One thing is to know that the agricultural business represents roughly 50% of Kenya’s GDP (including indirect contributions), and another thing is to observe how this is created. Last week I joined a group of IESE MBA students in their visit to two companies in this industry: Vegpro, and Kreative Roses. Both of them quite impressive!
Kreative Roses is a focused company that grows and exports roses. Vegpro is more diversified (and also larger): They export both processed fresh veggies and flowers, and they just acquired a sugarcane farm in Tanzania.
Selling perishable products, their logistics are challenging:
- Vegpro processing facilities are located in the Nairobi airport area. The airlines appreciate their business, as Vegpro contributes filling their planes regularly and all year long. This means that when the planes deviate due to weather conditions, and the cargo needs to be re-routed, Vegpro’s products receive priority treatment.
- Kreative Roses’ farm is in the Lake Naivasha area, about 100 km. away from Nairobi. But they are located next to a logistics operator to whom they outsource logistics.
Interestingly, neither of these companies utilizes insecticides. Instead, they control plagues by growing local insects that eliminate the pests.
SMEs like these are not the full picture of the Kenyan agricultural industry. A large number of small, traditional farmers contribute serving domestic needs. In fact agriculture employs more than 75% of the workforce. However, most of these farmers lack basic agricultural inputs and work with outdated technology, and the domestic demand is underserved.
And a striking situation: while food is being exported to the Western world, 35% of children under five are stunted and 16% are underweight. Isn’t this food for thought?