1. Pricing the Wild Gold (Shea Butter) Fairly
for Mutual Benefit
Global Shea Alliance Conference
4th March, 2013
Presenter: Zakaria Jalil
Venue: Sheraton Hotel-Abuja, Nigeria

2. Questions for Reflection
• What does Fair Pricing Mean?
• When do we say Prices are Fair?/What Constitutes Fair
Prices?
• Can there ever be Fair Prices?
• Who determines fair Price?
Title 2

3. What is Fair Pricing?
• A fair price is the price point for a good or service that is
considered acceptable to both parties involved in a
transaction.
• Buying Goods at prices that cover the full cost of
production and enable a living wage to be earned by
producers.
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4. Challenges of Fair Pricing in Shea Butter
• Lack of Market Information.
• Market Competition (Cost Differentiation).
• Rising cost of production.
• Weaker producer organizations (efficiency, volume,
bargaining).
• Poor/Lack of Price regulatory bodies.
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5. Who Determines Fair Prices
• Buyer
• Producer
• Both Buyer and Seller
• Regulatory Bodies
When Do We Say Prices are Fair?
• When it Benefits Producers of butter.
• When it Benefits Buyers of butter.
• When it Benefits both (Producers/Buyers).
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6. Approaches to Fair Pricing
• Cost Driven (Cost of Production).
• Price Driven (Market forces)
Elements of Fair Pricing
• Cost of Production
• Demand and Supply
• Competition
• Quality
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7. Cost Driven Approach to Fair Pricing
Cost Breakdown of Processing 1 bag (90kg) of Shea Butter (Pagsung Tamale)
Percent of
Item Quantity Unit Cost ($) Total Cost ($)
Total Cost
Shea nuts (1 bag) 1 26.3 26.3 65.2
Crushing & milling 1 5.3 5.3 13.0
Labour (Roasting,
1 2.6 2.6 6.5
Kneading, Carting)
Fuel wood
1 5.3 5.3 13.0
(Roasting/boiling)
Packing in polyethen
1 0.3 0.3 0.7
sheets/Paper Boxes
Water (drum) 225
1 0.6 0.6 1.6
litres
Total Cost 40.4 100
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8. Cost Driven Approach Cont.
• Conversion Efficiency Nut to Butter (30-35%)
Scenario 1 : Break Even Point is Highlighted Red
Price($)/kg 1.16
Gross
Throughput (Qty Total Sale Total Cost of
Unit Cost of Gross Profit
of Butter After of Butter Production
Sale ($)/kg Profit ($) Margin
Processing) kg ($)/kg ($)/Bag
(%)
27 31.3 40.4 -9.1 -0.003
1.16
27.9 32.3 40.4 -8.1 -0.002
1.16
28.8 1.16 33.3 40.4 -7.0 -0.002
29.7 34.4 40.4 -6.0 -0.002
1.16
30.6 35.4 40.4 -4.9 -0.001
1.16
31.5 36.5 40.4 -3.9 -0.001
1.16
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9. Cost Driven Approach Cont.
Scenario 2:
1.32 Break Even Point is Highlighted Red
Price($)/kg
Gross
Throughput (Qty Total Sale Total Cost of
Unit Cost of Gross Profit
of Butter After of Butter Production
Sale ($)/kg Profit ($) Margin
Processing) kg ($)/kg ($)/Bag
(%)
27 35.5 40.4 -4.8 -13.6
1.32
27.9 36.7 40.4 -3.7 -10.0
1.32
28.8 1.32 37.9 40.4 -2.5 -6.53
29.7 39.1 40.4 -1.3 -3.3
1.32
30.6 40.3 40.4 -0.1 -0.3
1.32
31.5 41.4 40.4 1.1 2.6
1.32
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10. Cost Driven Approach Cont.
Scenario 3:
Break Even Point is Highlighted Red
Price($)/kg 1.42
Total Cost Gross
Throughput (Qty Unit Cost of Total Sale
of Gross Profit
of Butter After Sale of Butter
Production Profit ($) Margin
Processing) kg ($)/kg ($)/kg
($)/Bag (%)
27 38.4 40.4 -2.0 -5.2
1.42
27.9 39.6 40.4 -0.7 -1.8
1.42
28.8 1.42 40.9 40.4 0.6 1.4
29.7 42.2 40.4 1.8 4.4
1.42
30.6 43.5 40.4 3.1 7.2
1.42
31.5 44.8 40.4 4.4 9.8
1.42
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11. Cost Driven Approach Cont.
Scenario 4: Break Even Point is Highlighted Red
Price($)/kg 1.58
Gross
Throughput (Qty Total Sale Total Cost of
Unit Cost of Gross Profit
of Butter After of Butter Production
Sale ($)/kg Profit ($) Margin
Processing) kg ($)/kg ($)/Bag
(%)
27 42.6 40.4 2.3 5.3
1.58
27.9 44.1 40.4 3.7 8.4
1.58
28.8 1.58 45.5 40.4 5.1 11.2
29.7 46.9 40.4 6.5 13.9
1.58
30.6 48.3 40.4 7.9 16.4
1.58
31.5 49.7 40.4 9.4 18.8
1.58
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12. SNV-AAK Nut Pre-Financing Model; A Case of Fair Pricing
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13. When Do We actually Say Prices are Fair
“Prices Can be Seen as Fair when Prices being Offered by
Buyers of Shea butter/Nuts are not lower than Cost of
Production to Guarantee Profit Margins and Must not
Heighten what Consumers of end Products of butter
Consider as Fair for the Buyers to Stay Competitive”
Thank you
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