Case 1 - The farmer cashing in!

In the last couple days I have been writing down some good business ideas I would like to get into. I have searched the internet for endless amount of hours and there seems to be a lack of ideas or information in Kenya. The reason I don’t know but I thought well, I will get sharing what I have found in my others source. 

My first case is close to home; actually it is from home. I had an interesting chat with my Uncle about his farming. He is a qualified accountant just below age of 50 and no longer wants to wear a suit and go to ‘work’ every day 5 days a week. He lives on my grandmothers’ land rent free as it is the custom with the Kikuyus. He used to farm cash crops which he has now given up for a rather lazy but very profitable venture as he call it. 

The usual cash crops for this area (Nyeri) are baby corn, French beans, onions, leeks, peas, flowers and other quick growing back breaking crops that the locals tend not to consume. The fact that the locals don’t consume the produce leads to volatile pricing further deteriorated by the fact that all the above favoured crops are perishables. Needless to say, there are no fridges/freezers in this household and many others and thus the produce goes off in a day after harvest. The real reason they grow the crops is the fact that the land is small and there are many mouths to feed. It thus makes more sense to the locals to farm cash crops for export and spend the money for food. The same piece of land would not produce enough food to feed the entire family. 

So what is the lazy more profitable option to growing cash crops? Well, fish farming. To this I was not quite sure this was a viable idea, but he had his facts right. 

He needs water, and not too much of it. A pond measuring about 3 meters deep and 5meters by 5 meters wide and long. The pond is not permanently walled i.e. it is a simple dug out hole on the ground with a way for water to get in and get out occasionally. He then bought 2,000 fingerlings for KES 3,000 and then hoped for the best. The feedS are quite simple; he feeds the fish ¼ kilo of fish meal twice a day. A 50 kg bag costs him KES 2,800. The fish food portions would increase as the fish grow bigger to about 1 kilo of food twice a day. After a cool 8 months he will be ready to sell his fish. The fish is Tilapia and it lays eggs and reproduces in the same pond without much help. The down side is that you cannot see the fish in the pond as the water is murky; but this doesn’t kill the fish apparently. 

So here are the figures 

A pond – 3 meters deep, 5 by 5 meters wide and long, supplied by a river – this is a week job for 4 men – say a cool KES 7,000 

Fingerlings – 2000 of them costing KES 3,000; approx KES 1.5 each 

Feeds – approximately 300 kilos i.e. 6 bags of the 50 kilo bags – KES 16,800 spread over 8 months 

Labour – Not much as just finding and the occasional cleaning say a generous KES 5,000 a month 

Overall cost (ignoring cost of capital and pond digging cost) = KES 66, 800; Lets say KES 70,000 

Revenue

Fish sale – There is a ready market for fish at KES 300 per kilo; the company buying the fish fillets for export

I fish is ¾ a kilo – so KES 225 a fish

Assuming he sells only a 1000 of the fish and ¾ kilos the sale revenue would be KES 225,000 in 8 months. Less the cost of KES 70000, he would have made KES 155,000 in 8 months and still has the pond and another 1000 fish to breed.

That is an approximate KES 20,000 a month; not bad, in fact very good for someone with no monthly rent or high transport bill to pay.

With this kind of idea well documented to the taste of the branch loan manager, I think Equity bank or any other micro finance lender would be more than willing to offer an unsecured loan of a reasonable amount. 

Food for thought!

The fish Pond and the feeding! Simple ha!