As a part of SNV Kenya’s Procurement Governance for Home Grown School Feeding project objective to build capacity within producer organisations (POs), SNV introduced a Grain Business Hub model to 13 POs as a means of enhancing access to the home grown school feeding market.
Introducing Grain Business Hubs
A Grain Business Hub model is a collective of supportive services that assist the production activities of a PO’s member farmers, enabling them to produce and sell grains more efficiently and profitably. A Grain Business Hub model also enables a farmer to store grains to the standard required by most formal markets and can help smallholder farmers collaborate and register as a formal business entity, allowing them to compete and bid for tenders. SNV selected 13 POs to convert into Grain Business Hubs based on their ability to:
- Interest smallholder farmer members to enter in joint marketing of their products;
- Mobilise funds and engage with financial institutions;
- Build or access warehousing facilities;
- Capitalise on already-existing connections to formal markets.
An entrepreneurial cooperative
Kuona Mbele Cooperative Society in Uasin Gishu County is one of the 13 POs developing itself into a Grain Business Hub with the support of SNV. Although initially weak in physical and financial capacity, the cooperative worked with SNV to develop the skills necessary to enter formal markets. SNV introduced Kuona Mbele to the school feeding market by involving the PO to schools in the distant Elgeyo Markwet County through matchmaking events. However, with the closest school feeding market 100 km away, SNV was wary about the potential for the PO to transverse the distance necessary to sell their goods in a competitive way. Nevertheless, Kuona Mbele proved that they were able to overcome these barriers and become competitive suppliers to the school feeding market.
How they did it
After a matchmaking event in which 18 schools and 17 POs participated in January 2014, Kuona Mbele not only managed to secure a school feeding contract to supply the required foodstuffs for school feeding meals immediately, but has also secured at least one contract within each subsequent procurement cycle. The PO has sold to one school, Rimoi Primary, three times in a row, proving they have a good business relationship with the client.
Kuona Mbele’s success can be attributed to their ability to supply goods to a distant market while being cost effective at the same time. Kuona Mbele avoided renting or purchasing their own vehicle to transport goods and engaged in other means of transporting their products to save money. They did this by:
- Sending their wares as bus “passengers”: POs typically package their goods in 90kg bags, which are too large to send on passenger busses. Kuona Mbele packaged their goods in 30kg bags, which easily fit in bus seats, enabling them to purchase tickets for the seats occupied by each bag, as opposed to renting an entire vehicle.
- Taking advantage of local trade routes: For a small fee, empty trucks carry Kuona Mbele’s produce as they leave on their normal trade route from Uasin Gishu County to Elgeyo Marakwet County where the schools are located. This strategy favoured both Kuona Mbele and the truck drivers, who made some extra income when they otherwise would not.
With the money saved through these strategies, Kuona Mbele was able to:
- Purchase a milling machine to increase the value of their products.
- Acquire a demonstration plot for member education.
- Build a 1,200 metric ton storage facility through member contributions.
What’s next for Kuona Mbele?
Kuona Mbele intends to continue to grow and develop their business. The next steps the cooperative decided to take include:
- Hiring a full time manager to assist in handling daily transactions, correspondences, and effective marketing.
- Engaging in Tech for Trade, a development initiative designed to improve transparency and accountability in agricultural trading.
- Buying products from non-members in their sub-county to keep adequate goods stocked.
Kuona Mbele was a community business organisation when SNV began working with them and has since successfully achieved status as a registered cooperative. Their success in joint marketing has led to the expectation that Kuona Mbele will continue growing into an effective Grain Business Hub.
Learn more about the Procurement Governance for Home Grown School Feeding project.