final presentation; business profile - githunguri constituency

Githunguri District

Small scale cereals reseller Food for catering

A healthy dairy Cow Greenhouse farmed tomatoes A Cup of yoghurt

Business Opportunities Profiling

By Samuel Mwangi

January 2012

Cereal Trading Catering services

A Healthy Dairy Cow Greenhouse Tomato farming A Cup of Fresh Yogurt

ii Business Opportunities Profiling – Githunguri Constituency

Acknowledgement & Appreciation

I would like to acknowledge the involvement and contribution of various institutions in the preparation

of this Business Opportunity profiling activity. The people who have significantly provided inspiration,

information and advice were Gachiku G, Mbugua Joseph, Waruingi George, Wachiuri John and Elijah

Ndung’u in their personal and business capacities.

The institutions that have provided a lot of the factual information used as the basis for the market

surveys in various categories are ; the Ministry of Agriculture, Market information department and

FAOSTAT database; the District Crops, Veterinary and Livestock production officer, Githunguri district

and the Kenya National Bureau of Statistics.

I would also like to appreciate the information derived from my interaction with various suppliers like

CAIS, Amiran Kenya, NARL and the Kenya Dairy Board.

Without them, this report would be hollow and lacking in fact and substance.

Finally, I would like to acknowledge the efforts of the Ministry of Youth Affairs and UNDP in the Kenya

National Youth Empowerment Project for being the inspiration behind this work. It opened my eyes to

some of the opportunities in my backyard that I had never thought about.

iii Business Opportunities Profiling – Githunguri Constituency

Table of Contents

Acknowledgement & Appreciation ............................................................................................................... ii

Table of Contents ......................................................................................................................................... iii

Executive summary ...................................................................................................................................... iv

Market Survey ............................................................................................................................................... 1

Evaluation ..................................................................................................................................................... 2

Findings ......................................................................................................................................................... 6

Business Opportunities chosen ..................................................................................................................... 6

Conclusions & Recommendations ................................................................................................................ 6

Business Profile 1; Veterinary Services ......................................................................................................... 7

Business Profile 2; Dairy Processing............................................................................................................ 10

Business Profile 3; Green house farming .................................................................................................... 14

Business Profile 4; Cereals Supply............................................................................................................... 16

Business Profile 5; Catering Services .......................................................................................................... 19

iv Business Opportunities Profiling – Githunguri Constituency

Executive summary

Githunguri District is one of the new Districts inaugurated in the year 2009. The district is however a net

exporter of skilled labour, dairy products and poultry. The district has one main urban centre at

Githunguri where the district headquarters are located, and several smaller peri-urban centres like

Kigumo, Kwa Maiko & Ikinu. There are very few post-secondary school training institutions in the

district.

There are various services needed by the residents of Githunguri district. Educational services at the

basic level are another rapidly growing service sector. Evaluation of businesses or business opportunities

is not an exact science. We came up with nine characteristics of a typical business against which to

evaluate the various business opportunities. We gave each characteristic three weights, High , Medium

and Low were used representing the ranking of the business opportunity qualitatively and/or

quantitatively with regard to that particular aspect of the business.

From the business opportunity evaluation and ranking exercise, the following business opportunities

were ranked according to their scores in order of preference;

Animal production related services are also very profitable whereas there is a significant showing of

service- related opportunities. The business opportunities chosen for profiling are therefore Veterinary

services, Dairy processing, Greenhouse farming, Cereals supply and Catering.Githunguri district has very

profitable veterinary services, dairy processing, greenhouse farming, cereal trading and catering services

openings that have not been exploited.

Veterinary Services

The amount of milk produced and marketed through formal processing channels generates between

Kshs 2.5 to 4.0 billion annually. Part of this income is also used to buy services and inputs associated

with dairy production like feeds, drugs, semen and veterinary services.

Assuming that only five percent of this amount is used to procure animal health services, that is still a

potential market of between Kshs 100 – 160 million annually in animal health goods and services alone.

The customers for these services are the 25,000 dairy farmers within the district. Even a conservative

market share target size of 3% of this market translates to 750 farmers and between Kshs 3 – 5 million in

annual revenues.

Dairy Processing

The technical knowledge required to process the milk will be a basic certificate or artisanal course in

dairy processing. For milk handling at the milk bars, basic hygiene education will suffice for the milk

handlers and selling assistantsThe returns on investment are higher for processed products than for raw

v Business Opportunities Profiling – Githunguri Constituency

milk, and therefore a Mini dairy though it has higher capital requirements is more profitable than a

micro dairy to the higher volumes of processed products sold.

Green house tomato production

From the annual production, 90 % of the production was meant for the fresh produce market while the

remaining percentage was processed into various products. Nearly all the tomatoes produced in Kenya

are consumes locally, very little of the fresh tomato produce is exported as processed products. The

major institution that can support Tomato greenhouse farmers on basic agronomic practices is the

District Horticulture department at Githunguri Township

Cereal trading

The major market for cereal s is the institutional market. The district has 20 private boarding schools,

and 35 secondary schools that serve meals for either day scholar or boarder students. There are no

other large institutions within the district. The other market that I have chosen to target is the small

reseller market and the institutional market. The other predictable market is the small cereal resellers.

This business does not require any particular specialized skill.

