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Firm-Level and Public-Sector Costs Make Small-Scale Maize Flour Fortification Challenging in Uganda
Stephen Vosti
Firm-Level and Public-Sector Costs Make Small-Scale Maize Flour Fortification Challenging in Uganda - P.12-23
Background:Maize flour in Uganda is milled by hundreds of enterprises, mostly small- (5-20 metric tons [MT]/day) and micro-scale (<5 MT/day) mills or firms. A mandatory maize flour fortification program exists for medium-scale mills (>20 MT/day) and policymakers are considering including smaller-scale millers.
Objective:We estimated the private and public costs of maize flour fortification at different scales and explored their implications for extending the mandatory fortification to include smaller-scale mills.
Methods:We used secondary data on the structure of the maize flour market and primary data on milling and fortification costs to estimate mill and regulatory costs at 3 scales of flour production: micro, small, and medium.
Results:For micro-, small-, and medium-size operations, respectively, operational costs of fortification were US$13, US$9, and US$7 per metric ton (MT) of maize flour, which represented 20%, 16%, and 16% of annual operating costs, and the ratio of fortification equipment cost to mill equipment costs was higher for micro-scale mills (2.7) than for small- (0.38) and medium-scale (0.54) maize mills. Governmental regulatory costs rise if smaller-scale mills are included due to the increased number of facility inspections.
Conclusions:Fortification and regulatory costs increase as production scale decreases. Up-front capital costs of fortification would be daunting for micro- and small-scale mills. Medium-scale mills, which supply social protection programs, might be able to manage fortification costs and other challenges. Decision-makers should consider all costs and cost burdens, and the realities of enforcement capabilities before expanding fortification programs to include smaller-scale operations.
Plain language titleCosts of Small-scale Maize Flour Fortification in Uganda
Plain language summaryA study of the costs of adding vitamins and minerals by small-scale maize flour millers in Uganda was undertaken to understand if it would be commercially beneficial from a business and operations perspective for them to do so, and if requiring them to do so would impose additional cost burdens on government to ensure that fortification standards were met.
Why was the study done?Maize flour is consumed by the majority of Uganda’s population, especially the rural poor. If the flour were fortified, it would reduce vitamin and mineral deficiencies among those at risk. The most important constraint to market-wide fortification is the presence of many small-scale mills or firms that neither have the resources nor the technology to adopt and sustain the fortification process. To date, no study has been done to calculate the costs that small-scale mills would have to face to fortify flour, or what the cost implications for government would be for including smaller-scale mills in a national fortification program, including the costs of enforcing regulations.
What did the researchers do?The researchers interviewed millers of several scales of operation to collect cost information on their operations and interviewed representatives of government regulatory bodies to estimate the costs of testing maize flour to ensure compliance with regulations. Researchers estimated the cost to the mills of adding fortification to their business models, and the impacts on the government costs (eg, testing additional samples, etc.) of including smaller-scale mills in the fortification program.
What did the researchers find?The researchers looked at 3 different types of mills based on their capacity to mill maize flour—micro-scale firms milled less than 5 metric tons (MT) a day, small-scale firms milled 5 to 20 MT per day, and medium-scale firms milled over 20 MT a day. For micro-, small-, and medium-size firms, respectively, fortification increased operational costs by US$13, US$9, and US$7 per MT of maize flour, which represented 20%, 16%, and 16% of annual operating costs. Similarly, governmental regulatory costs rose if smaller-scale mills were included because of the increased number of facility inspections required since the current legislation requires mandatory annual inspections.
