Case Study: Turning excrement into big bucks
Guano–a mixture of bat or bird excrement, organic waste and minerals – is not an obvious choice for an accountant starting his own business. Until, that is, you look at the figures.
We explained to farmers that our organic fertilisers didn’t deplete the soil, unlike chemical products
“I wasn’t a specialist in agriculture or agribusiness,” says Erick Rajaonary, founder and chief executive of Guanomad.
“But after a friend told me about bat guano, we went to visit a cave. In that cave alone, there were 3,000tn of guano. At $350 per tonne, I thought it was worth a shot,” he says.
Many samples, tests and sales later, Guanomad now produces 11,000tn of bat guano fertiliser a year and is valued at $10m, having started with capital of just €80,000 ($109,000) in 2006.
Guano-based fertilisers can be twice as cheap as chemical fertilisers, so they are ideally suited to the local market.
Yet Rajaonary says it took a lot of convincing to get farmers to switch from their tried-and-tested chemical products.
“Farmers in Madagascar are well used to chemical fertilisers, and their yields are higher than [those you get with guano]: for rice, we’re at 4-5tn/ ha, whereas they are at 7-8tn/ ha,” he says.
Guanomad invested heavily in marketing and communication. Rajaonary and his teams took part in trade shows, promotional tours and educational events. Their efforts paid off.
In 2006, Guanomad sold just 300tn of fertiliser; by 2008, it had reached 13,000tn.
“We explained to farmers that our organic fertilisers didn’t deplete the soil, unlike chemical products,” says Rajaonary. “We had to educate them little by little.”
By then, President Marc Ravalomanana and international donors had identified Guanomad as an instrumental part of Madagascar’s green revolution, and the company was on track to sell 20,000tn in 2009.
But the coup d’état that toppled Ravalomanana in March 2009 and plunged the country into a nearly five-year political crisis put paid to these ambitions. That year, Guanomad sold just 1,000tn.
With farmers struggling to afford fertiliser, Rajaonary decided to turn his attention to exports.
His early efforts focused on North America because the European Union banned the importation of products of animal origin from Madagascar.
The ban was eventually lifted in 2011 and exports to Europe rapidly took off: 40% of its business is now export-driven, with sales to Africa, Europe and North America.
Guanomad has diversified its range of products, introducing enriched and crop-specific fertilisers to meet farmers’ needs.
It developed a pellet formula to accommodate mechanised spreading and obtained organic certification from independent label Ecocert.
After the trials of 2009 and 2010, the company is looking forward to a promising future.
The year 2013 was a landmark: Guanomad won the Outstanding Small and Growing Business Award at the Africa Awards for Entrepreneurship.
The AAF SME Fund, a private equity group, also invested in the business.
As well as the investment to modernise production facilities, Rajaonary says that the fund brings valuable knowledge of the African market, which it sees as key for its expansion.
“We’ve always wanted to work on the continent, but we don’t know it well,” says the entrepreneur.
“We want to promote the use of organic products in Africa, and we think that Guanomad is ideally suited to improve food security.”
Guanomad recently received a large order from Tanzania, and it already predicts that exports in 2014 will account for 50% of its production.
As for the future, Rajaonary hopes to break into the organic fruit and vegetable market in Madagascar and to reach an annual production of 25,000tn of fertiliser within the next five years. ●