Shalem Investments, a Meru-based entity that brings together
7,000 sorghum farmers bore the brunt. The group had found a ready market
for the crop at the East African Breweries Limited (EABL).
Shalem
Investments partner Ruth Ireri, who recently won the European Marketing
Research Cooperation-Rabobank Project Incubator Award in Kinshasa, says
the government did little to weigh the effects the tax would have on
the thousands of sorghum farmers.
Money met the teacher-turned-social entrepreneur, who runs Shalem Investments together with her husband.
“I
started by supplying maize and beans to schools when I was a teacher
using my salary as the seed capital. The demand grew and when I finally
resigned and registered Shalem Investments in 1998, the plight of many
farmers touched me. I organised them into groups, bought their sorghum,
which EABL bought in big volumes,” said Ms Ireri.
MUTED SALES
With support from her husband, the mother of two says the business was booming.
Farmers
trusted her due to the assured market she provided thanks to the brewer
until the government hit low-cost beer business with tax in 2013. The
value chain was disrupted and the brewer failed to continue buying
sorghum in huge volumes starting January, last year.
“We were stuck with about 3,755 tonnes in the second season of 2014. This was the hardest moment for the farmers,” she said.
EABL had been making Senator Keg beer since 2004 as a drink for consumers wanting to shift from use of home-made alcohol.
The cheap drink was enjoying a tax break until 2013 when the government imposed excise duty hoping to generate Sh6.2 billion.
As
a result, the price of Senator Keg rose from Sh20 to between Sh45 and
Sh50 per 300ml glass bringing down sales by 80 per cent according to
EABL.
The government’s plan to
encourage production of low-cost beer made Senator Keg the second-most
popular beer in Kenya with a market share of 15.3 per cent. But with the
new tax, farmers’ stores began swelling with sorghum.
“If
only Deputy President William Ruto, who I have known to be an ardent
defender of farmers, knew of the full impact the taxation caused on
thousands of farmers, who had invested in sorghum. What is the benefit
of cheap fertiliser when there is no market for the harvest?’’ she said.
In
many parts of semi-arid Igembe North, Meru County, farmers had embraced
sorghum in droves. And with the coming of a ban on miraa (khat) in
European markets, Ms Ireri believes sorghum will be the best
alternative.
“There was total
transformation in lifestyles. We wrote many cheques to secondary
schools. Youths were employed in spraying, harvesting and they had even
formed groups through which they saved, and women groups leased land to
farmers, transforming many lives. If there is an initiative of meeting
all the Millenium Development Goals in totality, it is in agribusiness,”
she added.
At the moment, the
enterprise has over 2,000 tonnes of sorghum in its stores. Muted sales
have affected over 20 per cent of the firm’s annual turnover.
WALK THE JOURNEY
However,
encouraged by last month’s social agribusiness award, which includes a
cash prize of $15,000 (about Sh1.4 million), the former teacher says
there is no giving up yet. She plans to mobilise at least 15,000 farmers
in 1,500 groups in the next five years.
The
pain of a reversed breakthrough in sorghum farming has made her to
start thinking beyond the market chain that has since been interrupted.
She has turned to food and feed millers across the country including Unga limited as the main market for her group of farmers.
To
augment their earnings, she is urging them to diversify into sunflower
farming with oil maker BIDCO providing the market. She is also
encouraging farmers to venture into bee keeping.
Asked
about the money she won. “I want to set up a small fund to help farmer
groups access input loans and depending on how it goes, I will woo more
investors to grow the fund bigger. I feel for the poor farmers, who did
not even know what the sorghum was being used for but all they knew is
that life was being transformed. We have to complete the journey.”
In
a deal with 2 SCALE, an agribusiness incubator in Africa, Shalem
Investments trains farmers on the best farming practices. This is
achieved in cooperation with the ministry of Agriculture and the
European Cooperative for Rural Development.
Under
Shalem Investments, the annual income for the farmers had hit over
Sh400 million. There are plans to raise it to Sh1 billion in the next
five years.
The highest earning farmer now makes Sh750,000 per year.
EYE ON THE MONEY
Ms Ireri says the main motivation for farming is money and not food.
A ready market is therefore as crucial just as the resources dedicated in research for other aspects of good production.
“Policies
have to be well thought out. Before looking at any policy, the
government ought to look at the entire value chain. Farmers need cheap
loans and a reliable market. Every farmer will tell you how much they
intend to make, not how much food they expect,” she notes.
She has plans to explore new markets in China and Dubai for sorghum, green grams and other grains.
The
International Crops Research Institute for the Semi-Arid Tropics says
sorghum is widely grown as a food crop in sub-Saharan Africa, but
commercialisation has proved difficult as growers prioritise household
food security.
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