Catering Services

In our church home congregation, there is a wedding at least once every other month. Our location has

13 such congregations, and very at least five main denominations. Assuming that only 1 in 5 or (20 %) of

these occasions will require commercial catering services, this is still a very big catering market of 156

occasions. We intend to hire, train and certify our food handlers in catering and food production and run

the business from a dedicated kitchen at home to save on premises hiring costs. We also intend to make

the food presentation and service more professional to differentiate our service.

1 Business Opportunities Profiling – Githunguri Constituency

Market Survey

Population & location

Githunguri District is one of the new Districts inaugurated in the year 2009. The borders of the district

correlate with the constituency boundaries of Githunguri constituency. It has a Total population of

147,463 persons and an area of 61.3 square kilometers. The district borders Gatundu to the North-East,

Ruiru to the East, Kiambu East to the South- East, Kiambu west to the southwest and Lari to the

Northwest. Githunguri district is located about 50 Kilometers Northwest of Nairobi and has a lot of

potential as a commuter town serving the working population of Nairobi City.

There is a youthful working population with a significant disposable income for a rural area

Agricultural and Industrial production

In terms of agricultural production, it is in the mid altitude (1800 – 2100 m ASL) coffee- tea high

productivity transition zone. The area is therefore characterized by intensive Coffee, Tea, Horticultural

and subsistence production. It also has one of the most famous and highly productive dairy zone in the

country. However, since the land holdings are small due to a high population, the district is a net

importer of food. This therefore means that maize, beans, potatoes, cabbages, pulses and even cows for

meat are imported into the district. The district is however a net exporter of skilled labour, dairy

products and poultry. There is a gradual industrialization taking place around Githunguri town as there

are three dairies, a Tea factory and a small brewery. These firms however do not employ more than

1,000 people in total.

Employment and urbanization

About half the populations are gainfully employed, while 30,000 are in some form of economically

productive engagement and about 5,000 are looking for work and are therefore available for

employment. Only 25% of the population lives below the national poverty line. The rate of literacy for

the general population is very high with most of the people under the age of 40 having gone through

secondary school education. The district has one main urban centre at Githunguri where the district

headquarters are located, and several smaller peri-urban centres like Kigumo, Kwa Maiko & Ikinu.

There are very few post-secondary school training institutions in the district. There is also a lack of

relevant Vocational school training institutions.

Services


There are various services needed by the residents of Githunguri district. The district has a good number

of all weather roads. The main ones are the class C trunk road from Nairobi –Kiambu – Githunguri –

Uplands and the Ruiru – Kwa Maiko – Githunguri –Kagwe –Kimende routes. The Nairobi – Kiambu – Kwa

Maiko – Kibichoi route also passes through the southeastern part of the district. There are many

matatus plying the various routes. In the last three years, there has also been a profusion of motorcycle

transport services that ply the shorter routes within the district not serves by regular matatus.

Educational services at the basic level are another rapidly growing service sector. This is because people

who originally came from the district and have settled in urban areas prefer to bring their children to

boarding schools within the district. Parents who also want to give their children quality education also

prefer boarding schools to the public day schools.

There are also numerous trading activities that cater to various needs of local residents.

Evaluation

Evaluation of businesses or business opportunities is not an exact science. Profiling businesses however

is guided by several rules of the thumb depending on what the aim of the exercise is. There are

therefore several criteria which one can use in-order to illuminate the critical aspects of the

business/business opportunities that one is interested in. Some of the aspects that one would want to

evaluate are; profitability, scalability, compliance, employment creation, barriers to entry, level of

technology/specialist knowledge required and market size among others. We have therefore chosen

several characteristics to give a more rounded character of the business opportunities available.

We came up with nine characteristics of a typical business against which to evaluate the various

business opportunities. We gave each characteristic three weights, High , Medium and Low were used

representing the ranking of the business opportunity qualitatively and/or quantitatively with regard to

that particular aspect of the business. For each weight of a particular aspect, a ‘high’ rank attracted a

numerical score of 5, a ‘medium’ rank a numerical score of 3 and a ‘low’ rank a numerical score of 1.

These particular aspect or categories chosen were;

1. Profitability

For any commercial enterprise, the most attractive factor that determines whether one will

engage or will not engage in a business is the likely returns otherwise called profit. We therefore

considered this as one of the primary characteristics

2. Market size/Number of prospective customers

The size of the market is an important consideration for an entrepreneur. A large market means

a higher likelihood of success than a small market.

3. Length of the Production/sales cycle


A short production and sales cycle usually means higher revenues within a given time which

have a direct bearing on profitability. A short production cycle is also advantageous since one

can minimize losses and make adjustments to improve the product as one goes along, in

response to demand or according to other environmental conditions affecting the business.

Businesses with a short production/sales cycle are therefore more preferable than ones with

longer production/sales cycle.

4. Business risk profile

Businesses face various risks. These risks might be internal or external and depend on the type

of the business enterprise, the control that one has over the production process, the

competence and skill of one’s employees and other factors external to the business like location,

security, cash transaction volumes, alternative uses of business products and inputs among

other risk factor

5. Employment opportunities created

As a general rule, in high unemployment situations, enterprises that create many employment

opportunities are preferred. This usually entails the use of manual labour instead of automated

processes and mechanical equipment. If the production process is not very elaborate, then the

use of manual labour maybe convenient where utilities like electricity, piped water and gas are

unavailable. However this introduces many points of failure and contamination and is not

preferred where the quality requirements are very high since this requires a very high level of

skill and control to achieve. Start-ups however begin with manual labour creating employment

and then mechanize processes as they move up higher along the value chain and quality

requirements.

