Senegal Societe de Transformation des Legumes

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The proposed investment consisted of a 3.5 million A-loan from IFC and 3.5 million from the Private Sector Window of the International Development Association (IDA PSW) to support Societe Africaine d’Ingredients S.A. (SAF or the company), a French-Senegalese joint venture, in the development of a 18 million greenfield onion dehydration plant and 760-hectare nucleus farm located in the Gandiolais region in the Senegal River Valley, approximately 20 km from St. Louis and 275 km from Dakar in Senegal. SAF was in the process of acquiring a 270-hectare parcel of land from an existing company, a portion of which was being used for growing tomatoes. SAF had also planned to develop a 360-hectare parcel (which belonged to one of the Senegalese shareholders), located approximately 75 km north east of the primary parcel, near Lac Guiers and south of the town of Richard Toll. The project, however, determined the need to select a different location; this is now under development, approximately 50 km from St. Louis, near the village of Raynabe II (Commune of Diama) and the town of Ross Bethio.The project entails decommissioning an existing onion dehydration plant (newly built in 2003 and closed in 2014) near Dijon, in France, and SAF purchasing it for relocation to St. Louis. As the sponsor of the project, Dijon Céréales (a French agricultural cooperative) will manage the transfer of the plant with the technical support of Biaugeaud (a French engineering company), setting up the nucleus farm, and operating the plant in Senegal. This would be the first industrial-scale dehydration plant of its kind (no direct exposure of onions to the heat source) located in West and Central Africa.SAF's onion raw material needs for the dehydration plant were originally to be sourced primarily from the nucleus farm and complemented during the mid-season with production from small-holder farmers. The current project plan is to source onions primarily from small-holders, with whom the company will sign off-taker contracts; any shortfall will be supplied by the SAF farm. This allows a reduction in size of the farm. The onion harvest season (including onions produced by SAF on its farm) extends from early January until  mid-July (6 months). The dehydration plant and storage warehouse will occupy approximately 7,000 square meters. Raw material reception and storage entails cleaning and washing onions, destoning, trimming (to remove onion leaves), and short-term storage; the dehydration process entails re-washing, hand-sorting, and further rinsing of onions before passing through slicers and successive drying sections with declining temperatures (from 80 to 50 degrees Celsius), which reduces the final moisture content to 6%; the final step entails milling the dehydrated onions depending on customer specifications, before packaging of the finished product.It is projected that SAF would produce annually approximately 4,500 tons of dehydrated onion. The dehydration plant is designed to have a capacity to process up to 33,600 tons of onions per year (operating 7 months at a rate of 160 tons of onions per day) to produce up to 4,935 tons of dehydrated onion products (dry onion powder, granules, and strips, which can additionally be toasted based on client specifications)per year at full production capacity. The plant will be operational 24 hours per day over 210 days (7 months) per year given the lack of storability of onions at ambient temperature during the remainder of the year. Dry onion powder (80% of sales) as well as onion granules (10% of sales) and onion strips (10% of sales) will mostly supply regional food processors based in Senegal, Cote d'Ivoire, and Cameroon but SAF also expects to export to Europe. The company is already in discussions with Nestlé and Unilever, which plan to sign an off-take agreement for procuring dehydrated onion products from SAF. The investment will help support the company's investment plan, which comprises (i) the procurement of the equipment and machinery of the decommissioned dehydration plant in Dijon, (ii) the acquisition and land preparation of the nucleus onion farm including irrigation facilities,(iii) the transport and reassembly of the plant in St. Louis including acquisition and installation of a CHP plant and onion storage warehouse, and (iv) working capital. Additional financing will be provided by another development finance institution, which is also expected to provide funding for technical assistance. It is estimated that it will take 12 months to construct the plant in Senegal and start production. During the construction phase in Senegal, it is estimated that 30-60 workers will be employed through a subcontractor for a duration of 10 months. Once fully operational, it is estimated that the company will employ 70 permanent employees (52 at the plant and 18 at the farms) and 25 seasonal workers.