The diversification plan is meant to cushion company from fluctuating tea and coffee prices.
Listed agriculture firm Sasini #ticker:SASN has joined its rival Kakuzi #ticker:KUKZ in growing macadamia and avocado for export as part of a diversification plan meant to cushion the business from fluctuating coffee and tea earnings.
Sasini, which primarily grows coffee and tea, has set aside 200 acres of its land to grow avocado in Nandi and Sotik but has for the past six months been exporting fruits sourced from independent farmers.
The firm is also planting macadamia on a similar size of land in Kiambu, Ruiru and Mweiga as it prepares to commission its Sh500 million factory in Kiambu for processing the commodity starting April.
Sasini’s venture into macadamia and avocado farming comes at a time when its net profit for the year to September dropped 41.2 per cent to Sh339.7 million on lower gains from divestitures.
“Prices of commodities such as coffee and tea prices fluctuate significantly based on global demand. Diversification to the two crops will cushion our income,” said Stephen Githiga, Sasini’s managing director.
“The demand for both crops is higher than supply at the moment.”
Its rival Kakuzi exported 7,102 tonnes of avocado and 476 tonnes of macadamia in 2016, according to the firm’s latest annual report.
Avocado earned Kakuzi Sh1.9 billion, an increase from the previous year’s Sh1.8 billion.
Sasini’s full year net profit benefited from a Sh16.9 million gain from the sale of Savanna Coffee House but it was much lower than the Sh422.7 million it booked the previous year from divestitures.
The firm’s revenues increased 17.7 per cent to Sh4.2 billion, attributable to stronger international tea prices. It also booked a Sh81.7 million gain in fair valuation of its biological assets, compared to a loss of 117.9 million in 2016.
Coffee production was 861 tonnes, a drop from 944 tonnes recorded the previous year.
“Despite the effects of the severe weather conditions in the early part of the year, there was an improvement in tea production to 11.2 million kilogrammes against the production of 11.1 million kg the previous year,” the firm said.
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