6. Linkages to other business/value chains in the locality

Businesses that create linkages to other enterprises in the locality are better in the long run

since they are more economically beneficial to where they are situated. The economic

multipliers in the form of employment, revenues, technology, support services and technology

transfer cannot be gainsaid.

7. Barriers to entry

Each type of business has its own prerequisites that must be met before start-up, and that must

also be maintained for the business to run profitably. In a rural setting, business with low

barriers is preferable since the technology, capital, skill pools and inputs available are fewer

than in an industrial/urban setting. In some ways, low barriers to entry can be a disadvantage

since it means that the likely competition is very high

8. Capital required

Most young people do not have tangible assets that they can sell or use to secure commercial

credit. Therefore businesses that require little or no capital are preferred. A majority of rural


dwellers also do not have high regular incomes and therefore low capital requirements favour

them.

9. Technological complexity of equipment/process of running the businesses

There is a level of knowledge, skill or specialization that one must either have before starting

certain businesses or that one must acquire in the course of running such a business. Simple

services like typing and typesetting, printing and photocopying require a level of skill higher than

running a duka. Veterinary services can only be offered by recognized professional while

mechanics must either have formal training and qualifications or experience acquired over some

time in order for them to give satisfactory service.

We totaled the scores for each opportunity across the nine categories and ranked the opportunities

according to their respective scores in order of preference. From the foregoing, we selected 10 business

ideas that were feasible and viable;

Business opportunity character score

Business Opportunity

Pro

fita

bil

ity

Nu

mb

er#

of

pro

spe

ctiv

e

cust

om

ers

Pro

du

ctio

n/S

ale

s cy

cle

Ris

k p

rofi

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Em

plo

ym

en

t

op

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nit

ies

cre

ate

d

Lin

ka

ge

s t

o

loca

l v

alu

e

cha

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Ba

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rs t

o

en

try

Ca

pit

al

req

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ed

Te

chn

olo

gic

a

l co

mp

lex

ity

Flour milling High High Short Low Low Medium High High Medium

Cereals supply High High Short Low Medium Medium High High Low

Motorcycle repair Medium High Short High Low High Medium Low High

Veterinary services High High Short High Low High High High High

Fingerlings supply High Medium Short High Medium Medium High High Medium

Yoghurt processing High High Short Low Medium High Medium Medium High

Catering services High High Short Low Medium High Medium Medium Medium

Rabbit breeding High Medium Short Medium Medium Medium Medium Medium Medium

Green house farming High High Long High Low Medium High High High

Mushroom farming High Low Long High Low Medium High High High

Business Characteristic scoring scheme

Pro

fita

bil

ity

Nu

mb

er#

of

pro

spe

ctiv

e

cust

om

ers

Pro

du

ctio

n/S

ale

s cy

cle

Ris

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Em

plo

ym

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t

op

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nit

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ate

d

Lin

ka

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cha

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Ba

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o

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try

Ca

pit

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req

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ed

Te

chn

olo

gic

a

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mp

lex

ity

High 5

Medium 3

Low 1

High 5

Medium 3

Low 1

Short 5

Long 1

High 5

Medium 3

Low 1

High 5

Medium 3

Low 1

High 5

Medium 3

Low 1

High 5

Medium 3

Low 1

High 5

Medium 3

Low 1


Business Opportunity ranking scheme

B

usi

ne

ss

Op

po

rtu

nit

y

Pro

fita

bil

ity

Nu

mb

er#

of

pro

spe

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om

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Pro

du

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n/S

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s

cycl

e

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Em

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Lin

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oca

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va

lue

ch

ain

s

Ba

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o e

ntr

y

Ca

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Te

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com

ple

xit

y

Ra

nk

ing

To

tals

Bu

sin

ess

Op

po

rtu

nit

y

Ra

nk

1.

Flour

milling

High

5.00

High

5.00

Short

5.00

Low

1.00

Low

1.00

Medium

3.00

High

5.00

High

5.00

Medium

3.00 28 10

2.

Cereals

supply

High

5.00

High

5.00

Short

5.00

Low

1.00

Medium

3.00

Medium

3.00

High

5.00

High

5.00

Low

1.00 33 4

3.

Motorcycle

repair

Medium

3.00

High

5.00

Short

5.00

High

5.00

Low

1.00

High

5.00

Medium

3.00

Low

1.00

High

5.00 28 9

4.

Veterinary

services

High

5.00

High

5.00

Short

5.00

High

5.00

Low

1.00

High

5.00

High

5.00

High

5.00

High

5.00 41 1

5.

Fingerlings

supply

High

5.00

Medium

3.00

Short

5.00

High

5.00

Medium

3.00

Medium

3.00

High

5.00

High

5.00

Medium

3.00 32 6

6.

Yoghurt

processing

High

5.00

High

5.00

Short

5.00

Low

1.00

Medium

3.00

High

5.00

Medium

3.00

Medium

3.00

High

5.00 36 2

7.

