Sustainable Procurement of Shea Kernels

Relevance to our business

Shea trees grow naturally in the Sahel region of sub-Saharan West Africa. The shea butter extracted from shea nuts is an important raw material in the Fuji Oil Group's vegetable oils and fats business. Shea butter is a very versatile oil suitable for various uses including foods, confectionery, and skin care, and is widely used as a cocoa butter equivalent (CBE). Shea kernels (embryos in the seed) are harvested between May and June by women in rural West African regions, who also carry out the primary processing (boiling, shelling and drying). The main production areas are Burkina Faso, Mali, Ghana, Côte d'Ivoire, Benin, Togo and Nigeria.

Basic approach

The Fuji Oil Group formulated the Responsible Shea Kernels Sourcing Policy (in June 2021) as a policy for sustainable development of this supply chain. After establishing the policy, we set medium- to long-term goals and KPIs. We work toward a sustainable future by fulfilling the following three commitments set forth in the policy.

• Conserve parkland where shea trees grow: Plant 6,000 saplings of shea trees and other native trees every year in the region
• Encourage rural development and environmental initiatives: Empower the women involved in the shea kernel industry and improve production capacity of their cooperatives
• Local value creation: Create employment, including training on operational skills, quality and safety, and create high value-added products in the communities

• Responsible Shea Kernel Sourcing Policy (PDF, 945KB)

Shea trees growing naturally in West Africa

Management system

The Chief Strategy Officer (CSO) oversees initiatives in this area while Fuji Oil Ghana Ltd. carries out the procurement in collaboration with the relevant divisions at Fuji Oil Holdings Inc.
In March 2021, the Group launched the Shea Sustainability Program Tebma-Kandu^* with 23 women's cooperatives in North Ghana, as part of our initiatives to fulfill our three commitments. This program provides pre-financing and training on quality control for female farmers. It is steadily expanding, with 52 cooperatives planning to take part in 2023.

• * https://www.fujioilholdings.com/en/news/2021/__icsFiles/afieldfile/2021/03/11/20210311_news_e_Tebma-Kando.pdf

Goals / Results

Analysis

In FY2022, we significantly improved traceability to the regional level, including procurement from Tebma-Kandu cooperatives, to 93.3% against the target of 35%. A very poor harvest in FY2022 led to limited distribution quantities, which meant that more shea kernels were purchased from suppliers with existing business relationships, ensuring traceability.
Although 100% traceability was achieved for the Tebma-Kandu cooperatives, the harvest was particularly poor in the area where the program operates, so unfortunately the percentage procured directly from these cooperatives did not reach the target of 10%. However, we have communicated closely with the cooperatives and gained useful insights into aspects to focus on in future, including female farmers' ideas about pre-financing, effective management of warehouses, and management of cooperatives. Many cooperatives provided constructive ideas about the running of cooperatives and joined in business negotiations. Through the consistent efforts of the Fuji Oil Group, trust in this program is steadily increasing, along with empowerment of the cooperatives involved.

Next Step

We will provide support to increase the number of cooperatives enrolled in the Tebma-Kandu program. We will raise the profile of Fuji Oil Ghana Ltd. within the local community, increase the number of staff, and strive for more timely communication. This will help us to understand the ideas and circumstances of members of women's cooperatives, as well as show that we are always willing to purchase raw materials from them. Furthermore, we will strengthen our relationships with external partners, and provide the necessary training to individual women and partner organizations.

• Plant 6,000 trees/year
• Traceability to the regional level: 50% by the end of FY2023
• Direct procurement rate of shea kernels from Tebma-Kandu cooperatives: 15%

Discussions with Tebma-Kandu women's cooperatives

Solution-based approaches to implementing the Responsible Shea Kernel Sourcing Policy

Conserving parkland where shea trees grow

In northern Ghana, native shea trees are at risk from increased land clearance by heavy machinery. They are also under threat of being cut down for use as charcoal, which is on the increase.
In FY2022, working with local NGO EcoRestore, we planted 6,107 saplings of shea and other native trees. We also provided land for EcoRestore to plant 66,000 saplings. Training in appropriate cultivation techniques is important to improve the survival rate of the saplings. We plan to continue to implement training as well as planting trees in FY2023.

Training in looking after saplings

Reducing environmental impact by shifting energy sources

Fuji Oil Ghana Ltd. is shifting its production energy use from mineral oils to non-fossil fuels, such as by converting a portion of shea kernel meal and other byproducts of the shea butter production process into fuel, in order to reduce CO₂ emissions and waste during shear kernel processing. Using fuel from byproducts also reduces the use of firewood, leading to less deforestation, water savings, and reduced energy costs. The company's plant now uses 100% non-fossil fuel energy.

Creating value in local communities

Fuji Oil Ghana Ltd. continues to process and produce shea kernels and shea butter in West Africa, and to engage in the training of local employees on plant operations, quality control and safety, in order to create value and employment in local communities.
Under the Tebma-Kandu program, the company has signed memorandums of understanding (MOUs) with 34 women's cooperatives as of 2022, funded the construction of warehouses to procure guaranteed volumes of shea kernels at a given quality from the cooperatives, and provides pre-financing without any special conditions or restrictions before the start of the harvest season. This program includes capacity building of cooperative members and reforestation projects. This initiative has benefited about 20,000 women in farms in Northern Ghana by empowering them and helping improve the productivity of the cooperatives covered by the program. In FY2023, the number of women's cooperatives in the program is set to increase to 52.

Collaboration with external organizations

Fuji Oil Ghana Ltd. joined the Global Shea Alliance (GSA)^* in 2013 and the Shea Network Ghana in 2015. The activities of these organizations are:

• * https://globalshea.com/