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Githunguri District

Small scale cereals reseller Food for catering

Cereal Trading

Catering services

A healthy dairy Cow

Greenhouse farmed tomatoes

A Cup of yoghurt

A Healthy Dairy Cow

Greenhouse Tomato farming

A Cup of Fresh Yogurt

Business Opportunities Profiling

By Samuel Mwangi January 2012

Acknowledgement & Appreciation


I would like to acknowledge the involvement and contribution of various institutions in the preparation of this Business Opportunity profiling activity. The people who have significantly provided inspiration, information and advice were Gachiku G, Mbugua Joseph, Waruingi George, Wachiuri John and Elijah Ndungu in their personal and business capacities. The institutions that have provided a lot of the factual information used as the basis for the market surveys in various categories are ; the Ministry of Agriculture, Market information department and FAOSTAT database; the District Crops, Veterinary and Livestock production officer, Githunguri district and the Kenya National Bureau of Statistics. I would also like to appreciate the information derived from my interaction with various suppliers like CAIS, Amiran Kenya, NARL and the Kenya Dairy Board. Without them, this report would be hollow and lacking in fact and substance. Finally, I would like to acknowledge the efforts of the Ministry of Youth Affairs and UNDP in the Kenya National Youth Empowerment Project for being the inspiration behind this work. It opened my eyes to some of the opportunities in my backyard that I had never thought about.

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Business Opportunities Profiling Githunguri Constituency

Table of Contents

Acknowledgement & Appreciation ............................................................................................................... ii Table of Contents ......................................................................................................................................... iii Executive summary ...................................................................................................................................... iv Market Survey ............................................................................................................................................... 1 Evaluation ..................................................................................................................................................... 2 Findings ......................................................................................................................................................... 6 Business Opportunities chosen..................................................................................................................... 6 Conclusions & Recommendations ................................................................................................................ 6 Business Profile 1; Veterinary Services ......................................................................................................... 7 Business Profile 2; Dairy Processing............................................................................................................ 10 Business Profile 3; Green house farming .................................................................................................... 14 Business Profile 4; Cereals Supply............................................................................................................... 16 Business Profile 5; Catering Services .......................................................................................................... 19

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Business Opportunities Profiling Githunguri Constituency

Executive summary
Githunguri District is one of the new Districts inaugurated in the year 2009. The district is however a net exporter of skilled labour, dairy products and poultry. The district has one main urban centre at Githunguri where the district headquarters are located, and several smaller peri-urban centres like Kigumo, Kwa Maiko & Ikinu. There are very few post-secondary school training institutions in the district. There are various services needed by the residents of Githunguri district. Educational services at the basic level are another rapidly growing service sector. Evaluation of businesses or business opportunities is not an exact science. We came up with nine characteristics of a typical business against which to evaluate the various business opportunities. We gave each characteristic three weights, High , Medium and Low were used representing the ranking of the business opportunity qualitatively and/or quantitatively with regard to that particular aspect of the business. From the business opportunity evaluation and ranking exercise, the following business opportunities were ranked according to their scores in order of preference; Animal production related services are also very profitable whereas there is a significant showing of service- related opportunities. The business opportunities chosen for profiling are therefore Veterinary services, Dairy processing, Greenhouse farming, Cereals supply and Catering.Githunguri district has very profitable veterinary services, dairy processing, greenhouse farming, cereal trading and catering services openings that have not been exploited. Veterinary Services The amount of milk produced and marketed through formal processing channels generates between Kshs 2.5 to 4.0 billion annually. Part of this income is also used to buy services and inputs associated with dairy production like feeds, drugs, semen and veterinary services. Assuming that only five percent of this amount is used to procure animal health services, that is still a potential market of between Kshs 100 160 million annually in animal health goods and services alone. The customers for these services are the 25,000 dairy farmers within the district. Even a conservative market share target size of 3% of this market translates to 750 farmers and between Kshs 3 5 million in annual revenues. Dairy Processing The technical knowledge required to process the milk will be a basic certificate or artisanal course in dairy processing. For milk handling at the milk bars, basic hygiene education will suffice for the milk handlers and selling assistantsThe returns on investment are higher for processed products than for raw

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Business Opportunities Profiling Githunguri Constituency

milk, and therefore a Mini dairy though it has higher capital requirements is more profitable than a micro dairy to the higher volumes of processed products sold. Green house tomato production From the annual production, 90 % of the production was meant for the fresh produce market while the remaining percentage was processed into various products. Nearly all the tomatoes produced in Kenya are consumes locally, very little of the fresh tomato produce is exported as processed products. The major institution that can support Tomato greenhouse farmers on basic agronomic practices is the District Horticulture department at Githunguri Township Cereal trading The major market for cereal s is the institutional market. The district has 20 private boarding schools, and 35 secondary schools that serve meals for either day scholar or boarder students. There are no other large institutions within the district. The other market that I have chosen to target is the small reseller market and the institutional market. The other predictable market is the small cereal resellers. This business does not require any particular specialized skill. Catering Services In our church home congregation, there is a wedding at least once every other month. Our location has 13 such congregations, and very at least five main denominations. Assuming that only 1 in 5 or (20 %) of these occasions will require commercial catering services, this is still a very big catering market of 156 occasions. We intend to hire, train and certify our food handlers in catering and food production and run the business from a dedicated kitchen at home to save on premises hiring costs. We also intend to make the food presentation and service more professional to differentiate our service.