Catering

services

High

5.00

High

5.00

Short

5.00

Low

1.00

Medium

3.00

High

5.00

Medium

3.00

Medium

3.00

Medium

3.00 32 5

8.

Rabbit

breeding

High

5.00

Medium

3.00

Short

5.00

Medium

3.00

Medium

3.00

Medium

3.00

Medium

3.00

Medium

3.00

Medium

3.00 31 7

9.

Green

house

farming

High

5.00

High

5.00

Long

1.00

High

5.00

Low

1.00

Medium

3.00

High

5.00

High

5.00

High

5.00 35 3

10.

Mushroom

farming

High

5.00

Low

1.00

Long

1.00

High

5.00

Low

1.00

Medium

3.00

High

5.00

High

5.00

High

5.00 31 8


Findings

From the business opportunity evaluation and ranking exercise, the following business opportunities

were ranked according to their scores in order of preference;

Rank Business Opportunity Category

1. Veterinary Services Animal health Service

2. Dairy processing Cottage Production

3. Greenhouse farming Crop production

4. Cereals supply Trading

5. Catering Service

6. Fingerlings supply Fisheries production

7. Rabbit rearing Animal production

8. Mushroom farming Crop production

9. Motorcycle repair Service

10. Flour milling Cottage production

From the exercise, it is clear that agriculture ad agro related opportunities predominate the

opportunities available in the constituency. Animal production related services are also very profitable

whereas there is a significant showing of service- related opportunities.

Business Opportunities chosen

The business opportunities chosen for profiling are therefore Veterinary services, Dairy processing,

Greenhouse farming, Cereals supply and Catering

Conclusions & Recommendations

Githunguri district has very profitable veterinary services, dairy processing, greenhouse farming, cereal

trading and catering services openings that have not been exploited.

I therefore recommend that it behooves young people like me to realize that there are opportunities

that can pay better than a white collar job. One of my resolutions for this year is to get into dairy

processing and start exploiting them.


Business Profile 1; Veterinary Services

In the preparation of this profile, I talked to a trained and practicing veterinary officer. I was also able to

talk to the District veterinary and Livestock production officers. The data about the growth in the

number of cows in the district and the trends towards increase were obtained from the district livestock

production office. They are however official but unpublished. I was also able to corroborate this with

anecdotal and firsthand information since I hail from the district.

Market demand

The following are the total number of cows and the trends in dairy cow population the last three years;

Year Number of Dairy Cows Dairy Cows Population

Growth

Processed Production

(Liters)

Estimated production

(Liters)

2009 38,373 0% 83,554,980 150,000,000

2010 42,381 10% 123, 451,864 220,000,000

2011 46,450 10% 132, 162, 385 250,000,000

As illustrated in the second column of the table, the population of cows has been increasing by a rate of

10 % annually. This is also marked by an increased rate of milk productivity. A lot of this milk is marketed

through formal processing channels generating between Kshs 2.5 to 4.0 billion annually. This money

apart from providing the dairy farmers with an income is also used to buy services and inputs associated

with dairy production like feeds, drugs, semen and veterinary services.

Assuming that only five percent of this amount is used to procure animal health services, that is still a

potential market of between Kshs 100 – 160 million annually in Animal health goods and services. The

customers for these services are the 25,000 dairy farmers within the district.

Even a conservative market share target size of 3% of this market translates to 750 farmers and between

Kshs 3 – 5 million in annual revenues.

Veterinary Service Delivery

Veterinary services are provided by qualified professionals. These professionals usually run veterinary

and animal stockiest shops as a point of presence in the major shopping centres. They walk around and

introduce themselves to farmers and leave their mobile phone contacts with them. When a farmer

needs a service, they often call their favorite animal health provider who more often uses a motorcycle

and comes to provide the requisitioned service at the farm. This is a very efficient mode of service

delivery


Technology and equipment needed

The animal health or veterinary service provider needs to carry with them a range of drugs for the

common animal health problems. They can also carry with them different equipment for basic animal

surgery, vaccination or artificial insemination service. To store the drugs and semen under the specified

storage conditions, the stockist will need to have either a freezer of a fridge. A motorcycle comes in

handy for fast and cheap movement from point to point as services are requested. This is detailed

further in the table below.

Range of size of Investment –micro to medium size in shilling

Equipment & Supplies Full equipment Route Simple route

Syringes 1 lot (100) x 1800

1,800.00

100 ml

200.00

Needles 1 lot (100) x 400

400.00

100 ml

200.00

1 Freezer 1 lot x 25000

25,000.00

-

Antibiotics – Oxytetracycline 1 Liter pack x 2400

2,400.00

100 ml

200.00

Antibiotics – Pedistrep 1 Liter pack x 3200

3,200.00

100 ml

350.00

Albafas ( Dewormer) 1 liter pack

1,500.00

100 ml

200.00

Multi Vitamin Boosters 1 liter pack

1,800.00

100 ml

200.00

Semen Flask 10 Liter Pack x

50000

50,000.00

2 liter pack x 10000

10,000.00

Antibiotic spray 1 liter pack x 2200

2,200.00

100 ml

250.00

Epson Salts 1 Kg pack x 1700

1,700.00

100 ml

200.00

Intra mammary infusions I liter pack x 2500

2,500.00

100 ml

300.00

Sutures & needle I set X 500

500.00

I set x 500

500.00

Thermometer 1 piece x 300

300.00

1 piece x 300

300.00

Motorcycle 1 Motorcycle x

70000

70,000.00

0

-

Fuel 1 lot x 5000

5,000.00

0

-

Labour I lot x 5000

5,000.00

Labour

5,000.00

-

-

Kshs

173,300.00

Kshs

17,900.00


Returns on Investment

The typical service schedule in one month is as follows;

