foreign exchange.—T.T.

    Taco Tuinstra is Tobacco Reporter’s editorial director.Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.On his watch, Tobacco Reporter has won several awards for editorial excellence.Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.