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Business Opportunities Profiling Githunguri Constituency

Market Survey
Population & location Githunguri District is one of the new Districts inaugurated in the year 2009. The borders of the district correlate with the constituency boundaries of Githunguri constituency. It has a Total population of 147,463 persons and an area of 61.3 square kilometers. The district borders Gatundu to the North-East, Ruiru to the East, Kiambu East to the South- East, Kiambu west to the southwest and Lari to the Northwest. Githunguri district is located about 50 Kilometers Northwest of Nairobi and has a lot of potential as a commuter town serving the working population of Nairobi City. There is a youthful working population with a significant disposable income for a rural area Agricultural and Industrial production In terms of agricultural production, it is in the mid altitude (1800 2100 m ASL) coffee- tea high productivity transition zone. The area is therefore characterized by intensive Coffee, Tea, Horticultural and subsistence production. It also has one of the most famous and highly productive dairy zone in the country. However, since the land holdings are small due to a high population, the district is a net importer of food. This therefore means that maize, beans, potatoes, cabbages, pulses and even cows for meat are imported into the district. The district is however a net exporter of skilled labour, dairy products and poultry. There is a gradual industrialization taking place around Githunguri town as there are three dairies, a Tea factory and a small brewery. These firms however do not employ more than 1,000 people in total. Employment and urbanization About half the populations are gainfully employed, while 30,000 are in some form of economically productive engagement and about 5,000 are looking for work and are therefore available for employment. Only 25% of the population lives below the national poverty line. The rate of literacy for the general population is very high with most of the people under the age of 40 having gone through secondary school education. The district has one main urban centre at Githunguri where the district headquarters are located, and several smaller peri-urban centres like Kigumo, Kwa Maiko & Ikinu. There are very few post-secondary school training institutions in the district. There is also a lack of relevant Vocational school training institutions. Services

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Business Opportunities Profiling Githunguri Constituency

There are various services needed by the residents of Githunguri district. The district has a good number of all weather roads. The main ones are the class C trunk road from Nairobi Kiambu Githunguri Uplands and the Ruiru Kwa Maiko Githunguri Kagwe Kimende routes. The Nairobi Kiambu Kwa Maiko Kibichoi route also passes through the southeastern part of the district. There are many matatus plying the various routes. In the last three years, there has also been a profusion of motorcycle transport services that ply the shorter routes within the district not serves by regular matatus. Educational services at the basic level are another rapidly growing service sector. This is because people who originally came from the district and have settled in urban areas prefer to bring their children to boarding schools within the district. Parents who also want to give their children quality education also prefer boarding schools to the public day schools. There are also numerous trading activities that cater to various needs of local residents.

Evaluation
Evaluation of businesses or business opportunities is not an exact science. Profiling businesses however is guided by several rules of the thumb depending on what the aim of the exercise is. There are therefore several criteria which one can use in-order to illuminate the critical aspects of the business/business opportunities that one is interested in. Some of the aspects that one would want to evaluate are; profitability, scalability, compliance, employment creation, barriers to entry, level of technology/specialist knowledge required and market size among others. We have therefore chosen several characteristics to give a more rounded character of the business opportunities available. We came up with nine characteristics of a typical business against which to evaluate the various business opportunities. We gave each characteristic three weights, High , Medium and Low were used representing the ranking of the business opportunity qualitatively and/or quantitatively with regard to that particular aspect of the business. For each weight of a particular aspect, a high rank attracted a numerical score of 5, a medium rank a numerical score of 3 and a low rank a numerical score of 1. These particular aspect or categories chosen were; 1. Profitability For any commercial enterprise, the most attractive factor that determines whether one will engage or will not engage in a business is the likely returns otherwise called profit. We therefore considered this as one of the primary characteristics 2. Market size/Number of prospective customers The size of the market is an important consideration for an entrepreneur. A large market means a higher likelihood of success than a small market.

3. Length of the Production/sales cycle

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Business Opportunities Profiling Githunguri Constituency