Monthly returns

Service Cost of Service (Kshs) Rate charged (Kshs) Service

calls

Revenues

Mastitis Treatment 300.00 1,000.00 15 15,000.00

- Pneumonia Treatment 300.00 1,200.00 15 18,000.00

- Minor Surgery 750.00 2,000.00 10 20,000.00

- Major surgery 1,500.00 3,500.00 3 10,500.00

- AI service A 500.00 1,200.00 20 24,000.00

- AI service B 1,000.00 2,200.00 10 22,000.00

Revenues 109,500.00

The major suppliers of key inputs for animal health products and services are the Centre for Artificial

Insemination Services (CAIS) in Kabete and the major resellers of animal health services in Nairobi. The

Ministry of Livestock Development & Marketing also carries out disease surveillance and monitoring and

supports in the sensitization of farmers. The ministry also works hand in hand with the service providers

as they help the ministry in carrying out its mandate.


Business Profile 2; Dairy Processing

According to the Kenya Dairy Board, the dairy industry is the single largest agricultural sub-sector; it is

even larger than the tea subsector. It contributes some 14% of agricultural GDP and 3.5% of total GDP.

Kenyans consume more milk than almost anyone else in the developing world. In terms of milk

consumption per unit of average income, Kenya ranks only behind Mauritania and Mongolia globally

among developing countries. On average, each Kenyan drinks, according to the International Livestock

Research Institute (ILRI), about 145 litres of milk a year, three times his Ugandan counterpart and four

times the average for Sub-Saharan Africa. A 1999 survey found that urban households spent an average

of 18 percent of their income on dairy products, second only to their expenditure on cereals such as

maize.

The following table summarizes the milk production data for nine years between years 2000 and 2008;

Production in tonnes

Cow milk Goat milk Camel milk Total

2000 2,224,000 116,000 25,200 2,365,200

2001 2,444,150 97,100 25,200 2,566,450

2002 2,811,950 10,100 25,200 2,847,250

2003 2,819,500 107,230 25,200 2,951,930

2004 2,829,900 118,500 36,000 2,984,400

2005 2,650,000 129,000 25,200 2,804,200

2006 3,500,000 105,000 32,200 3,637,200

2007 4,230,000 108,000 32,500 4,370,500

2008 3,990,000 110.000 27,000 4,127,000

In Githunguri Constituency, the Dairy sector production statistics are as follows;

Year Number of Dairy Cows Processed Production (Liters) Estimated production (Liters)

2009 38,373

83,554,980 150,000,000

2010 42,381

123, 451,864 220,000,000

2011 46,450

132, 162, 385 250,000,000


There is a marked preference for the consumption of raw milk in rural areas and peri-urban towns due

to its cheaper cost and familiarity. This has however been accompanied by an increased appreciation for

other processed liquid dairy products like yoghurt and mala (fermented) milk which have a long African

tradition. Yoghurt is well liked as a refreshing, nutritional and flavorful drink for both children and adults

alike. Mala is consumed by adults either as a refreshment or as part of a meal as an accompaniment to

Ugali.

Market Demand

There is an estimated minimum daily demand of about 1,000 litres of raw milk and processed products

in Githunguri town alone. This is because it has now become a residential town with many workers living

there who work in Nairobi, in the industries and service institutions surrounding the town, and in the

businesses that support these institutions. The town has also become the district and constituency

headquarters attracting many residents who come daily to seek various administrative services and who

consume dairy products in the various catering institutions in the town.

Dairy Processing

The idea is to collect fresh raw milk from contracted farmers. This will always be tested for quality and

contamination at the point of collection/uptake. This milk will be cooled down; half the quantity will be

sold directly to consumers in two milk bars within the town and the rest processed into various dairy

products. About 400 litres will be processed into yoghurt everyday whereas 100 litres will be processed

into Mala. The processed dairy products will be sold loose at the small milk shops, while a proportion

will be packaged in plastic containers and sold through supermarkets and shops in Githunguri town and

three other major peri-urban centres within the district.

Technical skills or knowledge required

The technical knowledge required to process the milk will be a basic certificate or artisanal course in

dairy processing. For milk handling at the milk bars, basic hygiene education will suffice for the milk

handlers and selling assistants


The technology and equipment required are as follows; large aluminium milk churns; jacketed

aluminium or stainless steel heating vessels; large modified wood-fired cooking stoves for heating;

thermometers for temperature control; plastic containers for cleaning; a 5,000 litre water tank and

hired vehicle for milk collection purposes.


