How fight against brokers inspired couple’s milling business

Daniel and Ruth Kinoti. [Courtesy]

Growing up, Daniel and Ruth Kinoti, saw their parents invest in farming but get little in return due to poor prices. This propelled their desire to start a venture by buying produce directly from farmers, selling it and giving them better prices. 

That was the beginning of Shalem Investment Limited, a milling company that now manufactures various Asili Plus flour products. Now, their factory in Meru County mills maize, soya, finger millet and sorghum and works directly with 30,000 smallholder farmers. 

 What was the inspiration behind the company?

Our journey started after seeing how smallholder farmers, our parents included, struggle in the farms, planting and producing a bumper harvest but get very little in sales.

Our parents used the little they get from farming to educate us up to university and later, each one of us asked: How could we help not just our parents but other villagers to make profits from farming? To mitigate, we set up a small store in Meru and started buying from farmers, selling and giving them better prices than brokers did. That is how Shalem, a social business enterprise started.

Our focus is not just to make money but improve the lives of farmers. Later, we expanded and started milling at Kenya Industrial Estates in Meru. We established our own brand and continued growing to where we are today. We have 45 full-time employees and over 50 casual workers. We’re currently working with approximately 30,000 smallholder farmers. 

Where are your markets?

Our current market covers several counties including Meru, Murang’a, Laikipia, Isiolo, Tharaka Nithi, Embu and Kiambu, and counting. Our products are branded Asili Plus, meaning they’re original.

Daniel and Ruth Kinoti. [Courtesy]

What was the source of your capital?

We used our savings, l am an economist by training and worked with several international non-governmental organisations (NGOs) and my wife is a high school teacher. We also pumped in Sacco loans. Initially, we approached various local banks but nothing was forthcoming. However, since we were already creating an impact at the farmers level through our savings and Sacco loans, we got a lender who agreed to support our efforts. This support is what enabled us to reach a large number of farmers.

Tell us how you benefitted from development partners

Development partners accelerate the growth of a company, making it a win-win situation. For us, Global Alliance for Improved Nutrition (GAIN), an entity that supports access to nutritious and safe foods was a game-changer. GAIN trained and gave us technical assistance, and a grant we used to purchase equipment that we would soon start using to process a nutritious pre-cooked ugali flour that will be a blend of sorghum, soya and maize.

 Tell us about your latest innovation?

Our latest innovation is about pre-cooked ugali flour. Normally ugali takes quite a long time to cook but with the pre-cooked ugali flour, it will take less than five minutes. You only put boiling water, stir to your taste and it is ready to serve. This has been made possible through the support of GAIN to acquire an extruder.

Tell us your transit from finding the market to becoming marketers?

We started by searching for reliable markets for farmers produce, East Africa Breweries Limited (EABL) offered us the market for sorghum for thousands of smallholder farmers and therefore for several years, we aggregated for them, and still do. However, there was a year we had a significant drop in demand, and as a result, we were stuck with thousands of bags of sorghum in our stores. We learned hard lessons that you cannot depend on one market to grow a business. We resolved to become a market ourselves. And, that is how the idea of value addition started, from selling grains to value addition into flour products.

Sorghum. [Courtesy]

Describe your business journey

It has been long and winding, but the beauty of it is that we have been responding to our own challenges and those of people close to us.

What’s your advice to anyone planning to venture into this business?

Based on our experience, agri-entrepreneurship is not easy but very satisfying when you are patient. It is even more satisfying when the business helps to mitigate the challenges of smallholder farmers. Invest in quality food, because people want quality food. Quality sells and it sells consistently. This business requires continuous investment and improvement in all areas.

Tell us the challenges you face

When the government declared manufacturing as one of the Big Four Agenda, we had many expectations, for example, lowered electricity cost, availability of affordable working capital, among other goodies. Unfortunately, electricity costs have gone up and none of the other variables has improved to favour the sector. Moreover, maize and wheat as our primary raw materials are expensive due to high costs of production. There are also additional levies paid across counties among them distribution and branding licenses. All these, coupled with stiff competition, affect business performance whose margins are too low.

What are your future plans?

We want to continue with value-addition for other food-related crops. Value addition stabilised our business and our market is diverse now. We want to ensure our business remains focused on value addition.