A short production and sales cycle usually means higher revenues within a given time which have a direct bearing on profitability. A short production cycle is also advantageous since one can minimize losses and make adjustments to improve the product as one goes along, in response to demand or according to other environmental conditions affecting the business. Businesses with a short production/sales cycle are therefore more preferable than ones with longer production/sales cycle. 4. Business risk profile Businesses face various risks. These risks might be internal or external and depend on the type of the business enterprise, the control that one has over the production process, the competence and skill of ones employees and other factors external to the business like location, security, cash transaction volumes, alternative uses of business products and inputs among other risk factor 5. Employment opportunities created As a general rule, in high unemployment situations, enterprises that create many employment opportunities are preferred. This usually entails the use of manual labour instead of automated processes and mechanical equipment. If the production process is not very elaborate, then the use of manual labour maybe convenient where utilities like electricity, piped water and gas are unavailable. However this introduces many points of failure and contamination and is not preferred where the quality requirements are very high since this requires a very high level of skill and control to achieve. Start-ups however begin with manual labour creating employment and then mechanize processes as they move up higher along the value chain and quality requirements. 6. Linkages to other business/value chains in the locality Businesses that create linkages to other enterprises in the locality are better in the long run since they are more economically beneficial to where they are situated. The economic multipliers in the form of employment, revenues, technology, support services and technology transfer cannot be gainsaid. 7. Barriers to entry Each type of business has its own prerequisites that must be met before start-up, and that must also be maintained for the business to run profitably. In a rural setting, business with low barriers is preferable since the technology, capital, skill pools and inputs available are fewer than in an industrial/urban setting. In some ways, low barriers to entry can be a disadvantage since it means that the likely competition is very high 8. Capital required Most young people do not have tangible assets that they can sell or use to secure commercial credit. Therefore businesses that require little or no capital are preferred. A majority of rural

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Business Opportunities Profiling Githunguri Constituency

dwellers also do not have high regular incomes and therefore low capital requirements favour them. 9. Technological complexity of equipment/process of running the businesses There is a level of knowledge, skill or specialization that one must either have before starting certain businesses or that one must acquire in the course of running such a business. Simple services like typing and typesetting, printing and photocopying require a level of skill higher than running a duka. Veterinary services can only be offered by recognized professional while mechanics must either have formal training and qualifications or experience acquired over some time in order for them to give satisfactory service. We totaled the scores for each opportunity across the nine categories and ranked the opportunities according to their respective scores in order of preference. From the foregoing, we selected 10 business ideas that were feasible and viable; Business opportunity character score
Employment opportunities created Number# of prospective customers Technologica l complexity
Medium Low High High Medium High Medium Medium High High

Production/S ales cycle

Business Opportunity Profitability

Linkages to local value chains

Risk profile

Barriers to entry

Flour milling Cereals supply Motorcycle repair Veterinary services Fingerlings supply Yoghurt processing Catering services Rabbit breeding Green house farming Mushroom farming

High High Medium High High High High High High High

High High High High Medium High High Medium High Low

Short Short Short Short Short Short Short Short Long Long

Low Low High High High Low Low Medium High High

Low Medium Low Low Medium Medium Medium Medium Low Low

Medium Medium High High Medium High High Medium Medium Medium

High High Medium High High Medium Medium Medium High High

High High Low High High Medium Medium Medium High High

Business Characteristic scoring scheme


Employment opportunities created Number# of prospective customers Technologica l complexity
5 High 5 Medium 3 Low 1 1

Production/S ales cycle

Linkages to local value chains

Profitability

Risk profile

Barriers to entry

High

High

5 Short 5

High

High

High

High

Medium 3 Low 1

Medium 3 Long Low 1 1

Medium 3 Low 1

Medium 3 Low 1

Medium 3 Low 1

Medium 3 Low

Capital required

Capital required

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Business Opportunities Profiling Githunguri Constituency

Business Opportunity ranking scheme


Production/Sales cycle Employment opportunities created Number# of prospective customers Linkages to local value chains Barriers to entry Capital required Technological complexity Risk profile

Ranking Totals
3.00

Profitability

1.

Flour milling Cereals supply Motorcycle repair Veterinary services Fingerlings supply Yoghurt processing Catering services Rabbit breeding Green house farming Mushroom farming

High 5.00

High 5.00

Short 5.00

Low 1.00

Low 1.00

Medium 3.00

High 5.00

High 5.00

Medium

28 33 28 41 32 36 32 31 35 31

2.

High 5.00

High 5.00

Short 5.00

Low 1.00

Medium 3.00

Medium 3.00

High 5.00

High 5.00

Low

1.00

3.

Medium 3.00

High 5.00

Short 5.00

High 5.00

Low 1.00

High 5.00

Medium 3.00

Low 1.00

High

5.00

4.

High 5.00

High 5.00

Short 5.00

High 5.00

Low 1.00

High 5.00

High 5.00

High 5.00

High

5.00

5.

High 5.00

Medium 3.00

Short 5.00

High 5.00

Medium 3.00

Medium 3.00

High 5.00

High 5.00

Medium

3.00

6.

High 5.00

High 5.00

Short 5.00

Low 1.00

Medium 3.00

High 5.00

Medium 3.00

Medium 3.00

High

5.00

7.

High 5.00

High 5.00

Short 5.00

Low 1.00

Medium 3.00

High 5.00

Medium 3.00

Medium 3.00

Medium

3.00

8.

High 5.00

Medium 3.00

Short 5.00

Medium 3.00

Medium 3.00

Medium 3.00

Medium 3.00

Medium 3.00

Medium

3.00

9.

High 5.00

High 5.00

Long 1.00

High 5.00

Low 1.00

Medium 3.00

High 5.00

High 5.00

High

5.00

10.