Dairy processing investment options

Type of equipment Micro dairy Mini dairy

(100 – 200 litres per day) (500 – 1000 litres per day) Aluminium Oil Collection churns ( 5 x 8,000)

32,000.00

(20 X 8,000)

160,000.00

Stainless Steel jacketed vessels (4 x 15,000)

60,000.00

( 10 x 15,000)

150,000.00

Lease (4 months) (4 x 7,500)

30,000.00

(4 x 10,000)

40,000.00

Cooking Stoves (1 x 50,000)

50,000.00

(2 x 50,000)

100,000.00

Starter cultures & Flavours (1 x 2,000)

2,000.00

(3 x 2,000)

6,000.00

Assorted Dual use plastic ware (1 Lot x 10,000)

10,000.00

( 3 lots x 10,000)

30,000.00

Assorted Small equipment ( I Lot x 10,000)

10,000.00

(1 Lot x 10,000)

10,000.00

Labour ( 4 months) ( 2 Staff x 4 months x 8000)

64,000.00

( 5 Staff x 4 months x 8000)

160,000.00

Licenses I Lot x 15000

15,000.00

1 lot x 25000

25,000.00

Cost of Milk ( 200 liters x 30 days x Kshs 30)

180,000.00

( 1000 liters x 30 days x Kshs 30)

900,000.00

Packaging containers 1 Lot x Kshs 25,000 25,000.00 1 Lot x Kshs 80,000

80,000.00

Water tank 1 Tank (5000 liter) x Kshs 12,000

20,0000.00 1 Tank (10000 liter) x Kshs

20,000

20,000.00

Kshs

466,000.00

Kshs

1,681,000.00

Dairy processing return on Investment

The returns on investment are higher for processed products than for raw milk, and therefore a Mini

dairy though it has higher capital requirements is more profitable than a micro dairy to to the higher

volumes of processed products sold.

Product Micro dairy (200 litres per day)

Mini dairy

(1000 litres per day)

Raw Milk ( 100 litres x Kshs 50 x 30 days)

150,000.00

(500 litres x Kshs 50 x 30 days)

750,000.00

Yoghurt (80 Liters x Kshs 100 x 30 days)

240,000.00

(400 Liters x Kshs 100 x 30 days)

1,200,000.00

Mala (20 Liters x Kshs 80 x 30 days)

48,000.00

(100 Liters x Kshs 100 x 30 days)

240,000.00

Kshs

438,000.00

Kshs

2,190,000.00


Major suppliers of key inputs

The major suppliers of inputs are Kenya Dairy Board, Supermarkets and jua kali shops.

Support institution that can provide technical support

The Nairobi regional office of the Kenya Dairy Board can provide support in terms of technical training

and Hygiene certification.


Business Profile 3; Green house farming

Methodology of preparing this business profile

I had done some preliminary research while compiling an irrigation proposal for one of my regular

clients. I visited several suppliers who supply greenhouse kits or who sell all the supplies required to

fabricate one. The price of a kilo of tomatoes was the lowest wholesale price available from the Market

Information Department – Ministry of Agriculture weekly bulletin.

Market Demand

Tomatoes are one of the most common vegetable in Kenya. According to the FAO CountryStat database,

Kenya produced 529,922 million metric tonnes of tomatoes in 2009 and 539,151 metric tonnes of

tomatoes in the year 2010. From the annual production, 90 % of the production was meant for the fresh

produce market while the remaining percentage was processed into various products. Nearly all the

tomatoes produced in Kenya are consumes locally, very little of the fresh tomato produce is exported as

processed products. Fresh Tomatoes are therefore one of the most highly traded commodities in Kenya

Fabricating Process

When the greenhouse is purchased as a kit, the selling company sends someone to do the installation.

There is also a complete and easy to follow kit of DIY instructions. One can also buy the supplies and use

local materials as like wooden poles in place of the metal superstructure to build the greenhouse tunnel

with plastic sheeting. This latter type of greenhouse cannot however last more than 4 years.

It is however a cheaper alternative and one need just basic fundi skills to put of the structure and

connect the irrigation kit.


Tomato farming requires one to know basic things like how to prepare a seedbed, harden seedlings,

correctly space the seedlings, transplant them, do the correct thinning and train them on lines. One also

needs to observe basic hygiene to prevent plant disease infestation. Basic agronomic and pesticide

handling skills also come in handy


The technology and equipment required are listed in the table below and listed together with the

investment required

Range of size of Investment

As at October 2011, these were the corresponding levels of investment for the two sizes of

greenhouses;


Size of greenhouse Component parts Investment Required

Small 1/8 Acre

Plastic Sheeting & Plastic netting

Metal Superstructure

Knapsack Sprayer & Agrochemicals

Water container & Drip irrigation

Tomato Seeds & Fertilizer

Kshs 125, 000/-

Medium ¼ Acre

Plastic Sheeting & Plastic netting

Metal Superstructure

Knapsack Sprayer & Agrochemicals

Water container & Drip irrigation

Tomato Seeds & Fertilizer

Kshs 180,000/-

Possible return of investment

The possible return on investment is as follows;

For every quarter acre of greenhouse tomatoes;

Yields

150 - 250 kilograms weekly.

Production = (Average production)X(Period of 12 weeks) X

(2 production seasons in one Year)

High productivity scenario ; 250 kg x 12 weeks x 2 = 6,000 kgs

Moderate ; 180 kg x 12 weeks x 2 = 4,320 kgs

The gross revenue = { Production(Kgs) X Selling price per

(Kg)}

Scenario 1 = 6,000 kgs x Kshs 50/kg = Kshs 300,000

Scenario 2 = 4,320 kgs x Kshs 40/kg = Kshs 216,000


The major suppliers in fabrication of greenhouses are Amiran Kenya, the KARI National Agricultural

Research Laboratories-Westlands and Hydroconsult Limited. The costing used here are for the Amiran

Kenya Full irrigation kit.

