Enterprise

How Malindi firm cracked hot chillies export market

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Workers grade the African Bird Eye chili at the Equator Kenya factory in Malindi. PHOTO | CAROLINE WAMBUI | NMG

Malindi town is a hot destination for tourists looking to busk in its white sandy beaches as they soak in the hot sun. It is a big draw especially for Europeans and particularly Italians, so much so that it has acquired the nickname “Little Italy.”

However, away from the leisure beaches and hotels, Equator Kenya Limited has set up an agribusiness that is among the hottest ventures in the region. The company is utilising the hot weather for farming and processing quality African Bird Eye Chilies for export.

Founded in 2010 by Jan Willem van Casteren, the company has contracted over 8,000 farmers across the region to cultivate the variety that is highly sought by spice companies for its hotness and pungency.

Before settling on the African Bird Eye Chilies, Mr Van Casteren says he did his homework. With only his family to fund the venture, he says he did not have the luxury of getting the marketing wrong. The main consideration was a variety that is not only high yielding but high earning and above all, not capital intensive.

And African Bird Eye Chilies seemed to tick all those boxes. It was a particularly attractive proposition to farmers who have large tracks of land but lack the massive capital outlay it takes to put it into large-scale production of other high-earning crops that require a lot of water.

“It is also a very simple crop, not one easily affected by pests and diseases. If well taken care of, when it flowers, it carries green, orange and red fruits throughout the year,” adds Almut van Casteren, the company’s chief executive offering an explanation why many farmers have taken to the crop.

It has also helped that Equator Kenya has set attractive farm gate prices. For every kilogramme of fresh chilies the farmers deliver, the company pays Sh60. A single plant can yield up to 1,000 grammes of chillies in a year, which drops to about 300 grammes when dried. This translates to between one to three tonnes per acre.

“We never pay farmers late, and always embrace transparency, making sure that farmers have access to safe inputs,” adds Ms van Casteren noting that ensuring proper and timely communication through SMS has been key to cultivating a special relationship with the growers.

But more than just setting the right farmer prices, Equator Kenya has leaned heavily on technology to drive its enterprise. With its products mainly targeted at sensitive consumers in Europe, traceability is crucial to get the relevant certifications that open the doors to the lucrative 27-country European Union market.

The company has been utilising a mobile application that collects data at every stage, right from seeds used, to the harvested field, to the farmer’s details, and the date of collection all the way to the exported product.

Coincidentally, the eProd mobile application was developed by a chilli consolidator that was frustrated by the lack of a supply chain management system for small-scale farmers to enable it meet the high demands of export markets.

In Equator Kenya’s case, the data is collected by field officers. For efficiency, the company has fixed collection routes and centres along the coastal region to minimise farmers’ transportation.

Once the produce gets to the packhouse, quality grading follows. The fresh produce is then loaded and assigned to the dryer, after which it’s offloaded and updated in the system. Sorting according to the client’s specification follows. The inventory module makes it possible to have complete stock information at any given moment.

During export, the company manages a container loaded with 6300 kgs with standard packaging, though the packaging can be standardised based on the clients' requirements.

Equator Kenya sells its produce to large specialised spice traders and food processors. To ensure competitiveness and to distinguish its products, the company has its products branded as Kenyan Bird’s Eye Chilies.

With the Covid– 9 pandemic the company management has learned that it is important to be in total control. To avoid stem losses during this turbulent period, no cash transactions were allowed, and the staff is now in a position to account for all items assigned to them.

“Full accountability. We love it!” Ms van Casteren says.

If the company had a chance to start the company again, the one thing they would do differently is to look for investors early enough. Being a family business, and having financed everything themselves, the company opines that if they had an investor at an earlier stage, they probably could have grown faster and implemented a second crop to the farmers.

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