How I build a giant food factory by paying farmers promptly and fairly

When Thakarshi Patel bought land at Njoro, his plan was to grow French beans for sale in Europe. Thanks to his love for small-scale farming, he was also keen on supplying vegetables to his vegetarian family.

However, the small venture he started after shifting from wholesale trade has ballooned into a multi-billion food processing factory.

About 37 years since he opened shop, some of the factory peers such as battery maker Eveready, Kabazi Canners, Kenya Farmers Association, Londra, vehicle assembler Sam-con Limited, Pyrethrum Board of Kenya are either struggling or have since exited the scene.

“I bought this two acres to grow French beans as I wanted to exploit the European market and also earn my country foreign exchange,” he recalls.

That, however, changed drastically. As the yield doubled, he secured international orders and to earn better, he turned to value addition with the opening of Njoro Canning Factory.

In January 1982, armed with Sh20 million savings from his wholesale business that he operated between 1965 and 1978, he bought equipment and set up a small processor.

“Never underestimate the power of saving for a rainy day. While I also borrowed from the bank and relatives, the lion share of the capital came from my savings,” said Mr Patel.

His farm has since expanded to 14 acres. And to ensure steady supply of raw materials, he has contracted over 5,000 farmers from seven counties. His factory buys tomatoes, carrots, cabbages, potatoes, kales, green peas, sweet corn and fruits from the growers.

The factory, which specialises in canned food, tomato products, frozen and dehydrated vegetables, also buys spices such as coriander, cumin, ginger, pepper, turmeric and herbs such as sage, basil, parsley and lemon grass from farmers across Kenya.

The farmers are from Nakuru, Machakos, Murang’a, Kirinyaga, Bungoma, Baringo and Laikipia counties.

“When this factory started receiving fresh produce from farmers 37 years ago, they were earning Sh2 million per month. Today every month we pay our farmers between Sh8 million and Sh10 million.”

SECRET PASSWORD

The factory also benefits Egerton University students studying food technology, who come to sharpen their skills through internship.

“We started with four employees but today we have employed more than 400 people among them 20 graduates,” said the 75-year-old CEO-cum-chairman of the company.

So how has Mr Patel been steering the canning factory?

“The secret password is paying farmers promptly. We pay our farmers three weeks after delivery. If farmers are not paid on time, they won’t tend their crops, translating into poor yields and poor returns to our factory,” said the father-of-four.

Besides offering good prices for deliveries, the farmers are trained on land use, application of fertilisers and use of certified seeds.

Mr Patel, who has spent 53 years in business, says the factory’s daily output has increased to 50 tonnes per day from 400 cans despite a stiff competition.

“If we pay our farmers Sh10 million a month, our 400 employees have never complained of salary delay, and the factory is still receiving fresh produce from farmers then it would be wrong to say that we’re not making profits,” he said.

But he has also been facing hurdles. “The introduction of cheap imports is hurting our market,” said Mr Patel.

“Besides a ballooning wage bill, rising electricity bill and high cost of drilling water and factory maintenance, the spiralling interest rates is a stumbling block to our expansion plan,” said Mr Patel, who is a director of Horticultural Corporation Development Authority.

EUROPEAN MARKET

To access the European market, the factory observes high standards of hygiene. “Workers must wash their hands before starting their duties. Their shoes must be disinfected at the entrance,” said managing director Sudheer Vaia, adding that entire plant is washed daily.

Mr Patel says a vital business lesson he has learnt is the need for continuous quality improvement. One must invest in the latest machinery, treat the workers as partners while farmers’ issues must be sorted out on the spot, he says.

“By 2030 we hope to make a major expansion to accommodate at least 20,000 farmers and turn the factory to specialise in a variety of food products,” he said.

The Kenya Defence Forces, disciplined forces, Kenya Wildlife Services and various supermarkets in Kenya provide the entrepreneur with a ready market.