Support institution that can provide technical support /guidance

The major institution that can support Tomato greenhouse farmers on basic agronomic practices is the

District Horticulture department at Githunguri Township


Business Profile 4; Cereals Supply

According to survey findings in the Basic Report on Wellbeing in Kenya, by the Kenya National Bureau of

Statistics, each central province household spends 57 % of all their income on food purchases. This was

about Kshs 1,700/- per month (Year 2005 figures). A half of this amount is spent in buying cereals which

are the main component of their diet in the form of maize, maize flour, beans, green grams, cowpeas,

rice, and lab lab. There are also many public and private primary and secondary schools which procure

these cereals in bulk for catering meals. The district has 20 private boarding schools, and 35 secondary

schools that serve meals for either day scholar or boarder students. These institutions serve between 5

– 10 meals every week that has a major cereal component. There are no other large institutions within

the district.

The markets that I have chosen to target are the small reseller market and the institutional market. The

types of cereals that I used as a reference are as follows with their prices at Source and destination

markets as at 27th

January 2012;

Cereal Quantity

(Kgs)

Price @

Source

(Kshs)

Price @

Market

(Kshs)

Price

Differential

Quantity

Bags

Dry Maize 90 2100 3300 1200 200

Green Maize 110 1600 3600 2000 40

Finger Millet 90 4500 4700 200 20

Sorghum 90 2600 3600 1000 20

Beans Canadian 90 3800 5000 1200 25

Beans Rosecoco 90 3800 5200 1400 25

Beans Mwitemania 90 3800 5000 1200 25

Beans Mwezi Moja 90 4800 5000 200 25

Beans Dolichos (Njahi) 90 5400 6500 1100 40

Green Gram 90 5800 7000 1200 40

Cowpeas 90 4600 7200 2600 40

Fresh Peas 51 2000 2800 800 25

Groundnuts 90 9600 11000 1400 10

535

a) The methodology that you followed in the preparation of each business profile – indicate the

sources of data and market survey that you undertook


Cereal trading services

There are no unique skills required to trade in cereals. It is however important to keep abreast of

development in terms of production trends of agricultural produce in various source markets and

destination markets in order to take maximum advantage of trade differentials since this is a margins

business. It is also advisable to work with large institutional buyers since they have almost consistent

demand throughout the year therefore assuring one of a regular market. These customers are schools,

hospitals, training institutions and university colleges.

The other predictable market is the small cereal resellers. In my district, not everyone has agricultural

land to produce subsistence crops. Whereas local demand is influenced by seasonal production, there is

no surplus for marketing meaning demand is only low during the period immediately after harvest when

households have some cereals from the immediate harvest for at maximum two months before they

come again to the market.


This business does not require any particular specialized skill. However, the seriousness of aflatoxin

poisoning in the recent past means that one must know how to judge the right moisture content at

which to harvest, transport and store cereals to preserve their quality. One must also know how to

prepare the cereals and protects them from pests like weevils, rats and theft.

It is also prudent to ensure that the grain one buys has been adequately cleaned and graded in order to

reduce contamination and wastage at the end markets. Bulk buyers often want to buy clean grain to

reduce time taken in food preparation


One needs dry, well ventilated, safe and secure means of storage, transportation and distribution

facilities. A warehouse that is waterproofed and well ventilated can be hired for aggregation purposes at

the sources markets, and a big lorry secured to transport the commodities to the destination markets.

At the buyer end, it is important to have a large permanent warehouse where one can both store and

sell the commodities from.

A weighing system is a key requirement at the destination market since commodities are sold per

weight.

Range of size of Investment required & returns on investment

The range of investment required in cereal trading ranges from a few hundred thousand to tens of

millions for a medium scale operation

Returns of cereal trading

The largest proportion Kenyan staple diet comprises of cereals or cereal products. There is therefore

demand for cereals throughout the year. The highest demand occurs in high population centres like

urban centres and also in other high population and cash crop high production areas. There is also

moderate demand in marginal areas where there is no local cereal production. In good years when there


is adequate rainfall and bumper harvests, the margins are moderate. However when there is crop failure

or a bad season with poor harvests, the margins rise as local and national demand cannot be met

without sourcing from distant markets or even importing which puts an upward pressure on prices as

demand is high all over the country.

