Remo Pedon of Acos tells the story of how he founded a bean processing plant in rural Ethiopia and the difference it has made.

By wpengine

4 Flares 4 Flares ×

“A great example of private investment in developing countries.” These were the words Bill Gates used to describe the Acos bean processing plant in Nazreth, Ethiopia during his visit there in March 2012. Through the hard work and vision of Remo Pedon, the Italian commodity trading company’s Managing Director, the Nazreth project has become a model for unlocking the potential of agriculture in Africa.

Photo: Bill Gates and Remo Pedon at Acos in Nazreth, Ethiopia (March 2012).

Since its construction in 2005, the facility has transformed the local bean industry by introducing European standards for cleaning and processing, as well as training materials to produce higher yields. Working with Catholic Relief Services (CRS), Acos has succeeded in creating a value chain that puts more money in the pockets of smallholders and encourages greater efficiency and quality. As part of the initial phase of the project, the company founded a local primary school which enrolls students from Nazreth and other nearby communities.

We spoke to Remo Pedon recently about the inspirations for and development of the project, one which has brought a great deal of hope and pride to the people in this small Ethiopian community.

IFT: How did you get your start in the world of food commodity trading? What makes the Pedon/Acos story unique among global trading enterprises?

Remo Pedon: My brothers and I started back in 1984 with a small pulses’ packaging line in Italy to serve the fast growing retailers and supermarkets. Our first break came from adding the bar code to our beans’ packs, and we have not looked back since. Pedon, which was the original company, has been the market leader in pulses retailing in Italy for the last decades. Commodity trading came in the early 2000s with the birth of Acos (Agricultural Commodity Supplies). Initially we intended to scout for goods to fulfill our own requirements. We eventually opened our first factories in China, then Ethiopia and Argentina. Now we sell our products all around the world.

I would say that our unique selling point is quality. We serve high-end canning industries all over the world. We have opened new markets from origins such as Ethiopia. I believe the Acos name stands for service and reliability. We stand by our product, and this is a key point for our company.

IFT: What inspired you to become involved with the Nazreth project? What prior experiences did you bring to the table?

Remo Pedon: We believe in social sustainability for all our projects, but Ethiopia is a unique environment. As a group we believe Africa is the food basket to the world, and with a predicted population of 8 billion by 2025, we all need to invest in Africa for the long term. My first time in Ethiopa was in 2002, and when I arrived I saw that Ethiopian mothers would come to work with their babies and sit on the floor all day hand picking beans. I knew I had to do something about it. I believe that depriving children of their childhood means taking away part of their future, and our vision is that a happy and educated workforce is a benefit to our company.

We are still at heart a family business with solid Christian values. My father, who founded Pedon, was always active in the community as a benefactor. He first started to help the people in our region after the Second World War, giving food and credit to those in need. It’s just something that’s in the family blood.

IFT: What in your view is Ethiopia’s great agricultural potential? How do beans play into this?

Remo Pedon: In Ethiopia only a small fraction of land is actually used for production because of the lack of infrastructure. Because of its physical position—it is on a plateau—it’s a country that can have several continuous crops, so it could become an important source of food for the whole world. Traditionally we look for countries that don’t have internal consumption of beans. We are not interested in feeding a domestic market; we export them to different destinations and to new markets.

The Ethiopian navy pea bean is now a strong competitor to the American variety, the traditional market leader. Ethiopia has come to the foreground as a new variety. It is a little smaller because of the dryness of the country and a little creamier in color. It also holds under cooking better because it’s a slightly harder bean.

IFT: What are the main pulses processed at the Nazreth plant and what is the approximate volume? Are there plans to expand into new markets or increase volume?

Remo Pedon: Our main product from Ethiopia remains the navy pea bean. It was traditionally a cash crop for smallholders, and it is now a traded commodity on the Ethiopia Commodities Exchange (ECX). We will process 35,000 MT during next season and we expect to reach 50,000 MT capacity by 2015. Ethiopian small reds are also a strong product and are being very well received in the market.

Acos has concentrated on opening new markets with leading canners in Europe, USA, Saudi Arabia, Israel and South Africa. We have been the leading Ethiopian exporters for the last four years running. Traditionally, Ethiopian exporters tended to serve the loose product market in countries like Pakistan, India or North Africa.

IFT: What kind of positive changes has the Nazreth facility brought to the local community?

Remo Pedon: Actually there have been many positive changes. Smallholders have seen their selling price for navy pea raw material grow sevenfold since 2005. The network of suppliers around our Acos Ethiopia operation now provides employment to 15,000 people in the community. Also, after 10 years everybody now has a mobile phone, so that has completely changed their situation and their lives. Taxis, which were once just carts and donkeys, have been replaced by motorized scooter cars. We’ve seen a lot of progress and modernization.

IFT: What are some of the cultural differences that have presented challenges during your work in Ethiopia?

Remo Pedon: Ethiopia is a land of contrasts, a beautiful land of great agricultural potential, but a closed society. For example they have their own calendar; they are currently living in 2005. They also use a different time system from the rest of the world. For example 6 o’clock in the morning for them is like midnight for us. It’s a completely closed system but they use it. Some people ask me if this is just a tradition, but it’s not. Young people, 20 years old, use this system, so it’s not just for the older people; it’s for everybody.

Everything related to beans is based on the price of a bag. So they’re always thinking of the price for one field bag, which is 100 kg. We [in the industry] normally talk about tons, but this can lead to big mistakes. International trading fluctuations are not known in Ethiopia and therefore tend not to impact the Ethiopian market. Despite these different structures and traditions, there can be a way of working with it and adapting to serve the international market, though it’s not always easy.

IFT: What are some of factors that have allowed Acos to flourish in Ethiopia?

Remo Pedon: Constant product supply is a key factor. Also the banking system is very forward thinking and helpful. In Europe it is very difficult to obtain credit because of the banking situation. In Ethiopia if you have a very good business plan, as well as a good budget and you export, the bank will give you the amount of money that you need. This is important because in other parts of the world, not only Europe but for example South America, it’s very difficult to access credit from the bank. Here they support our project.

IFT: How would you describe the impact of the Ethiopian Commodities Exchange (ECX)? Has it inspired similar efforts in other developing countries in Africa?

Remo Pedon: I would say it has been very beneficial. Acos was a founding member and I believe it has steadied the market a lot. It is a good example of what Ethiopians can achieve when they set their minds and political will to it. Within a mere three years they have built a $1.2 billion market. Dr. Eleni Gabre-Madhin, who founded the exchange, has now left ECX to repeat its success in Kenya.


Visit their Sponsor Profile to learn MORE! Want to become a goIFT Sponsor?