High 5.00

Low 1.00

Long 1.00

High 5.00

Low 1.00

Medium 3.00

High 5.00

High 5.00

High

5.00

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Business Opportunities Profiling Githunguri Constituency

Business Opportunity Rank 10 4 9 1 6 2 5 7 3 8

Business Opportunity

Findings
From the business opportunity evaluation and ranking exercise, the following business opportunities were ranked according to their scores in order of preference; Rank 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Business Opportunity Veterinary Services Dairy processing Greenhouse farming Cereals supply Catering Fingerlings supply Rabbit rearing Mushroom farming Motorcycle repair Flour milling Category Animal health Service Cottage Production Crop production Trading Service Fisheries production Animal production Crop production Service Cottage production

From the exercise, it is clear that agriculture ad agro related opportunities predominate the opportunities available in the constituency. Animal production related services are also very profitable whereas there is a significant showing of service- related opportunities.

Business Opportunities chosen


The business opportunities chosen for profiling are therefore Veterinary services, Dairy processing, Greenhouse farming, Cereals supply and Catering

Conclusions & Recommendations


Githunguri district has very profitable veterinary services, dairy processing, greenhouse farming, cereal trading and catering services openings that have not been exploited. I therefore recommend that it behooves young people like me to realize that there are opportunities that can pay better than a white collar job. One of my resolutions for this year is to get into dairy processing and start exploiting them.

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Business Opportunities Profiling Githunguri Constituency

Business Profile 1; Veterinary Services


In the preparation of this profile, I talked to a trained and practicing veterinary officer. I was also able to talk to the District veterinary and Livestock production officers. The data about the growth in the number of cows in the district and the trends towards increase were obtained from the district livestock production office. They are however official but unpublished. I was also able to corroborate this with anecdotal and firsthand information since I hail from the district. Market demand The following are the total number of cows and the trends in dairy cow population the last three years;
Year Number of Dairy Cows Dairy Cows Population Growth Processed Production (Liters) Estimated production (Liters)

2009

38,373

0%

83,554,980

150,000,000

2010

42,381

10%

123, 451,864

220,000,000

2011

46,450

10%

132, 162, 385

250,000,000

As illustrated in the second column of the table, the population of cows has been increasing by a rate of 10 % annually. This is also marked by an increased rate of milk productivity. A lot of this milk is marketed through formal processing channels generating between Kshs 2.5 to 4.0 billion annually. This money apart from providing the dairy farmers with an income is also used to buy services and inputs associated with dairy production like feeds, drugs, semen and veterinary services. Assuming that only five percent of this amount is used to procure animal health services, that is still a potential market of between Kshs 100 160 million annually in Animal health goods and services. The customers for these services are the 25,000 dairy farmers within the district. Even a conservative market share target size of 3% of this market translates to 750 farmers and between Kshs 3 5 million in annual revenues. Veterinary Service Delivery Veterinary services are provided by qualified professionals. These professionals usually run veterinary and animal stockiest shops as a point of presence in the major shopping centres. They walk around and introduce themselves to farmers and leave their mobile phone contacts with them. When a farmer needs a service, they often call their favorite animal health provider who more often uses a motorcycle and comes to provide the requisitioned service at the farm. This is a very efficient mode of service delivery 7
Business Opportunities Profiling Githunguri Constituency

Technology and equipment needed The animal health or veterinary service provider needs to carry with them a range of drugs for the common animal health problems. They can also carry with them different equipment for basic animal surgery, vaccination or artificial insemination service. To store the drugs and semen under the specified storage conditions, the stockist will need to have either a freezer of a fridge. A motorcycle comes in handy for fast and cheap movement from point to point as services are requested. This is detailed further in the table below. Range of size of Investment micro to medium size in shilling Equipment & Supplies
Syringes Needles 1 Freezer Antibiotics Oxytetracycline Antibiotics Pedistrep Albafas ( Dewormer) Multi Vitamin Boosters Semen Flask Antibiotic spray Epson Salts Intra mammary infusions Sutures & needle Thermometer Motorcycle Fuel Labour

Full equipment Route


1 lot (100) x 1800 1,800.00 1 lot (100) x 400 400.00 1 lot x 25000 25,000.00 1 Liter pack x 2400 2,400.00 1 Liter pack x 3200 3,200.00 1 liter pack 1,500.00 1 liter pack 1,800.00 10 Liter 50000 Pack x 50,000.00 100 ml 2,200.00 1 Kg pack x 1700 1,700.00 I liter pack x 2500 2,500.00 I set X 500 500.00 1 piece x 300 300.00 1 Motorcycle 70000 1 lot x 5000 5,000.00 I lot x 5000 5,000.00 Labour x 70,000.00 0 0 I set x 500 100 ml 100 ml 100 ml 100 ml 100 ml 100 ml 100 ml 100 ml

Simple route
200.00 200.00 200.00 350.00 200.00 200.00 2 liter pack x 10000 10,000.00 250.00 200.00 300.00 500.00 1 piece x 300 300.00 5,000.00 -

1 liter pack x 2200

Kshs 173,300.00

Kshs 17,900.00

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Business Opportunities Profiling Githunguri Constituency

Returns on Investment The typical service schedule in one month is as follows; Monthly returns Cost of Service (Kshs) Rate charged (Kshs)

Service

Service calls
15

Revenues

Mastitis Treatment

300.00

1,000.00

15,000.00 -

Pneumonia Treatment

300.00

1,200.00

15

18,000.00 -

Minor Surgery

750.00

2,000.00

10

20,000.00 -

Major surgery

1,500.00

3,500.00

10,500.00 -

AI service A

500.00

1,200.00

20

24,000.00 -

AI service B

1,000.00

2,200.00

10

22,000.00

Revenues

109,500.00

The major suppliers of key inputs for animal health products and services are the Centre for Artificial Insemination Services (CAIS) in Kabete and the major resellers of animal health services in Nairobi. The Ministry of Livestock Development & Marketing also carries out disease surveillance and monitoring and supports in the sensitization of farmers. The ministry also works hand in hand with the service providers as they help the ministry in carrying out its mandate.