What do the findings mean?Fortification and regulatory costs increase as the scale of production by the millers decreases. If fortification by small- and micro-scale mills were made mandatory, up-front costs of fortification equipment and materials would be daunting for micro- and small-scale millers. Ugandan medium-scale millers might manage fortification costs and other challenges, but only if the social protection programs they supplied were of sufficient volume and regularity.
maize flour
small-scale food fortification
private and public sector
costs
micronutrients
Uganda
Firm-Level and Public-Sector Costs Make Small-Scale Maize Flour Fortification Challenging in Uganda - P.12-23
Background:Maize flour in Uganda is milled by hundreds of enterprises, mostly small- (5-20 metric tons [MT]/day) and micro-scale (<5 MT/day) mills or firms. A mandatory maize flour fortification program exists for medium-scale mills (>20 MT/day) and policymakers are considering including smaller-scale millers.
Objective:We estimated the private and public costs of maize flour fortification at different scales and explored their implications for extending the mandatory fortification to include smaller-scale mills.
Methods:We used secondary data on the structure of the maize flour market and primary data on milling and fortification costs to estimate mill and regulatory costs at 3 scales of flour production: micro, small, and medium.
Results:For micro-, small-, and medium-size operations, respectively, operational costs of fortification were US$13, US$9, and US$7 per metric ton (MT) of maize flour, which represented 20%, 16%, and 16% of annual operating costs, and the ratio of fortification equipment cost to mill equipment costs was higher for micro-scale mills (2.7) than for small- (0.38) and medium-scale (0.54) maize mills. Governmental regulatory costs rise if smaller-scale mills are included due to the increased number of facility inspections.
Conclusions:Fortification and regulatory costs increase as production scale decreases. Up-front capital costs of fortification would be daunting for micro- and small-scale mills. Medium-scale mills, which supply social protection programs, might be able to manage fortification costs and other challenges. Decision-makers should consider all costs and cost burdens, and the realities of enforcement capabilities before expanding fortification programs to include smaller-scale operations.
Plain language titleCosts of Small-scale Maize Flour Fortification in Uganda
Plain language summaryA study of the costs of adding vitamins and minerals by small-scale maize flour millers in Uganda was undertaken to understand if it would be commercially beneficial from a business and operations perspective for them to do so, and if requiring them to do so would impose additional cost burdens on government to ensure that fortification standards were met.
Why was the study done?Maize flour is consumed by the majority of Uganda’s population, especially the rural poor. If the flour were fortified, it would reduce vitamin and mineral deficiencies among those at risk. The most important constraint to market-wide fortification is the presence of many small-scale mills or firms that neither have the resources nor the technology to adopt and sustain the fortification process. To date, no study has been done to calculate the costs that small-scale mills would have to face to fortify flour, or what the cost implications for government would be for including smaller-scale mills in a national fortification program, including the costs of enforcing regulations.
What did the researchers do?The researchers interviewed millers of several scales of operation to collect cost information on their operations and interviewed representatives of government regulatory bodies to estimate the costs of testing maize flour to ensure compliance with regulations. Researchers estimated the cost to the mills of adding fortification to their business models, and the impacts on the government costs (eg, testing additional samples, etc.) of including smaller-scale mills in the fortification program.
What did the researchers find?The researchers looked at 3 different types of mills based on their capacity to mill maize flour—micro-scale firms milled less than 5 metric tons (MT) a day, small-scale firms milled 5 to 20 MT per day, and medium-scale firms milled over 20 MT a day. For micro-, small-, and medium-size firms, respectively, fortification increased operational costs by US$13, US$9, and US$7 per MT of maize flour, which represented 20%, 16%, and 16% of annual operating costs. Similarly, governmental regulatory costs rose if smaller-scale mills were included because of the increased number of facility inspections required since the current legislation requires mandatory annual inspections.
What do the findings mean?Fortification and regulatory costs increase as the scale of production by the millers decreases. If fortification by small- and micro-scale mills were made mandatory, up-front costs of fortification equipment and materials would be daunting for micro- and small-scale millers. Ugandan medium-scale millers might manage fortification costs and other challenges, but only if the social protection programs they supplied were of sufficient volume and regularity.
maize flour
small-scale food fortification
private and public sector
costs
micronutrients
Uganda