When a rabbi boarded a plane from Israel to Ghana in 2016, it was a journey that would change the fortunes of an entrepreneur who had set his sights on creating a coconut products company. At the time, Michael Annan-Forson, CEO of Melach Coconut Processing Farm, had advertised coconut oil that was made in his kitchen on the networking website LinkedIn.
A businessman in Jerusalem reached out to the Ghanaian entrepreneur, requesting a sample. Impressed with the quality of the oil, he asked Annan-Forson if he could manufacture six tonnes and send it to Israel.
The entrepreneur, who had only made coconut oil on a small scale, accepted the order and set about figuring out how to ramp up production. He was paid USD 35,000 upfront by the Israeli businessman to fast-track the process.
“The man sent me the whole amount without even knowing if I was authentic or not. I had to pack up everything in my flat in Accra and move to Kumasi in the Ashanti region where I was able to rent a factory space and purchase a small grinding machine,” says Annan-Forson.
He was able to complete the order in only seven days, processing the coconuts quicker than expected. The rabbi was sent to Kumasi to certify if the oil met the kosher standards of the Jewish religion.
Continued growth
Since Melach’s first sale, the company has expanded to become one of Africa’s foremost exporters of coconut products, including oil, water, porridge, charcoal, potash and sugar. Annan-Forson sources the raw material from 166 smallholder farmers in the Nzema region of western Ghana and 200 acres of company-owned land, where the coconuts are farmed on an industrial scale, to ensure that there is never a disruption to supply.
The CEO was able to buy another processing machine after he secured a $17,000 grant from the Department for International Development (DFID), the UK’s former development agency. However, aside from the grant and the upfront capital from Israel, the company has never taken out a loan.
Melach employees dehusking coconuts.
“We have never had a facility from any bank. When we started in 2006, I was going from bank to bank with my proposal and they were throwing me away because they did not believe in the project. Today almost every bank is knocking on our door to give us a loan,” Annan-Forson says.
Melach has since expanded its exports to clients in Thailand, the Netherlands, Bangladesh and Mexico. “We are also supplying to the USA, it is one of our biggest customers. We supply Costco with a minimum of 50 tonnes a month,” he says.
The business model is to sell coconut products, like oil and water, in bulk to companies that process the raw material and create a branded product for consumers.
Competing globally
Annan-Forson says the company has managed to outcompete rivals in Thailand, Sri Lanka and Indonesia – big coconut producing countries. The strategy, he says, is selling coconut products at a lower price.
“If one litre of certified oil is about USD 4.9 we try our best to do production in a way where we can sell below that, at USD 3, for example.”
The Ghanaian national previously worked in Thailand for six years as an HR manager for a big coconut company where he got the idea for his business. Some of the large Thai companies have now started buying from Melach rather than processing coconuts themselves as they can still maintain a profit margin after buying the oil at a reduced price from the Ghanian company, Annan-Forson says.
Melach’s refinery workshop.
The company’s balance sheet reflects the firm’s growth as a global exporter. Melach is now able to produce around 600 tonnes a year of coconut produce and it registered a profit of USD 966,000 in 2021.
The CEO says that sales were boosted during the pandemic by the continued demand from cosmetic companies that use coconut oil for beauty products. He expects sales to increase by 40% each year and aims to reach USD 2 million profit in 2022.
Targeting Africa
However, alongside continued exports outside Africa, Melach is also now targeting the rest of the continent.
“We want to look back to the nation and do something for the nation. We want to take advantage of the African Continental Free Trade Area (AfCFTA). We see opportunity in West Africa and other parts,” he says.
The CEO recently returned from Kenya where he is setting up a processing facility in Mombasa, on the Indian Ocean, to supply eastern and southern Africa. In addition, he is also looking to expand into soya beans and has invested over USD 300,000 in a plant near Ghana’s coastline to start producing edible oil from the commodity.
Melach Coconut Processing Farm CEO Michael Annan-Forson’s contact information
Source: howwemadeitinafrica.com
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