kenya

grain trading
KENYA MAIZE: NAFICS

Figures Nafics Nafics will buy maize from smallholder farmers in Western Kenya and large scale farmers on the markets of Busia, Kakamega and Eldoret. More than 4000 farmers are selected and organized into 136 farmer groups, while another 2,000 farmers will be added already in 2013, aiming for 10,000 in total. Nafics will offer the farmers: market access through buying their maize market transparency by announcing the market price: this will improve their bargaining power , reasonable market prices, which in return will result in supply assurance for Nafics an increase in the production of maize per acre by cooperating with ICS on production improvement on the longer term; a market also for other crops produced by the farmers

Through this cooperation, sustainable socio-economic change for the farmers results in food and income security on the one hand and a profitable business on the other. Nafics will buy the first volumes of maize in the harvest season of August 2013 and expects to breakeven in the third year of business (2016). Maize volumes and cash ow In the first five years, the volumes will gradually grow to a maximum of rounded 120.000 bags (of 90 kg) of maize. The majority of the cash ow is to finance working capital which mainly consist of the available stock of maize. Nafics aims to reach a turnover of KES 300 Million (EUR 3 Million) by the fifth year, with a gross margin of around 30% and a net profit of approximately EUR 400.000.

For more information:

Isaac Chege Managing Director Nacs Ltd
Gold Rock Park Mombasa Road next to Tuffsteel complex P.O Box 13892-00800 Nairobi, Kenya Ofce: +254 (20) 254 23 24 +254 728 653 857 Mobile: +254 722 367 755 E-mail: isaac.chege@nacs.com Skype: isaac.c.n

Marije Tanis Social Business Developer

Smallepad 32 3811 MG Amersfoort The Netherlands Ofce:+ 31 33 303 0250 Mobile:+ 316 14 53 55 20 E-mail: marije.tanis@nacs.com Skype: marije.tanis

kenya

grain trading
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Check our website for all our activities: www.nacs.nl

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KENYA MAIZE: NAFICS

Investics is a Dutch based holding company, 100% owned by a Dutch NGO called ICS. ICS builds on a sustainable growth in welfare and wellbeing by simultaneously investing in economic and social opportunities and needs. ICS believes an optimal result is achieved by combining not for profit programs with social businesses. Investics identifies and implements scaleable commercial opportunities in rural areas in Africa and Asia. The Investics companies tend to link smallholder farmers to the market and strive for maximum social impact on communities. Investics companies are run by local entrepreneurs, with support from the Board. Nafics Ltd Nafics Ltd is a maize trading company in Kenya. Nafics wants to improve the livelihood of smallholder farmers by filling in the imperfections in the Western Kenyan maize supply-chain, specifically in Busia and Kakamega (Western Kenya). Nafics wants to be a profitable business, improving the livelihood of smallholder farmers by filling in the imperfections in the Western Kenyan maize supply-chain, specifically in Busia and Kakamega. Basedon a strong network with medium-sized millers, smallholder farmers, brokers and other players in the public and private Kenyan maize market, Nafics will:  buy maize during harvest seasons when volumes are high and prices are low store and treat the maize  sell the maize outside the harvest season when prices are high Nafics will provide security to all partners when it comes to supply, partnership and quality. Moreover, Nafics will provide a sustainable positive impact on the food security for West-Kenyan smallholder farmers. The entrepreneur: Mr. Isaac Chege Nafics is managed by Mr. Isaac Chege, current Chair of the Nairobi Maize Millers and Farmers Association and an award-winning young Kenyan entrepreneur. The network and vast experience in the maize industry that Mr. Chege adds to Nafics is highly valuable for the business and makes this business opportunity an even more interesting investment proposition for all

The 5 year term objective of Nafics is to be preferred by clients through offering a reliable standard quality product, and by farmers (the suppliers) through providing a transparent market for maize by buying and selling the maize through a wholesale company. Within 5 years, Nafics will buy at least 50% of its total volumes of maize from low-income households, being more than 10.000 lowincome households in the regions of Busia and Kakamega in Western Kenya to improve the economic position of the smallholders. Nafics aims to reach a turnover of KES 300 Million (EUR 3 Million) by the fifth year, with a gross margin of around 30% and a net profit of approximately EUR 400.000.

Obviously there are also risks involved. A harvest may fail for example. In our business plan we have worked out several scenarios, such as crop failure, and their impact on the financial budget. The basic business idea of Nafics 1. Collect maize from farmers in Western Kenya directly after the harvest period (August October), when selling prices are low. 2. Transport the maize to a central warehouse location. 3. Arrange treatment and quality assurance. 4. Sell the maize at the right place and when prices are high from March to July. The business opportunity is based upon the opportunities we see in the maize value chain in Kenya:  A lack of working capital leading to minimal arbitrage.  A structural maize production deficit, leading to the necessity to import maize for example.  A lack of optimal standardized quality control measures by most players in the value chain. Province Central Coast Eastern Nyanza Rift Valley Western
(incl. Busia and Kakamega)

Background maize in Kenya Maize is the main staple crop in Kenya. The total consumption of maize in Kenya in 2011 was 43 million bags. The total national production in 2011 grew to only 30 million bags of maize. This indicates the structural deficit of maize production Kenya is dealing with (coverage of 69%) and the corresponding structural demand in the market. With an annual per capita consumption rate of 98 kilograms, maize contributes about 35% of the daily dietary energy consumption. The total national production did grow in recent years. In 2002 the production was rounded to 26 million bags. The following table shows the production per Kenyan province and their market shares during the crop season of 2008 compared to 2007. Nafics will buy maize in Western Kenya and part of the Rift Valley. Production (Metric Tonnes of maize) Many of the large commercial farmers are based in the Rift valley where they produce maize on larger scale (5 up to 1000 acres per farmer). The yield of maize per acre in these districts is reported high. The food gap of Kakamega and Busia districts is mainly filled by the supply from these two districts. Large quantities of maize are also imported from Uganda and Tanzania. In a market research done by the company CTRT, grain traders in Busia estimated the import of maize from Uganda and Tanzania at about 55% of the total maize traded in the market. Rift Valley is supplying 40% of maize traded by the wholesalers in Busia. Also the majority of the maize traded by traders in Kakamega North district comes from the Rift Valley.

kinds of investors interested in the growing agricultural opportunities of sub-Saharan Africa. Build on extensive research and expert advice, our budget shows good profitability. Moreover, Nafics adds a major social component to its business by working closely with smallholder farmers across Western Kenya who we organize into farmers groups. The two thousand smallholders we have already organized in this manner will see substantial and permanent growth in their own food security as well as the profits and continuity of their agribusiness.

Maize production 08 MT 134,312 49,975 114,365 252,361 1,085,765 418,706 2,055,484

Maize production 07 MT 184,041 52,727 136,434 269,671 1,253,670 439,343 2,335,886

Market Share 2008 7% 2% 6% 12% 53% 20% 100%

Total

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