How we built a Sh25m maize empire

The cream building in Mabonde Sub-location on the outskirts of Kitale Town in Trans Nzoia County is conspicuous as it dwarfs the rest in its neighbourhood.

To access it, one drives for about five kilometres on an earth road after branching off from the main road that leads to Kitale Town.

Inscribed on the building is the name Wamuini Soko Huru. The building belongs to a maize farmers group in the location going by the same name, and it epitomises their struggles and successes.

“This is where we store our maize after harvest,” group chairperson Judith Muhambe says.

The farmers built the warehouse that has a capacity of 5,000 90-kg bags of maize at a cost of Sh2.5 million.

REARING CHICKEN

“We were tired of being exploited by middlemen who were buying our produce at low prices. We built the warehouse so that we could store and sell the maize when prices rise,” Judith, whose group has 43 members, says.

Building the warehouse capped the hard work for the group that started off by contributing Sh30 every Tuesday.

“We were 10 of us when we started in 2003. Then we were rearing chicken and the aim was to contribute money to buy vaccines for our poultry and access agricultural extension services.”

As members grew, the group increased contributions to Sh50, thereafter to Sh100 and then to the current Sh200, which they pay every Tuesday when they meet from 9am to 11am.

“We still use the money to buy vaccines, but as we held our meetings, we realised that we have a bigger problem finding market for our maize.”

The group did not have an immediate solution to their problem. However, they embraced table-banking — contributing and lending money to members at a small fee.

“We encouraged members to borrow money from the group to use it to plough their land, buy farm inputs and even pay school fees for their children,” Judith says.

Wamuini Soko Huru currently has two loans, namely development and emergency. Members can borrow from Sh20,000 to Sh100,000 for development and pay with a 10 per cent interest in one-and-a-half years.

On the other hand, emergency loan attracts the same interest but members can borrow up to Sh5,000 and pay in four months. Members of the group act as guarantors of money borrowed.

So far, total cash lent out stands at Sh25.5 million — Sh24 million being development loans and the rest emergency, with members shares growing to Sh23,000 each.

MANY CHALLENGES

The savings they had, coupled with challenges they faced as maize farmers pushed them to built the warehouse.

“Initially we were harvesting maize and keeping it individually in stores in our homes. But we realised we were facing many challenges, besides exploitation by middlemen. Our maize would be destroyed by weevils and large grain borers,” Judith recalls.

The quest for a warehouse was further fanned by the lessons they got from the East African Grain Council trainers on how to stop post-harvest losses and avoid exploitation by middlemen.

“We were taught how to plant maize, harvest, dry, grade and store safely in the warehouse. For instance, when drying, moisture should be at least 13.5 per cent to avoid aflatoxin (a toxic mould).”
The farmers started building the warehouse in 2012 and completed last year. It was soon after certified by the grain council.

“Each member has about three acres from where we harvest over 20 bags each. However, we have set a minimum storage capacity of 20 bags for every member in the warehouse,” John Wang’ombe, the vice-chairperson, says.

To store the maize, members currently don’t pay but the group is working on a plan to charge Sh70 per bag in the first month and Sh10 in subsequent months to raise revenue.

This is the fee non-members pay to store their maize in the facility. The warehouse serves an average of 300 farmers, including Wamuini members.

The large volumes have enabled the farmers to sell their maize at better prices to big clients, among them millers and World Food Programme.

“Last year, we sold 623 bags of maize from the group and other farmers at Sh3,200 each. Middlemen were then buying the produce at Sh2,400. This year we will sell 1,300 bags to World Food Programme,” Wang’ombe says.

Farmers are currently selling their maize to middlemen for as low as Sh1,400 a bag.

“The good thing is that World Food Programme encourages farmers to produce and sell quality maize. They add Sh400 on every bag above the market price. Then if your maize is of the best quality, you get 20 per cent more on each bag,” Wang’ombe says. He adds that non-members are charged a Sh200 fee per bag for sale of their produce to big clients.

Before taking maize from members or other farmers, they ensure it has the recommended 13.5 per cent moisture content.

“Farmers must dry, sort and deliver clean maize. We do not accept coloured maize or grain that has weevils or impurities. Once we have ascertained the maize is of good quality, we weigh it and store in the warehouse where it is fumigated to keep pests like weevils at bay,” Elkana Ngige, a member and internal auditor at the warehouse says.

Each member has been assigned a specific role, including that of manager, assistant manager and clerk. Others help in sorting and grading maize. The group is bound and governed by a strict discipline code and a constitution.

“I no longer have to struggle looking for a market or storage because the warehouse takes care of all that,” another member Lucy Karanja says.

Before the government-registered group came up with the warehouse, Lucy says, members used to sell their maize to villagers and middlemen in bits.

“I used to sell my maize in 2kg tins. I would sell one, two, three or even 10 tins, get the money and use it immediately. When time came for planting, I would not have cash.”

With the warehouse, Lucy can now store her maize, make her budget for the next planting season, and when it is sold at better price, get the cash and use it for her home and farm needs.

The group holds training for farmers in the region on practices that can help them earn good returns from their maize.

They recently bought a piece of land at Sh1 million in the area where they are planning to build rental units.

“We will soon buy our own driers because drying maize is a problem to many farmers,” Ngige says.

The group is also installing the Warehouse Receipting System (WRS), which has been billed as the panacea for the problems facing maize farmers.

WRS involves storing farmers’ maize in a warehouse where they are given a receipt, which they use to secure loans of up to 65 per cent of the value of their produce as they await prices to rise. They later sell the maize to repay their loans.

The system involves farmers, a warehouse operator and a bank, making it foolproof.

PAY SCHOOL FEES

“We want to issue farmers with the receipts so that they can access money from the bank and use it for their needs. Many farmers sell their maize at throw-away prices because they need money to prepare their land or pay school fees,” Ngige says.

Grain council executive director Gerald Masila says warehouse system has the potential of cutting maize post-harvest losses from 30 per cent to zero.

“Once farmers have taken their grain to warehouses, they do not have to worry about pests and low prices if the market is left to regulate itself. Further, the maize is insured and they can get the money they need without having to sell their crop at a low price.”