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Business Opportunities Profiling Githunguri Constituency

Business Profile 2; Dairy Processing


According to the Kenya Dairy Board, the dairy industry is the single largest agricultural sub-sector; it is even larger than the tea subsector. It contributes some 14% of agricultural GDP and 3.5% of total GDP. Kenyans consume more milk than almost anyone else in the developing world. In terms of milk consumption per unit of average income, Kenya ranks only behind Mauritania and Mongolia globally among developing countries. On average, each Kenyan drinks, according to the International Livestock Research Institute (ILRI), about 145 litres of milk a year, three times his Ugandan counterpart and four times the average for Sub-Saharan Africa. A 1999 survey found that urban households spent an average of 18 percent of their income on dairy products, second only to their expenditure on cereals such as maize. The following table summarizes the milk production data for nine years between years 2000 and 2008;
Production in tonnes Cow milk 2000 2001 2002 2003 2004 2005 2006 2007 2008 2,224,000 2,444,150 2,811,950 2,819,500 2,829,900 2,650,000 3,500,000 4,230,000 3,990,000 Goat milk 116,000 97,100 10,100 107,230 118,500 129,000 105,000 108,000 110.000 Camel milk 25,200 25,200 25,200 25,200 36,000 25,200 32,200 32,500 27,000 Total 2,365,200 2,566,450 2,847,250 2,951,930 2,984,400 2,804,200 3,637,200 4,370,500 4,127,000

In Githunguri Constituency, the Dairy sector production statistics are as follows;


Year Number of Dairy Cows Processed Production (Liters) Estimated production (Liters)

2009 2010 2011

38,373 42,381 46,450

83,554,980 123, 451,864 132, 162, 385

150,000,000 220,000,000 250,000,000

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Business Opportunities Profiling Githunguri Constituency

There is a marked preference for the consumption of raw milk in rural areas and peri-urban towns due to its cheaper cost and familiarity. This has however been accompanied by an increased appreciation for other processed liquid dairy products like yoghurt and mala (fermented) milk which have a long African tradition. Yoghurt is well liked as a refreshing, nutritional and flavorful drink for both children and adults alike. Mala is consumed by adults either as a refreshment or as part of a meal as an accompaniment to Ugali. Market Demand There is an estimated minimum daily demand of about 1,000 litres of raw milk and processed products in Githunguri town alone. This is because it has now become a residential town with many workers living there who work in Nairobi, in the industries and service institutions surrounding the town, and in the businesses that support these institutions. The town has also become the district and constituency headquarters attracting many residents who come daily to seek various administrative services and who consume dairy products in the various catering institutions in the town. Dairy Processing The idea is to collect fresh raw milk from contracted farmers. This will always be tested for quality and contamination at the point of collection/uptake. This milk will be cooled down; half the quantity will be sold directly to consumers in two milk bars within the town and the rest processed into various dairy products. About 400 litres will be processed into yoghurt everyday whereas 100 litres will be processed into Mala. The processed dairy products will be sold loose at the small milk shops, while a proportion will be packaged in plastic containers and sold through supermarkets and shops in Githunguri town and three other major peri-urban centres within the district. Technical skills or knowledge required The technical knowledge required to process the milk will be a basic certificate or artisanal course in dairy processing. For milk handling at the milk bars, basic hygiene education will suffice for the milk handlers and selling assistants Technology and equipment needed The technology and equipment required are as follows; large aluminium milk churns; jacketed aluminium or stainless steel heating vessels; large modified wood-fired cooking stoves for heating; thermometers for temperature control; plastic containers for cleaning; a 5,000 litre water tank and hired vehicle for milk collection purposes.

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Business Opportunities Profiling Githunguri Constituency

Dairy processing investment options


Type of equipment

Micro dairy
(100 200 litres per day) ( 5 x 8,000) 32,000.00

Mini dairy
(500 1000 litres per day) (20 X 8,000) 160,000.00 ( 10 x 15,000) 60,000.00 150,000.00 (4 x 10,000) 30,000.00 40,000.00 (2 x 50,000) 50,000.00 100,000.00 (3 x 2,000) 2,000.00 6,000.00 ( 3 lots x 10,000) 10,000.00 30,000.00 (1 Lot x 10,000) 10,000.00 10,000.00 ( 5 Staff x 4 months x 8000) 64,000.00 160,000.00 1 lot x 25000 15,000.00 25,000.00 ( 1000 liters x 30 days x Kshs 30) 180,000.00 900,000.00 1 Lot x Kshs 80,000 1 Tank (10000 liter) x Kshs 20,000 Kshs 80,000.00 20,000.00

