NSE-listed brewery has 60,000 small-scale growers on contract to ensure steady grain supply
East African Breweries Limited (EABL) #ticker:EABL has paid Sh1.5 billion to 60,000 sorghum farmers this year.
The Nairobi Securities Exchange-listed brewer, which is majority-owned by British multinational Diageo, contracted the small-scale farmers in the region to ensure a steady supply of the grain.
The company says it is looking to increase the supply of sorghum going forward following the opening of its new plant in Kisumu, which is complete and is set for commissioning later this year.
The company has contracted additional growers in western to supply sorghum to the new plant.
“We are very proud to welcome the new 15,000 farmers contracted to supply our Kisumu brewery into our ever-expanding value chain,” said EABL chairman Charles Muchene in the brewer’s annual report. “These farmers will help us realise our vision to support in delivering over 100,000 jobs to the communities across the western Kenya region.”
The EABL, which started using sorghum as a raw material for the production of its low-priced Senator Keg in 2009, has been eyeing to increase local sourcing of raw material, which currently stands at 80 per cent.
“Under this programme, EABL has managed to develop a network of more than 60,000 farmers supplying the company with 80 per cent of raw materials,” said the brewer.
“In return, EABL provides farmers with free inputs (seeds), fertilisers, extension services and other technical and financial support needed for farming.”
The contract farming guarantees farmers purchase of their harvests but also helps the brewer cut costs.
“Through these initiatives and the direct payment of Sh1.5 billion to the farmers, EABL has played a part in local wealth creation.
“We have created value directly to local economies and have built capacity among the communities we work in,” says the brewer.
The brewer has contracted farmers in Migori, Homa Bay, Kisumu, Siaya and Busia to grow white sorghum, the main raw material for making its low-priced Senator Keg.
“To ensure enough sorghum supply, KBL will be providing sorghum seed and donating tractors, with the aim of supporting farmers deliver quality crop,” the brewer said.