My milk ATMs offer farmers better deal

My friends usually tell me that besides banks, I am the only other person in the country who has Automated Teller Machines (ATM).

Well, that is true, but mine are not ATMs in the original meaning of the word, because they do not dispense money. My machines dispense milk. I prefer to call them milk dispensers.

I run over 20 machines, through my company Farming Solutions, in different supermarkets in Nairobi, Kiambu, Eldoret, Bungoma, Busia and Machakos. The supermarkets include Naivas, Uchumi, Saltes, Eastmatt and Mulleys.

The machines have an in-built cooler and use electricity to store and dispense milk. It works like an ATM machine where consumers can key in the amount of milk they want and pay.

QUALITY MILK

Consumers come with their clear bottles or can purchase them from supermarkets. Many supermarkets, milk bars and businesspeople have adopted this mode of distribution as it is considered hygienic and there is no wastage.

In addition, milk dispensed from these ATMs is cheaper compared to that packaged in 500ml packets.

My main source of pasteurised milk is Kinangop Dairy, a farmers’ cooperative based in the town. They get the milk from farmers, pasteurise and then sell to me.

I go to collect the milk from the dairy, and another major farmer in Kahawa Sukari, Nairobi.

Many firms buy a litre of milk at Sh30, but I buy the pasteurised milk at Sh55 per litre. The milk dispensers are changing the supply and distribution of milk as consumers can get quality milk for as low as Sh5 for 77ml.

Farmers who want to supply their milk to me or to other dispensers must have a small plant where they first pasteurise it.

If they cannot afford a processing plant individually, they can get into groups or co-operatives to share the cost of processing the milk. Pasteurised milk is more marketable than raw.

Milk is very delicate, so it must be handled with a lot of care. That is why before we buy the milk, it has to go through tests to determine its density and acidity.

There is good business in milk because it is widely consumed. I sell my milk at Sh65 a litre, which means I get a profit of Sh10 for every litre.

I sell about 500 litres of milk per dispenser every day, which translates to a profit of Sh5,000 per dispenser.

I went into milk selling business sometime in 2011. Before then, I was running an agrovet business in Eldoret until 2007 when I relocated to Nairobi due to the post-election violence.

I had also worked for an agricultural company soon after completing my Bachelor of Science degree in Agriculture from Egerton University.

Upon landing in Nairobi, I realised something interesting. There was a lot of demand for quality and affordable milk, yet it was only sold in packets.
I saw the gap and decided to fill it with my machines.

My initial investment was Sh2 million, which was from my savings and a loan. I used it all to import my first milk dispenser from Italy, which I installed at a milk bar I owned in Nairobi’s Nyayo Embakasi estate.

The response was overwhelming, to say the least. To get into supermarkets, I drafted a proposal and took it to Uchumu Supermarket. They liked my idea and we got into a partnership. I installed my milk dispenser and we agreed on a commission in late 2011.

Uchumi was my first big selling point, the other supermarkets came later.

I also import and sell the milk dispensing machines to individuals and supermarkets.

The smallest milk dispenser, with a capacity of 200 litres goes for Sh650,000, and largest with a capacity of 1,200 litres goes for Sh1.5 million.

The importation business seems rosy but it is not because one pays huge taxes.

The Kenya Revenue Authority doesn’t consider dispensers dairy equipment to attract minimal tax, hence, importing the ATMs attracts all manner of duties.
To save on cost of importation, I have resorted to importing the dispensers in parts, and then I assemble them locally.

HIGHER PRICE

Through my company, I have employed 20 people, among them technicians who install the machines, milk vendors and those who ferry the milk to various dispensers countrywide.

I am happy that I am now able to assist dairy farmers get the most out of their produce by purchasing milk at higher prices.

At 42, I am living my dream. Growing up on my parent’s farm in Lanet, Nakuru, I was fascinated by farming. This is where I believe my interest in agribusiness started. I am not be doing actual farming, but I am in the value chain, offering farmers better prices.

My greatest challenge is to find enough pasteurised milk because most farmers offer raw milk, which is against the Kenya Dairy Board regulations.

Farmers should add value to their produce by pasteurising to reap maximum profits from their milk. It may be expensive at the beginning, but it pays to add value.

However, I must acknowledge that pasteurisation is an expensive process, especially for farmers. In Bungoma and Eldoret for example, there is only one milk processor in each of the regions, which gives us challenges because we cannot get pasteurised milk. That is why we are asking farmers to form cooperatives.

My next business is to invest in machines that dispense yoghurt, fermented milk and liquid cooking oil.