Aluminium Oil Collection churns

Stainless Steel jacketed vessels Lease (4 months) Cooking Stoves Starter cultures & Flavours Assorted Dual use plastic ware Assorted Small equipment Labour ( 4 months) Licenses Cost of Milk

(4 x 15,000) (4 x 7,500) (1 x 50,000) (1 x 2,000) (1 Lot x 10,000) ( I Lot x 10,000) ( 2 Staff x 4 months x 8000) I Lot x 15000 ( 200 liters x 30 days x Kshs 30)

Packaging containers Water tank

1 Lot x Kshs 25,000 1 Tank (5000 liter) x Kshs 12,000 Kshs

25,000.00 20,0000.00

466,000.00

1,681,000.00

Dairy processing return on Investment The returns on investment are higher for processed products than for raw milk, and therefore a Mini dairy though it has higher capital requirements is more profitable than a micro dairy to to the higher volumes of processed products sold.
Product

Micro dairy
(200 litres per day) ( 100 litres x Kshs 50 x 30 days) 150,000.00 (80 Liters x Kshs 100 x 30 days) 240,000.00 (20 Liters x Kshs 80 x 30 days) 48,000.00 Kshs 438,000.00

Mini dairy
(1000 litres per day) (500 litres x Kshs 50 x 30 days) 750,000.00 (400 Liters x Kshs 100 x 30 days) 1,200,000.00 (100 Liters x Kshs 100 x 30 days) 240,000.00 Kshs 2,190,000.00

Raw Milk Yoghurt Mala

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Business Opportunities Profiling Githunguri Constituency

Major suppliers of key inputs The major suppliers of inputs are Kenya Dairy Board, Supermarkets and jua kali shops. Support institution that can provide technical support The Nairobi regional office of the Kenya Dairy Board can provide support in terms of technical training and Hygiene certification.

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Business Opportunities Profiling Githunguri Constituency

Business Profile 3; Green house farming


Methodology of preparing this business profile I had done some preliminary research while compiling an irrigation proposal for one of my regular clients. I visited several suppliers who supply greenhouse kits or who sell all the supplies required to fabricate one. The price of a kilo of tomatoes was the lowest wholesale price available from the Market Information Department Ministry of Agriculture weekly bulletin. Market Demand Tomatoes are one of the most common vegetable in Kenya. According to the FAO CountryStat database, Kenya produced 529,922 million metric tonnes of tomatoes in 2009 and 539,151 metric tonnes of tomatoes in the year 2010. From the annual production, 90 % of the production was meant for the fresh produce market while the remaining percentage was processed into various products. Nearly all the tomatoes produced in Kenya are consumes locally, very little of the fresh tomato produce is exported as processed products. Fresh Tomatoes are therefore one of the most highly traded commodities in Kenya Fabricating Process When the greenhouse is purchased as a kit, the selling company sends someone to do the installation. There is also a complete and easy to follow kit of DIY instructions. One can also buy the supplies and use local materials as like wooden poles in place of the metal superstructure to build the greenhouse tunnel with plastic sheeting. This latter type of greenhouse cannot however last more than 4 years. It is however a cheaper alternative and one need just basic fundi skills to put of the structure and connect the irrigation kit. Technical skills or knowledge required Tomato farming requires one to know basic things like how to prepare a seedbed, harden seedlings, correctly space the seedlings, transplant them, do the correct thinning and train them on lines. One also needs to observe basic hygiene to prevent plant disease infestation. Basic agronomic and pesticide handling skills also come in handy Technology and equipment needed The technology and equipment required are listed in the table below and listed together with the investment required Range of size of Investment As at October 2011, these were the corresponding levels of investment for the two sizes of greenhouses;

14
Business Opportunities Profiling Githunguri Constituency

Size of greenhouse
Small 1/8 Acre

Component parts
Plastic Sheeting & Plastic netting Metal Superstructure Knapsack Sprayer & Agrochemicals Water container & Drip irrigation Tomato Seeds & Fertilizer Plastic Sheeting & Plastic netting Metal Superstructure Knapsack Sprayer & Agrochemicals Water container & Drip irrigation Tomato Seeds & Fertilizer

Investment Required
Kshs 125, 000/-

Medium

Acre

Kshs 180,000/-

Possible return of investment The possible return on investment is as follows; For every quarter acre of greenhouse tomatoes;

Yields Production = (Average production)X(Period of 12 weeks) X (2 production seasons in one Year) The gross revenue = { Production(Kgs) X Selling price per (Kg)}

150 - 250 kilograms weekly. High productivity scenario ; 250 kg x 12 weeks x 2 = 6,000 kgs Moderate ; 180 kg x 12 weeks x 2 = 4,320 kgs Scenario 1 = 6,000 kgs x Kshs 50/kg = Kshs 300,000 Scenario 2 = 4,320 kgs x Kshs 40/kg = Kshs 216,000

