Kenya’s Beer Wars
The Nation has an interesting article on this new company that is trying to enter the Kenyan beer market and succeed where Castle did not by attempting to compete with EABL.
What I found interesting about this article is that while EABL gets it’s barley from local farmers, this new company is going to import it’s barley from Europe. The article states that:
“Unlike the competition, which has contracted local barley farmers, the new player is counting on European malting barley imports”.
Why would they do that? Is there a difference between barley grown in Kenya and barley grown in Europe? And if you are a company that is trying to market yourself as being “truly Kenyan” (because that’s going to be their marketing campaign slogan), why would you want to help heavily subsidized European Farmers when Kenyan farmers can provide you with the same product at a much cheaper price? From a purely profit rearing standpoint, it doesn’t make sense and from a public relations standpoint, it hurts their marketing campaign. Yes? No?
The Kenyan beverage industry seems to be an industry that attracts many aspiring entrepreneurs. It seemed to start with the bottled water craze and when people saw how much money those guys were making, they wanted in. Then, coke, which hadn’t tapped into that market, got into the fray. Now, the market is flooded with all kinds of bottled waters, both flavored and non-flavored.
Then, we had Kuguru foods, developing their cheap softa drink (what’s in that by the way?). Then, the South Africans came in with all their “natural” fruit juices. A friend was telling me recently that her mother asked her to send her a juice market that can make carrot juice. Apparently, that’s the new craze: Fresh squeezed “organically” grown vegetable juices.
So, now I guess we’re going to start seeing people opening juice bars all over the place. Would you like that? a glass of carrot and spinach juice infused with soy milk? ewwww. I’ll just stick to eating my sukuma wiki. Thank you very much.
This is the Keroche industries…Its been in distiling business for long…
Were their practices completely legit ? some one should answer
Anyway they INTEND to source their barley from Europe & elsewhere….
I think this is a Brilliant business Idea..Their inputs will be lower given the cost of agricultural inputs burdening the Kenyan farmer to such an extent that its cheaper to import practically anything (sugar,milk,processed tea,coffee,wheat,maize,barley,oat…) from abroad than source locally
As for their slogan ‘Truly kenyan’ well this idea can ONLY be Kenyan
Not sure, about the import bit, i thought they were just getting the malt flavoring.
However it is believed that EABL have the ability to lock up all the local barley from farmers, freezing out supply to the competition
Beer companies should be heavily taxed and the money used for social programmes.
I was distressed when I was recently in Kenya and witnessed the devastation caused to young lives by alcohol.
*****
Botswana has increased the price of beer by 70% to discourage drinking. They said they will raise it by another 70% if there is no change in the next few months.
KEI:
If the government increases the tax on beer people will just switch to the more dangerous underground liquors. As long as the country remains poor, people will be forced to drain their problems in alcohol. I almost understand it.
Lord:
Could you explain further why it’s cheaper to import agricultural products into an agricultural country? I don’t get that, especially when Kenya is busy complaining about it’s inability to export its products into the european market.
KE
Its true and is realy sad: There are Three scenarios making our agricultural products expensive
1) Farm subsidies by our competitors….
2) Land tenure in Kenya vs Those of our competitors
3) Technological disvantage and colonial heritage
Farm subsidies:
Western agriculture is so heavily subsidised such that its obscene
check this site http://www.indiatogether.org/2.....ntitle.htm
A cow in industrialesed nation is subsidised to the extent of Kes 75000 per year.
This is above a mans per capita income in Kenya
Crops are even heavily subsided…And this we have not factored the emuloments & pension to farmers
The REOSON they do this is They consider agriculture as a SECURITY ISSUE….They CAN NOT OUTSOURCE security
LAND TENURE/SUBDIVISION
Land subdivision/tenure is pre agragrian: One is aloowed to own small parcels (unecomic farming units) and call themseleves farmers…For farming to make sense all the countryside must evacuated…(I have writen about this before in your blog)…..
Small farms will only make prices /unit of product very high…..TAKE Sugar for example……Sugar in Nyanza and western Kenayn on small grower holdings of 1 acre/2 acre is ridiculous..even 1000 acres are ridiclous…compare with even say sudan which grows sugar in sizes of Nyanza,western combined..one continous sugar plantation..you can see why they can sell it at 20cents and still make profits
KENYATTA SHOULD NEVER HAVE DONE A MUGABE in the early 60’s
Technogoly & cololinal heritage
We grow tea and coffee ship it abroad return it as proceesed(not ours any more)…
With all these its CLEAR KENYA is NOT an AGRICULTURAL Country.
Therefore do not wonder why Keroche is (or thinks of) importing Barley
LORD.
I get your great point…But dont you think we can fix that by having a farming law that requires all those small scale farmers to do their practice uniformly with no exceptions.Practically then,it will all look like one continous plantation as you state it except few houses and huts in the midst.What do you think?
