Potatoes to become booming business in Kenya

After steering a business from a simple idea to a multimillion enterprise in five years, Junghae Wainaina is both a happy and a sad man.

Happy because after a rough ride, his efforts are beginning to pay off, but sad because after spending about Ksh5 million ($66,000) to sell the concept of a potato cooling and processing facility to farmers in Nyandarua, central Kenya, he got a paltry Ksh750,000 ($1,000) and was at pains to explain to the board that as the chairman of Midlands, it was worthwhile to commit the funds to the exercise.

But that was then.

The company’s shares were being sold through a private placement organised by Suntra Investment Bank at Ksh10.

Mr Wainaina thought farmers would troop in their numbers and snap up the 250 million shares on offer giving the firm a cool Ksh2.5 billion ($33.3 million) investment capital it so badly needed but that was not to be.

After the debacle, the easier option was to quit.

But believing that Midlands Limited was still a viable venture, Mr Wainaina soldiered on through all sorts of fund raising avenues — bank loans, grants, venture capital, harambee, name it.

Five years on, the agribusiness is sitting on Ksh400 million ($5.3 million) worth of assets, has built the factory with a cooler and is set to go live this month, while its share value has grown three fold.

But Mr Wainaina is unhappy about the general failure in the country to embrace value addition and management of surplus and shortage in order to stabilise prices; failure by the government to support farmers through establishment of value chains and failure by the investing public to take risks believing that farming is a poor man’s occupation.

Midlands Ltd. hopes to give farmers better incomes, and create employment through agro processing of local produce and waste management.

The main focus products include pyrethrum, potatoes, peas, carrots, cabbages and herbs.

The company is collecting potatoes grading, storing and selling them through established networks such as supermarkets and hotels, which has led to an increase of farmgate prices from Ksh 3 per kg to Ksh 20.

Other long-term plans include drying vegetables which go to waste during the glut and processing long-life fries, crisps, pringles and potato flour.

This will put the industry in Kenya at par with industrialised countries in Europe and the US where potato is big business.

Joint efforts