Major suppliers of key inputs The major suppliers in fabrication of greenhouses are Amiran Kenya, the KARI National Agricultural Research Laboratories-Westlands and Hydroconsult Limited. The costing used here are for the Amiran Kenya Full irrigation kit. Support institution that can provide technical support /guidance The major institution that can support Tomato greenhouse farmers on basic agronomic practices is the District Horticulture department at Githunguri Township

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Business Opportunities Profiling Githunguri Constituency

Business Profile 4; Cereals Supply


According to survey findings in the Basic Report on Wellbeing in Kenya, by the Kenya National Bureau of Statistics, each central province household spends 57 % of all their income on food purchases. This was about Kshs 1,700/- per month (Year 2005 figures). A half of this amount is spent in buying cereals which are the main component of their diet in the form of maize, maize flour, beans, green grams, cowpeas, rice, and lab lab. There are also many public and private primary and secondary schools which procure these cereals in bulk for catering meals. The district has 20 private boarding schools, and 35 secondary schools that serve meals for either day scholar or boarder students. These institutions serve between 5 10 meals every week that has a major cereal component. There are no other large institutions within the district. The markets that I have chosen to target are the small reseller market and the institutional market. The types of cereals that I used as a reference are as follows with their prices at Source and destination markets as at 27th January 2012; Cereal Quantity (Kgs) 90 110 90 90 90 90 90 90 90 90 90 51 90 Price @ Source (Kshs) 2100 1600 4500 2600 3800 3800 3800 4800 5400 5800 4600 2000 9600 Price @ Market (Kshs) 3300 3600 4700 3600 5000 5200 5000 5000 6500 7000 7200 2800 11000 Price Differential 1200 2000 200 1000 1200 1400 1200 200 1100 1200 2600 800 1400 Quantity Bags 200 40 20 20 25 25 25 25 40 40 40 25 10 535

Dry Maize Green Maize Finger Millet Sorghum Beans Canadian Beans Rosecoco Beans Mwitemania Beans Mwezi Moja Beans Dolichos (Njahi) Green Gram Cowpeas Fresh Peas Groundnuts

a) The methodology that you followed in the preparation of each business profile indicate the sources of data and market survey that you undertook 16
Business Opportunities Profiling Githunguri Constituency

Cereal trading services There are no unique skills required to trade in cereals. It is however important to keep abreast of development in terms of production trends of agricultural produce in various source markets and destination markets in order to take maximum advantage of trade differentials since this is a margins business. It is also advisable to work with large institutional buyers since they have almost consistent demand throughout the year therefore assuring one of a regular market. These customers are schools, hospitals, training institutions and university colleges. The other predictable market is the small cereal resellers. In my district, not everyone has agricultural land to produce subsistence crops. Whereas local demand is influenced by seasonal production, there is no surplus for marketing meaning demand is only low during the period immediately after harvest when households have some cereals from the immediate harvest for at maximum two months before they come again to the market. Technical skills or knowledge required This business does not require any particular specialized skill. However, the seriousness of aflatoxin poisoning in the recent past means that one must know how to judge the right moisture content at which to harvest, transport and store cereals to preserve their quality. One must also know how to prepare the cereals and protects them from pests like weevils, rats and theft. It is also prudent to ensure that the grain one buys has been adequately cleaned and graded in order to reduce contamination and wastage at the end markets. Bulk buyers often want to buy clean grain to reduce time taken in food preparation Technology and equipment needed One needs dry, well ventilated, safe and secure means of storage, transportation and distribution facilities. A warehouse that is waterproofed and well ventilated can be hired for aggregation purposes at the sources markets, and a big lorry secured to transport the commodities to the destination markets. At the buyer end, it is important to have a large permanent warehouse where one can both store and sell the commodities from. A weighing system is a key requirement at the destination market since commodities are sold per weight. Range of size of Investment required & returns on investment The range of investment required in cereal trading ranges from a few hundred thousand to tens of millions for a medium scale operation Returns of cereal trading The largest proportion Kenyan staple diet comprises of cereals or cereal products. There is therefore demand for cereals throughout the year. The highest demand occurs in high population centres like urban centres and also in other high population and cash crop high production areas. There is also moderate demand in marginal areas where there is no local cereal production. In good years when there 17
Business Opportunities Profiling Githunguri Constituency

is adequate rainfall and bumper harvests, the margins are moderate. However when there is crop failure or a bad season with poor harvests, the margins rise as local and national demand cannot be met without sourcing from distant markets or even importing which puts an upward pressure on prices as demand is high all over the country. This is a typical profile of likely returns during the current market;

Cereal

Qty (Kgs)

Price @ Source (Kshs)

Price @ Marke t (Kshs)

Price Differe ntial Local reseller

Quantity of bags

Wholesaler

Large reseller

Dry Maize Green Maize Finger Millet Sorghum Beans Canadian Beans Rosecoco Beans Mwitemania Beans Mwezi Moja Beans Dolichos (Njahi) Green Gram Cowpeas Fresh Peas Groundnuts

