EABL plots against rivals using low cost supply model

By Morris Aron

Several kilometres deep into Mau-Narok complex, you meet Charles Kamotho, a busy farmer harvesting barley. He looks contented with a neatly lined grey hair, the hallmarks of graceful aging and an evident gap tooth whenever he smiles.

"Farming is my passion, growing barley is my forte," he says. In the 660 acres barley farm, Kamotho will rake in about Sh15,000 per acre after harvest.

Getting this money involves alerting alert officials at East African Malting Limited — a subsidiary of East African Breweries Limited (EABL). They will harvest the crop, weigh and a give out a cheque.

The advantage is an assured market, including insurance of his crop and subsidised farm inputs such as fertiliser and seeds.

Kamotho is one of the more than 100, 000 barley farmers benefiting from an EABL financing programme aimed at self sufficiency in barley production at low costs in the country.

"The idea here is to assist farmers reap the maximum they can for their efforts. EABL on its side ensures that the best quality barley for their products in addition to streamlining our supply chain," said Jean Kiarie- Ngumo Head of sustainability.

Under the arrangement started in 1975, farmers who grow the crop are encouraged and financed after pre-qualification.

To qualify, one is required to have at least 35 acres of land solely dedicated to barley growing and a willing heart to enter into a financing agreement with EABL.

EABL then supplies farmers with farm inputs including seeds, fertilizers and insecticides.

The farmers are financed for their input needs through a loan from the Co-operative Bank at a negotiated interest rate of 12 per cent. In addition, their farms are insured by CIC incase of misfortunes such as drought and frost.

In addition, EABL also trains the farmers on best cultivation practices and on how best to ensure maximum yield. EABL has in the recent past upped the game in ensuring steady supply of raw materials as it diversifies into sorghum as a source of raw materials in the manufacture of alcoholic beverages.

"We are currently working on a programme that ensures a steady supply of sorghum. We have projects in Nyanza, Eastern Province and also in the Rift Valley," said Patrick Kamugi, general manager East African Maltings.

Under the programme, EABL is targeting 24,000 tonnes of sorghum this year, an additional 30,000 tonnes next year and 60,000 tonnes by 2017.

Analysts argue the decision by the beer maker to engage farmers and diversify, is a concerted effort to grow a loyal customer base under its ‘grain to bottle’ programme in addition to ensuring a consistent supply of raw materials and elimination of any additional supply chain costs aimed at maximising profitability its rival SABMiller.