Dee
It dont work like that….It as to be one farm…The houses in between have fences,pit latrines,cows,dogs,roads which will take huge space in sum.The idea of one large farm is to elimanate fences,enable machanisation puchase inputs in great bulk (reducing costs of input) and provide one big work source for labourers and skilled workers…maximising benefits & mininising waste…Its easey to access credit when you got a large farm…It makes sense
Take Delemere farm in Naivasha…Its huge…Take the same size of settlement in a better place agricultauraly like Kisii…(Kisii has better rainfall than Naivasha and even better soil)
The kisii farm housing bout 2 or 3 constituecies to be equal to delemere estate…..You can see the DELEMERE farm will beat the KISII farm in any line of agricultural products despite Naivasha being dry……
Imagin if all of western and Nyanza people were ether to live in Kisumu or Kakamega (creating two huge Cities…real cities).. The countryside of Nyanza and western would be able to feed the all of Kenya and some surplus to export…its amazng
We can DO IT…By RADICAL land consoliadtion policy
The resultant CITIES arising out of land consolidation will be markets to farms and source of labour….The cities will then process the agricultural produce (adding value) and export…..this how western industrial countries evolved…..
Dee
Again when you have many small holder farmers you can NOT force them to do one thing..Some will go for chicken layers,others broilers,others will keep cows,goats,sheeps,donkeys…etc maize,quashi,cassava,potatoe,cabage etc….changaa ,bhang
Most will mix all above
Lord, Dee
The western economies are underpinned by other economic activties such as manufacturing, weapons sales and financial services.
Infact, agriculture in EU and US would be a total failure if it wasn’t for the EU and US subsidies. You have mentioned that yourself. And yet they have massive farms over here!
I therefore do not agree that consolidation of land will automatically lead to better production.
I think the problem lies with the international trading system. It is very simple, EU and US pay their farmers to overproduce and then they donate this food to international aid organisations such as World Vision etc.
Third World farmers on the other hand cannot sell their produce to the lucrative markets of EU and US at fair prices due to high tariffs and trade barriers. They give up farming and start starving – getting food aid from World Vision! I have a European farmer (Beef products) who is also a friend and I know he exclusively sells his produce to the international aid organisations.
Small scale farmers can organise themselves into cooperatives and reduce their economies of scale. This model has worked very well for small scale coffee, tea and horticultural farmers in Central and Eastern provinces. Just go and see for yourself.
However, corruption and inefficiency in the cooperative movement has disillusioned farmers. But this is not to do with the cooperative model – it is to do with poor management practices.
KEI o
This is simple ……A small scale farmer CANNOT outsell a large scale farmer weather for waether ..management for management….crop for crop
Coffee small holders do not compete with large scale coffee farmers even in Central…Lets not EVEN talk of Brazil were Coffee farms are province size continously……….
If you introduce small holder organisine them to copeartives to achive a large scale model you are assuming
1) You have the organising capacity
2) you can remove roads and fences dividing farms
3) you can machanise from plot hoping to next plot
4) you can fix intra holder road networks
5) can manage coop/vilage politics
6) YOU CAN MAINTAIN minimum Quality accross small holder farms (a nightmare)
YOU ARE increasing so many variables you cannot surely succeed or compete
DO not forget that corruption & ineffeciancy are products of trying to organise a group of persons having varied asperations and capacities…essentialy undivorceable from the cooperative model you are proposing…Elimate any organisational layers if you can…it has a cost even if they were not corrupt or 100% efficient
Lord
I am not merely proposing the cooperative model – it already exists in Kenya! Infact there is a ministry of cooperatives if I am not wrong. It has generally been successful in addressing the needs of small scale farmers.
You have conveniently ignored my main point – which is that EU & US farmers are not successful just because they have big farms. They are “sucessful” because they are heavily subsidised. Everyone knows this and there is actually a consumer backlash.
EU & US consumers have now been insisting that they want the 3rd world farmers to get fair prices for their produce – hence the FAIRTRADE concept was born.
I know alot of small scale Central American coffee producers are now selling their produce directly to the EU & US consumers under the Fairtrade concept. I also know Rwanda has embraced this concept and some Rwandese coffee farmers are selling directly to consumers and getting a fair price for their products.
You cannot excuse corruption and inefficiency by saying that it happens because people have different aspirations and capacities. What has happened in many Kenyan cooperatives is plain old theft – these are criminal matters that should be dealt with by the law enforcement agencies.
On the issue of Brazil and Latin America in general you have to understand there is a different land tenure system. The system of colonialism in Latin America was so brutal that the native americans were almost completely exterminated. They exist today as small, marginalised and voiceless groups. The European colonisers were thus able to easily establish the big farms you talk about.
And by the way, I am not saying that there is anything wrong with big farms, I am just saying that small scale farmers can also be successful.