90 110 90 90 90 90 90 90 90 90 90 51 90

2100 1600 4500 2600 3800 3800 3800 4800 5400 5800 4600 2000 9600

3300 3600 4700 3600 5000 5200 5000 5000 6500 7000 7200 2800 11000

1200 2000 200 1000 1200 1400 1200 200 1100 1200 2600 800 1400

10 12,000.00 0 1 200.00 1 1,000.00 2 2,400.00 2 2,800.00 3 3,600.00 3 600.00 2 2,200.00 2 2,400.00 2 5,200.00 2 1,600.00 1 1,400.00

50 60,000.00

200 240,000.00 40 80,000.00 20 1,000.00 4,000.00 20 5,000.00 20,000.00 50 12,000.00 60,000.00 50 14,000.00 70,000.00 50 12,000.00 60,000.00 50 2,000.00 10,000.00 40 16,500.00 44,000.00 40 18,000.00 48,000.00 40 39,000.00 104,000.00 25 12,000.00 20,000.00 40 7,000.00 56,000.00

5 5 10 10 10 10 15 15 15 15 5

31.0 0

35,400.00

165. 00

198,500.00

665. 00

816,000.00

Major suppliers and support institutions for the cereal trading services There are no major suppliers of any of the related services for traders. They however utilize the normal transport and banking services.

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Business Opportunities Profiling Githunguri Constituency

Business Profile 5; Catering Services


The people of Githunguri have believed so much in the spirit of community service that must social occasions are usually catered for by women from the community. However, as the town has grown and increased in prominence, there is a growing need for variety and more professionalized catering services. Right now, there are very few established caterers and their services are run on an ad hoc basis instead of as an ongoing business concern. An anecdotal evidence of the dire need for such services is the fact that even the district headquarters does not enjoy the services of a regular caterer during their meetings, and they rely on inconsistent hotel services. There are however many weddings and other social occasions that a professional caterer can profitably service. Market Demand in the local area In our church home congregation, there is a wedding at least once every other month. Our location has 13 such congregations, and very at least five main denominations. That makes a total minimum of (13 x 12 x 5) = 780 occasions that need to be catered for regularly. Assuming that only 1 in 5 or (20 %) of these occasions will require commercial catering services, this is still a very big catering market of 156 occasions. As a start up, we could aim to cater for at least one occasion every week. Catering service delivery This is a rural setting where quality at the most affordable cost is the key consideration. We will therefore operate the business by giving a maximum of four set menus, with a budget of between Kshs 200/- to Kshs 300/- per plate inclusive of Food, Drinks & Waitressing Service. We intend to procure equipment like cooking sets, serving set and non-perishable consumables in bulk flours, cereals, fuel, cooking oils and fats from wholesalers at concessional rates. For perishable products, we intend to have standing orders with purveyors of high quality products and farm produce. This will be an effective cost management strategy. We intend to hire, train and certify our food handlers in catering and food production and run the business from a dedicated kitchen at home to save on premises hiring costs. We also intend to make the food presentation and service more professional to differentiate our service. Equipment needed We will procure the following equipment; A large deep freezer, four jacketed fuel efficient stoves, eight big sufurias, 5 large frying woks, 4 large frying pans, assorted storage and preparation containers, 600 cutlery serving sets, 600 plates, 4 food serving sets, 4 large food transport containers.

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Business Opportunities Profiling Githunguri Constituency

Equipment & Supplies


4Fuel Efficient stoves 8 Large Sufurias 1 Freezer Assorted storage & preparation containers 4 Large woks 4 Large pans 4 Large serving sets 600 Cutlery serving sets 600 plates 4 large containers Fuel Labour Supplies food transport

Full equipment Route Kshs


4 x 40,000 160,000.00 8 x 2,500 20,000.00 1 x 50,000 50,000.00 1 x 35,000 35,000.00 4 x 2000 8,000.00 4 x 2000 8,000.00 4 x 4000 16,000.00 I Lot X 30000 30,000.00 I lot X 75000 75,000.00 4 x 2000 8,000.00 1 Lot x 20000 20,000.00 1 Lot x 60000 60,000.00 1 Lot 100,000.00 1 Lot 0 I lot X 45000 I Lot X 30000 0 4 x 2000 0 1 x 15,000 0 8 x 2,500 0

Simple route Kshs


20,000.00 15,000.00 8,000.00 30,000.00 75,000.00 1 Lot x 10000 10,000.00 1 Lot x 30000 30,000.00 30,000.00

Kshs 590,000.00

Kshs 218,000.00

Returns on investment While the upfront cost of running a fully fledged catering business seems high, a lot of the equipment can be discounted over a life of between 5 8 years therefore drastically reducing the chargeable expense to the business. For a typical wedding, catering gross revenues for a party of 600 people @ Kshs 250/- per person are Kshs 150,000/-. With a conservative margin of 20 %, the takings per occasion are Kshs 30,000/-. If you catered for an occasion every fortnight, that will be gross profit of a minimum of Kshs 780,000/- per annum. Major suppliers of key inputs The major suppliers of jacketed fuel efficient stoves are found at the Muthurwa jua kali sheds. All other supplies are readily available in hops, wholesalers and traders in Nairobi, Githunguri or locally. There are no major support institutions that support the catering trade apart from training institutions

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Business Opportunities Profiling Githunguri Constituency