Value Addition and Proposition for Cooperative Society/Union

Now we will discuss the channels we can use to do value addition and proposition to these products that we learnt how to produce using the cooperative society/union approach.

We learnt how to form cooperative societies/unions from scratch in a previous article and explained how to get going from planting to harvesting. Since we now have a product or a raw material, we can now hit the road running to the era of value addition and proposition.

We will discuss the value addition and proposition for maize farming in Kenya. Let us start from where an individual farmer has harvested his maize. Let’s say the farmer has 40 bags from a 1-acre piece of land. With these 40 bags, the farmer will take them to his cooperative society and add to those of other farmers. Let’s say the total inventory for that one cooperative society comes to around 1000 bags.

These 1000 bags are good enough not to be sold to middlemen but not sufficient enough to start a maize flour milling company. But still, something needs to be done to this maize so that it can bring more income to the cooperative society. What needs to be done is what we are calling value addition and proposition.

For value to be added to this maize, several things have to happen, the cooperative society needs to opt to;

1. Scout for the best market for the maize e.g. the boarding schools around.
2. Sell the maize directly to the millers at the prevailing market rates.
3. Sell the maize directly to NCPB if they are lucky to get a chance.
4. Join other cooperative societies in the ward to form a Ward cooperative union to see whether their combined inventory can successfully start and sustain a maize flour milling company.

Forming a Maize Flour Milling Company

The idea of forming a maize flour milling company appears to be the best because it will bring very high returns.

But then, picture our aged mothers, fathers and grandparents back there in the village coming up with that idea. It is highly unlikely that they can even moot such an idea.

So, who are these people who will moot and operationalize this idea? It is the educated young men and women from that ward who have a passion for that maize milling trade. How these young men and women will meet to moot this idea is the same as how the farmers met as explained in this article.

If the young ward residents don’t come together to form the milling company, the county cooperative union will not fail to get the attention of the county government to establish a maize milling company.

I am sure no county government can turn down a county maize farmers cooperative union which supports more than 100,000 farmers. A county government worth its stature will sit down with the members of the cooperative and come up with a framework of how to make the dreams of these farmers or investors come true.

If the county government is unable to establish a milling company, then they can invite an existing maize milling company operating elsewhere to come and set up their factory in the county and benefit from the closeness to the farmers.

Benefits of Having a Maize Milling Company in the County

There are many benefits that will come with having a Maize Milling Company in close proximity. Some of these benefits are

1. Transportation cost of maize from the farmers to the miller will be greatly reduced.
2. The residents of the area will get employment opportunities in these milling companies.
3. The milling company will easily engage gainfully with the farmers in matters like contract farming.

Contract Farming Between the Farmers and the Millers

One of the best ways to add value to the cooperative societies/unions and their produce is engaging in contract farming. The farmers, millers and the government (both county and national) will gain massively from this.

Farmers Gain

Farmers will;

1. Get farm inputs cheaply because they will be procured in bulk by the government or the millers.
2. Get freely the best education on the best farming methods from the millers and government.
3. Get the best returns on their investments and labour.
4. Not need to crack their heads looking for markets for their produce.
5. Get their disputes solved amicably because they belong to a cooperative.

Millers Gain

Millers will;

1. Get the maize produce without much hassle
2. Get the maize in good quality, quantity and cheaply from the farmers
3. Get some sort of incentives from the government

Governments Gain

Both levels of government will;

1. Collect the taxes, rates and licences easily from the cooperatives and millers.
2. Be able to get the correct GDP and GNP for the country because most of the products will be declared.
3. Be able to procure in bulk farm inputs and other necessities needed by the farmers and therefore benefit from the economies of scale.
4. Be able to accomplish its responsibility of assisting the population to live in unity, peace and liberty and have plenty within our borders.

In contract farming, the cooperative society will be given quotas depending on their land inventory, and the farmers, therefore, will be left to do what they do best, farming. They will now not need to wary about where to get certified farm inputs and the markets too.

Selling the Product through the eCommerce Websites and Applications

Once the finished product or by-product has been released, it needs to reach the market. In this era of eCommerce, we have the online market place provided by entities like Masoko, Jumia, Alibaba, Amazon etc.

There is this analogue, discriminative and uncompetitive distribution chain that is currently being used by our Kenyan manufactures. This is where the manufacturer only sells the products in bulk to selected licenced distributors, locking out everybody else. These distributors are then trusted to eventually sell to retailers or final consumers.

Why on earth should a person be turned away from the factory gate and be told to go and buy from a distributor whose price is several thousand of shillings more expensive? There should be liberty to buy from the factory if one meets and surpasses that minimum quantity required to place an order at the factory.

You factories or producers who discriminate consumers with this very outdated business model, your days are numbered. The digital eCommerce revolution will wipe you out like an avalanche. So acquaint yourselves with this eCommerce model and reap the benefits.

So let me go back to my point. Selling the products through the eCommerce platforms. When the millers or cooperative societies embrace eCommerce, they can be getting orders from all corners of the country because the eCommerce platforms have the magic to make that happen.

Value Addition and Proposition for Cooperative Society/Union Conclusion

To conclude, I can say that eCommerce is the motivation towards innovation that will boost the value addition and proposition for our products.

This eCommerce model will be fast-tracked after the Communication Authority of Kenya rolls out the National Addressing System (NAS) that will give life to eCommerce logistics.

The NAS will make it possible for a shopkeeper in Umoja, Nairobi to procure for the Maize flour from the milling factory or a licenced distributer and have it delivered at his doorstep.

The NAS will enable the exponential growth of the logistics companies because most people will want their goods delivered to their prefered addresses.

In the next article, we will discuss how to bring to life eCommerce in Kenya