Mechanization hub agrimech africa limited - kenya

1. Regional workshop to share experiences of
sustainable agricultural mechanization hire service
provision practices in Sub-Saharan African countries.
What opportunities for investments?
Joseph Mutua
Agrimech Africa Limited
Kenya
December 9-12, 2019, Grand Imperial Hotel
Uganda, Kampala

2. The hub

3. Services Provided
• Laikipia (Original hub): Maize, Sorghum, Hay
• Eldoret (North Rift): Maize
• Homa Bay (Sukari project, Suba) Sugar, Maize
• Nyandarua (Skyland - Potato project)
• Activities in the provision of agricultural
mechanization hire services: Baling, Sorghum
threshing, Chiseling, planting, spraying,
• Other activities: Training MSPs & youth,
Consultancy

4. Capacity: machinery and human
resources
Type of Equipment Performance
(Power, Width..
Date of Purchase New or Used
condition
John Deere 75hp 2016 New
MF 75hp 2016 New
2WT(4) 16hp 2015 New
Planter (Fitarelli) 2-row 2014 New
Air seeder 9ft – 13 tines 2016 New
Disc harrow 6’9’’ – 18 discs 2017 New
Chisel plough 2 tines 2017 New
Chisel plough 4 tines 2018 New
Disc plough 3 discs 2016 New
Ridger 4 body 2017 New
Machinery resources

5. Capacity: machinery and human
resources
Type of Equipment Performance
(Power, Width..
Date of Purchase New or Used
condition
Potato planter(2WT) Single row 2016 New
Potato digger(2WT) Single row 2016 New
Mower 2017 New
Rake 2017 New
Baler (2) 2017 New
Thresher 2017 New
Brick maker 2016 New
Trailer 2016 New
Assorted w/shop tools
Others from
partners(AMS, TNS,
Shalem
Machinery resources cont…

6. Capacity: machinery and human
resources
Human resources
Staff Number Training/Qualification Years of
experience
Field Officer 1 Dip. Agric Bio-tech 3
Field Marshal 1 Dip. Agric. 6
Tractor Operators 10 Trained by us Various

7. Major mechanization hire-services: Outputs
(hectares/year; farmers served; tons processed/year; revenue)
Description
of the
activity
Agricultural production
chain
Output (in
Ha/year, t/h,
km …)
Gross income Production
costs
Period over
the year
Chiseling Maize, wheat/sorghum,
potato
320ha @ 7,500 2,400,000 1,440,000 2016=2018
Ploughing Maize, wheat/sorghum,
potato
140ha @ 8,750 1,225,000 710,500
Harrowing Maize, wheat/sorghum,
potato
115ha @ 6,250 718,750 445,625
Ridging Potato 42ha @ 5,000 210,000 115,500
Planting Maize, wheat/sorghum,
potato
212ha @ 5,000 1,060,000 572,400
Spraying Maize, wheat/sorghum,
potato
22ha @ 1,250 26,000 13,750
Threshing Sorghum 1,850bags @
200
370,000 177,600
Baling Livestock 8,928bales @
20
178,560 89,750
Total 6,188,310 3,565,125
Salaries,
Overheads
2,466,000

8. Sources of financing for the acquisition
of equipment
• Own funds (Equity)
• Loans
• Leasing
• Donations/grants

9. Clients and Service Charges
• Market prospecting (we largely work through partnerships with
development partners & through organized farmer groups in
specific value chain.
• Types of customers (Small to medium scale farmers, mostly self-
financed)
• Setting of service rates(existing commercial rates as entry point)
• Method of payment (Cash after work completion)
• Market strategies (filed days, show cases, partnerships, incentives)
• Profitability of the entity (barely breaking even)

10. Business Constraints/Challenges
• Access to finance
• Erratic Weather
• Narrow service window
• Fragmented nature of smallholders

11. Future Plans
Future plans
•Expansion into more hubs
around Mechanization Hot Spots
in the country by introducing
more equipment along selected
market-linked value chains
•Absorb the Competition
(Nomadic SPs, through UBER
Technology
• Consultancy in Engineering
Services - (Training)

12. Investment needs
• Funding requirement: USD 500,000
• Against:
• A Funds Infusion to the Business of ~ US$
200,000 Equity, grants.
• Usage of Funds
• CAPEX for additional equipment, Smart Inputs,
Machinery Training, Full R&M Workshop
(Supplier-linked) to serve others, Model farms,
Aggregation and other Income Streams.
• Low-Loader, Mobile Workshop, Camping set, etc

13. Conclusions
• Difficulties/challenges/lessons
– Raising capital
– Narrow services window that renders small-mech unprofitable and breakages negatively impactful,
– Quality of machinery, suppliers and after-sales services.
– Fragmented & small land sizes results in high operational costs
• How to overcome them:
– Bundling of services (Multiple income streams)
– Land consolidation by use is needed to enhance service delivery & cut down on costs,
– Value-chain focus,
– Joint-Venture (JV) with an Asset-Leasing companies,
– Strengthened farmer networks,
– Youth Services wing, to man small-mech,
• Recommendations for promoting service delivery at National level:
– Policy interventions
– Research & development
– Vetting of machinery (quality control)
• Partnerships
– Help incubate the business
– Assist in resource acquisition &
– Increase awareness (showcases, training)