Companies

Jamii Milling gives maize farmers an economic lifeline

jamii

The Jamii Milling Complex in Eldoret. PHOTO | COURTESY

Jamii Milling is in talks with two banks to grant its suppliers and distributors access to credit, thus offering the miller a steady supply of maize and ensuring faster delivery of flour to the market.

With its newly built Sh1 billion milling plant in Eldoret, the miller plans to enter into a contract with farmers to grow maize.

Joshua Chepkwony, the chairman of Jamii Milling, told the Business Daily that farmers are currently supplying maize on ad hoc basis, but this is set to change after the conclusion of talks with the two banks.

The banks will give loans to farmers to buy seeds, fertiliser and tractors; a major stride towards commercial maize farming. Jamii will offer the farmers a ready market for their produce.

Other than the farmers, Jamii said it will also extend the loan facility to its distributors who wish to increase or acquire a fleet of trucks or those looking to expand the size of their warehouses.

“We are approaching the farmers differently. We want to build a long-term relationship with them and that is the reason we are going for contractual farming,” Mr Chepkwony told the Business Daily in an interview.

He added that creating such an enabling environment would help solve the financing problems that farmers and distributors face; translating to growth in the agribusiness sector, creation of new jobs and increase in food production.

“Some of these farmers or distributors don’t have enough cash flow, but this will be a thing of the past. We want to create a financing model and build a whole community where we can track the whole process. We will start with two banks and hold talks with additional financial institutions later,” he added.

The milling plant is located 15 kilometres northeast of Eldoret town and has a capacity to process 3,000 bags of maize per day. The maize flour brand is set to be launched in two weeks.

READ: Jamii Telecoms owner builds Sh1bn maize mill

Contractual farming is not new in Kenya. However, maize farmers have not benefited much compared to growers of sugarcane, tobacco, tea, barley, mangoes and cassava.

Multinationals such as Coca-Cola, Mastermind, British American Tobacco and regional ones such as East Africa Breweries Limited – in looking to cut costs of imported raw materials – have struck deals with farmers and they offer them incentives like training, high-yielding seeds and a ready market.

Such deals entice farmers who have long been grappling with low and erratic market prices for their produce.

Jamii is following in these footsteps and will link the small holder maize farmers to markets and enable them to share production and marketing risks, while exposing them to new opportunities to increase their earnings.

The milling plant is expected to employ 100 permanent staff and 50 workers on contract in the first phase. It will start by producing maize flour, poultry, animal and fish feeds.

The second phase of the project will include wheat flour processing. The milling plant has a storage capacity of 30,000 tonnes.

There are plans to put up extra storage of 40,000 tonnes for wheat by the beginning of next year.

Last year, the value of marketed maize was Sh10.1 billion, according to the Kenya National Bureau of Statistics, a five per cent decline from the previous year.

Maize production dropped by 4.2 per cent to 39 million bags in 2014.

The entry of Jamii into the maize business is expected to offer farmers an additional market for their produce, but raise competition for grains with established millers like Unga, Dola and Jembe that also have milling plants in the town.

The factory has been built at a time when millers have claimed they were experiencing maize supply shortages, forcing them to increase flour prices.

The government has, however, opened the National Cereals and Produce Board’s doors to the millers to access cheaper supplies. Kenya is a maize deficit country that also relies on its neighbours to supplement stocks.

Millers have said the high cost of raw material was due to restricted movement of maize from neighbouring countries such as Tanzania that is facing an acute shortage this year.

The ex-factory price of maize flour has risen from Sh84 to Sh87 per two-kilogramme packet in February to between Sh95 and Sh100 last month, a 13 per cent increase.