Earlier this year, Anthony Wambua noticed a difference in the grain market.
Millions of Kenyans grow small-scale crops but lack proper markets for their harvest.
Wambua founded the Kingdom Grains Company, a bulk sourcing company for corn, soybeans, chia seeds, red sorghum and beans.
It sources produce from small-scale producers and traders in Kenya, Uganda and Tanzania, then sells it to millers and other wholesale buyers.
“We cover about 17 value chains right from the farm gate to the buyers,” he says.
Mr Wambua worked in Uganda in 2008 and would travel to Rwanda and Tanzania, a job that enabled him to discover a market need in agribusiness.
“When I came back, I worked for Cargill, an American global food corporation with an office in Kenya, and as much experience as I had in agribusiness, Cargill was a big eye-opener for me because the exposure made me aware of these gaps. The grain supply chain, More on quality issues,” he says.
It is in Kargil that he saw farmers with the capacity to produce but little knowledge of post-harvest management and how to minimize losses.
Kingdom Grains has two categories of buyers – those looking for pulses, maize and red sorghum for human consumption, and another group that buys cottonseed cake, sunflower seed cake and rice germ for making animal feed.
Most of the buyers are millers, food processors and wholesalers who have bulk sources.
“One of the main concerns is the aflatoxin issue, which is a post-harvest issue, so we work with suppliers on post-harvest handling where we can because when you compromise quality from the source, the entire value chain is compromised. ,” he says.
Mastering the trade takes time and comes with lessons. Mr Wambua says he has had to turn to imports amid a cutthroat business environment locally.
“We are forced to import maize from Uganda, which attracts taxes due to the high cost of fertilizer in Kenya which increases the cost of production. Kenya is also a highly competitive business environment. The market is vibrant with many millers so the cost of purchasing raw materials goes up,” he says.
Mr. Wambua says the main headache in the logistics business is that you can get the right source of grain at the right price but face the challenges of collecting and delivering it.
One needs to have a very efficient supply chain so you always have intelligence and networks on the ground that give you accurate information consistently.
Another challenge is market dynamics. For example, before the general election in August, demand for soybeans in Kenya was high as about 80 percent of production came from Uganda and smaller amounts from Malawi and Zambia.
“Buyers, who are food processors, started panicking and stockpiled soybeans from Malawi and Zambia in their warehouses,” he says.
By the time Ugandan farmers started harvesting their soybeans, Kenyan buyers had stocked up on the product.
“The grain industry market is very dynamic. It can be very fluid. You can make your predictions but something happens, people start panic buying and when the harvest comes, prices drop,” he says.
He says the market is very competitive as both growers and millers are fighting for the best grain prices for their members through their respective lobby groups.
Import on their behalf
Despite being a young company, Kingdom Grains does about 1,000 tonnes per week.
“We are growing. We are talking to the Nakuru Business Association and some of their members want us to do about 300 metric tonnes a week,” he says.
An accountant by profession, Mr Wambua says two millers have also requested him to import 3,000 metric tonnes of maize on their behalf and although the company cannot do so now, he is looking to collaborate with the companies.
One strategy that has sustained the business is contacting the farmer well in advance of harvesting.
“We build relationships with farmers. People appreciate when you walk with them, starting to grow as opposed to showing up when it’s harvest time. We involve farmers to some extent in the whole process,” he says.
Do they plan to sustain the business?
“On post-harvest handling, we invested in things like tarpaulins to dry the grain, which people take for granted. We have a network of farmers in Kenya and Uganda and are entering Tanzania. We want to start teaching them post-harvest management and how to use moisture meters and invest in rapid aflatoxin testing kits, just to make the business sustainable.
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“Another thing is being competitive in terms of prices – we update our price list every time which means having market intelligence and getting information from our sources,” he says.
To survive the stiff competition, Mr Wambua says Kingdom Grains is setting its sights on smaller buyers.
“These people buy about 500 kg of grain so we are trying to map this market and be very specific in meeting their needs.
“This is where quality and food safety come in because you’re selling to restaurants and want assurance that what you’re giving them is safe,” he says.
25 workers in EAC
He created the Kingdom Grains Company, currently based in East Africa, for about 25 workers.
The well-traveled agribusiness entrepreneur says the company plans to launch an e-commerce platform.
“This makes all the difference because as an entrepreneur you are available.
Market availability and effective communication are key,” he says.
For those willing to venture into the grain value chain, Mr. Wambua advises that the first thing to do is to learn as much as you can about the various grain value chains from sourcing, standards, harvesting periods, supply chain components of transportation and supply chain components. The logistics and all the dynamics involved at all levels and what it takes to collect the grain from point A and transport it to point B and finally to the market.
“There are no shortcuts but to start on a small scale with a small size and grow. And even as you begin, it will be a learning curve.
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“Everything you do has to be market-driven and informed by market needs,” he says.
He adds that one cannot talk about a growing grain-sourcing company without food security as they are two sides of the same coin.
“Anyone who wants to be in the food value chain in Kenya, East Africa and Africa has to address the issue of food security and that has been our differentiating point even in these early days as a business,” he adds.
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