This is a typical profile of likely returns during the current market;

Cereal Qty (Kgs) Price

@

Source

Price

@

Marke

t

Price

Differe

ntial

Quantity of bags

(Kshs) (Kshs) Local reseller Wholesaler Large reseller

Dry Maize 90 2100 3300 1200 10

12,000.00

50

60,000.00

200

240,000.00

Green Maize 110 1600 3600 2000 0

-

-

40

80,000.00

Finger Millet 90 4500 4700 200 1

200.00

5

1,000.00

20

4,000.00

Sorghum 90 2600 3600 1000 1

1,000.00

5

5,000.00

20

20,000.00

Beans Canadian 90 3800 5000 1200 2

2,400.00

10

12,000.00

50

60,000.00

Beans Rosecoco 90 3800 5200 1400 2

2,800.00

10

14,000.00

50

70,000.00

Beans Mwitemania 90 3800 5000 1200 3

3,600.00

10

12,000.00

50

60,000.00

Beans Mwezi Moja 90 4800 5000 200 3

600.00

10

2,000.00

50

10,000.00

Beans Dolichos

(Njahi)

90 5400 6500 1100 2

2,200.00

15

16,500.00

40

44,000.00

Green Gram 90 5800 7000 1200 2

2,400.00

15

18,000.00

40

48,000.00

Cowpeas 90 4600 7200 2600 2

5,200.00

15

39,000.00

40

104,000.00

Fresh Peas 51 2000 2800 800 2

1,600.00

15

12,000.00

25

20,000.00

Groundnuts 90 9600 11000 1400 1

1,400.00

5

7,000.00

40

56,000.00

31.0

0

35,400.00

165.

00

198,500.00

665.

00

816,000.00

Major suppliers and support institutions for the cereal trading services

There are no major suppliers of any of the related services for traders. They however utilize the normal

transport and banking services.


Business Profile 5; Catering Services

The people of Githunguri have believed so much in the spirit of community service that must social

occasions are usually catered for by women from the community. However, as the town has grown and

increased in prominence, there is a growing need for variety and more professionalized catering

services. Right now, there are very few established caterers and their services are run on an ad hoc basis

instead of as an ongoing business concern. An anecdotal evidence of the dire need for such services is

the fact that even the district headquarters does not enjoy the services of a regular caterer during their

meetings, and they rely on inconsistent hotel services.

There are however many weddings and other social occasions that a professional caterer can profitably

service.

Market Demand in the local area

In our church home congregation, there is a wedding at least once every other month. Our location has

13 such congregations, and very at least five main denominations. That makes a total minimum of (13 x

12 x 5) = 780 occasions that need to be catered for regularly. Assuming that only 1 in 5 or (20 %) of these

occasions will require commercial catering services, this is still a very big catering market of 156

occasions. As a start up, we could aim to cater for at least one occasion every week.

Catering service delivery

This is a rural setting where quality at the most affordable cost is the key consideration. We will

therefore operate the business by giving a maximum of four set menus, with a budget of between Kshs

200/- to Kshs 300/- per plate inclusive of Food, Drinks & Waitressing Service. We intend to procure

equipment like cooking sets, serving set and non-perishable consumables in bulk flours, cereals, fuel,

cooking oils and fats from wholesalers at concessional rates. For perishable products, we intend to have

standing orders with purveyors of high quality products and farm produce. This will be an effective cost

management strategy.

We intend to hire, train and certify our food handlers in catering and food production and run the

business from a dedicated kitchen at home to save on premises hiring costs. We also intend to make the

food presentation and service more professional to differentiate our service.

Equipment needed

We will procure the following equipment; A large deep freezer, four jacketed fuel efficient stoves, eight

big sufurias, 5 large frying woks, 4 large frying pans, assorted storage and preparation containers, 600

cutlery serving sets, 600 plates, 4 food serving sets, 4 large food transport containers.


Equipment & Supplies Full equipment Route Simple route

Kshs Kshs

4Fuel Efficient stoves 4 x 40,000

160,000.00

0

-

8 Large Sufurias 8 x 2,500

20,000.00

8 x 2,500

20,000.00

1 Freezer 1 x 50,000

50,000.00

0

-

Assorted storage & preparation

containers

1 x 35,000

35,000.00

1 x 15,000

15,000.00

4 Large woks 4 x 2000

8,000.00

0

-

4 Large pans 4 x 2000

8,000.00

4 x 2000

8,000.00

4 Large serving sets 4 x 4000

16,000.00

0

-

600 Cutlery serving sets I Lot X 30000

30,000.00

I Lot X 30000

30,000.00

600 plates I lot X 75000

75,000.00

I lot X 45000

75,000.00

4 large food transport

containers

4 x 2000

8,000.00

0

-

Fuel 1 Lot x 20000

20,000.00

1 Lot x 10000

10,000.00

Labour 1 Lot x 60000

60,000.00

1 Lot x 30000

30,000.00

Supplies 1 Lot

100,000.00

1 Lot

30,000.00

Kshs

590,000.00

Kshs

218,000.00

Returns on investment

While the upfront cost of running a fully fledged catering business seems high, a lot of the equipment

can be discounted over a life of between 5 – 8 years therefore drastically reducing the chargeable

expense to the business.

For a typical wedding, catering gross revenues for a party of 600 people @ Kshs 250/- per person are

Kshs 150,000/-. With a conservative margin of 20 %, the takings per occasion are Kshs 30,000/-. If you

catered for an occasion every fortnight, that will be gross profit of a minimum of Kshs 780,000/- per

annum.


The major suppliers of jacketed fuel efficient stoves are found at the Muthurwa jua kali sheds. All other

supplies are readily available in hops, wholesalers and traders in Nairobi, Githunguri or locally.

There are no major support institutions that support the catering trade apart from training institutions

final presentation; business profile - githunguri constituency

Documents

premises hiring

animal health

kwa maiko

fresh tomato

healthy dairy

basic hygiene

basic agronomic

church home