Fresh organic food could be a much bigger business

Monday November 30 2015

By BITANGE NDEMO
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If you had told someone ten years ago that we would one day use technology to sell vegetables, you would have been considered a mad man.

Up until 2005, it was considered a risky venture to invest in high capacity broadband.

But after an inspiration from the film Field of Dreams, Senator Mutahi Kagwe and I stuck our necks out to imagine James Earl Jones’ famous quote, “If you build it, they will come.”

We took the risk of building high-capacity broadband through undersea cables. As a consequence, the cost of Internet came down. Believe it or not, today we are buying vegetables through the internet.

Last week, I visited two online organic home delivery supermarket start-ups, Kalimoni Greens and Kitchen Soko. For me it was a dream come true.

The dream of ICT-enabled transformation is slowly becoming a reality. Internet will soon become as ubiquitous as mobile phones.

The advent of smartphones, social media networks, and mobile applications although relatively recent, is reshaping our behaviours and lifestyles. This is where new opportunities for enterprises like these two are arising from.

KALIMONI GREENS

At the height of post-election violence in January 2008, Lillian Kanari and her family partners had enough optimism about our country to brave the violence and found Kalimoni Greens. 

It took Lillian two years to switch her mind from a high-flying job as a marketer in the hospitality industry into agriculture, but that did not happen easily.

She increasingly doubted the food in restaurants and felt obliged to do something. Her father kept on nudging her to do something else if she was dissatisfied with her job.

By sheer accident, a colleague in her work place asked her if she knew where to get good organic potatoes, and she remembered the glut of organic potatoes lying at the 20-acre family farm in Kinangop.

Quickly, she organised for the delivery and began to do some research around organic food in Kenya.

Kinangop Farm . PHOTOS | KALIMONI GREENS

She then decided to start a boutique supermarket in Karen. Her initial customers were basically many of the clients she’d met at her workplace.  She used mostly word of mouth and social media to market her produce. 

She became a member of Kenya Institute of Organic Farming as well as the Kenya Organic Agricultural Network, where she began to enlist a network of suppliers to supplement what they produced from their family farms. 

Six months down the road, after establishing a wide network of out-growers, she set up her online platform, courtesy of Chika Limited to target customers from other parts of the city.

This led to the introduction of home delivery services. Today, more than 70 per cent of Kalimoni Greens revenue comes from home delivery. 

Kalimoni has 70 of its products certified by ENCERT, an organic foods certification body. To satisfy a market of more than 200 box deliveries a week, they maintain a base production from their farms in Kinangop, Karen and Juja.

The rest come from their farmer network with similar certifications.  For other products like meats and bread, they have created a network of certified suppliers to meet the demand.

Lillian inspecting her organic farms. PHOTOS | KALIMONI GREENS

Many of her customers are foreign nationals living in Kenya but with the rising cases of cancer locally, the number of local customers is beginning to rise.

Consumers are arming themselves with rapid test kits to check the chemical levels in the foods they eat.  Charles, Lillian’s father is an organic foods evangelist of repute. 

“Let food not take us to our maker too soon,” he tells me as he took me around the small supermarket.

Lillian knows there are new competitors recruiting farmers into this emerging enterprise. Like any good entrepreneur, she is strategically seeking new innovations before the market gets saturated. 

From her extensive travels to food shows abroad, she realises that Middle East is warming up to organic produce. 

KITCHEN SOKO

In the meantime a new kid on the block is Kitchen Soko. Run by Winston Wachanga, David Kang’ethe and Loretta Wangui, the start-up operates from Kiambu Road. In the past one year, it has been hustling to penetrate this niche market.

They are ambitious and are succeeding. They use their small pieces of land in Sagana, Thika and Ondiri to start growing quality farm produce.

Winston, the CEO, spent many years working at an international organisation. He quit to found a technology company, Sumatran Technologies Solutions Limited, before coming up with the Kitchen Soko concept.

Growing up in a farm himself, he has a great passion for agribusiness. Besides his duties as the CEO, he is also the technical director.

Loretta comes from a background in Food Technology and Agriculture and previously worked as an operations manager for a countryside farm and bakery. Her duties combine quality assurance, food and logistics.

Loretta in their Kikuyu farm (left) and Winston talking to a farmer. PHOTOS | DAVID KANG'ETHE.

David has worked with leading private equity, asset and fund management companies within European, Middle Eastern and North American markets. He is also a founder of Mobivendi Limited, a telecommunications company.

His passion however, is in farming and when he came back to Kenya he embarked on it. He is very excited about the opportunity to help local farmers and small businesses attain a broader reach.

He is in charge of the team that sources and establishes relationships with food producers and farmers. His finance and investment knowledge also guides the start-up on the business development and viability.

These two start-ups are solving many challenges farmers face, including overcoming access-to-market barriers, logistical challenges, as well as buyer power from large supermarkets that take up to one year before paying farm produce suppliers.

They are, in essence, agents of productivity that improves our economic growth. They too are experiencing problems of setting up in a developing country like Kenya. 

Instead of focusing on their core business, they find themselves investing in logistics. 

ORGANIC MARKET DAY

In developed countries, entrepreneurs find it easy to focus and leave other areas to other experts. Although we have a number of courier companies including Posta, they often don’t understand micro and small enterprises.

Initially, both start-ups tried to leverage the growing numbers of motorbikes to create a seamless network, but indiscipline among the bikers was too much to bear.

Most are unable to handle delicate supplies such as eggs properly, thus resulting in losses. Also, some deliveries are just too large for motorbikes to handle. 

They now have their own delivery vans and considering the debilitating traffic in Nairobi, it means they will have to invest more in transportation to meet the delivery requirement.  Yet the businesses have not grown big enough to support such an investment.

Their inherent risk in outsourcing transportation could be sorted out by a dedicated logistics company that can affordably deliver within hours in a city troubled with traffic jams.

For now, the two start-ups have scheduled delivery days in several parts of the city.  For example, Monday could be Runda, Tuesday Karen, Wednesday Kitsuru etc.  For clients who may need supplies outside the delivery schedule, they visit the store.

To deal with excess supplies, they have created an organic market day in Karen on Saturday and Gigiri on Thursday. These market days become handy especially during summer when most of the clients travel out of the country.

LOGISTICS OPPORTUNITY

From my own estimation, technology-enabled farming and distribution will create the next billionaires right here in Kenya. This will happen if the right policy interventions are made now.

Small start-ups are spending too much time out of their core activities to do agricultural extension work.  The government must intervene and deploy the many unemployed Agriculture graduates as extension officers.

This will open up the market to more players and create more consumers as a result of better pricing of organic produce created by increased demand and competition from suppliers. 

Policy interventions may reduce healthcare costs arising from higher consumption of chemicals in foods.

If there is any investor listening out there, there is a huge logistics opportunity to be exploited in Kenya.  Farm produce rots in farms yet there is huge demand in towns and cities.

We import eggs from Uganda when we have plenty of the same in Kakamega. Several of the young people I am mentoring at the moment have mobile applications to identify supply and demand of produce, but they lack quality assessors on the ground to certify the quality of produce before payment and shipment is made. This is another area that requires policy intervention.

Nikolai Vasilievich Gogol a Ukrainian dramatist, novelist and short story writer once said, “The experience of ages has shown that a man who works on the land is purer, nobler, higher, and more moral... Agriculture should be at the basis of everything. That's my idea.”

The writer is an associate professor at University of Nairobi’s Business School. Twitter: @bantigito