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 Kenya: The Background
! Largest economy in East Africa ! 75% of labor force contributed
! Population: 34.7 million 16.3% of GDP and 67% of
! Real growth rate: 5.8% foreign exchange earning
! Purchasing Power Parity: US$! Only 8% of the land is arable
1100 ! Major crops - coffee, tea,
! Unemployment: 40% cotton, sugar cane, potatoes,
tobacco, wheat, peanuts and
! Human Development Index: sesame
Rank 152 out of 177
! Small scale farmers ʹ 75% of
total agricultural production;
they lived on subsistence
agriculture
 Existing Business Models
Large government-owned parastatals
: distributed agricultural commodities
: forced farmers to sell their produce at pre-set and often rock-bottom
prices
: farmers were reimbursed 8to 12 months later

Cooperative ventures
: produced and marketed
: commodities such as tea, coffee and milk, on behalf of their members
: Corruption, mismanagement, politics

Long sequence of intermediaries

: Farmers have limited market information
: Exploited by middlemen
 Honey Care Africa: A New Business Model
! Conceptualized by Farouk! Paid in 48 hours
Jiwa ! Helped financially through
! Shift from long brokerage : private loans
chain to direct link between : company-sponsored plans
farmers and supermarkets : donor agencies
! Provided farmers with : nongovernmental
necessary tools organizations (NGOs)
! Packaged and marketed the : micro-financing institutions
produces to ! Model very well accepted
: Urban consumers ! Fostered rapid and inclusive
: Supermarkets growth
! Provided training and
technical support
 Founding Honey Care
! Initially farmers were not motivated
! Government ventures failed due to improper
planning, opportunistic market linkages and poor
commercialization
! Honey Care International distributed Langstroth
hives but was struggling in the business
! Yusuf Keshavjee and Husein Bhanji bought out
Honey Care International and established honey
Care Africa
! Farouk Jiwa was the head behind; He ran the
business for its owners
 Development of the New Business Model
! Based on triple bottom line ʹ economic, social and
environmental
! Jiwa convinced NGOs about the sustainability of the
project and used their help to reach out to the farmers
! Finance from bank was not an option due to high
interests
! NGOs finally agreed to finance with ownership of hives
to farmers and some facilities owned at community
levels
! Jiwa made sure that the farmers payoff for their hives
and draw their attention towards the economically
viable opportunity
 The Farmers
! Used NGOs for fostering trust
! Allowed open interaction with farmers
! Promised on spot cash payment
! Convinced DANIDA for financing a 100 hive pilot
project
! Project success promoted on ÷
  

! Honey Care prepared for training the farmers
! Project Officers were employed for handling the
training, production and quality assurance at the
community and village level
 The Employees
! All the employees were highly motivated and
showed high level of commitment
! The vision of the company was shared with them
! Jiwa personally supervised each and every step
! Incentive schemes were started for the field
officers; this motivated them more
! These helped in perfect forecasting of the
production volume
 The Milestones
! Initial problems faced for marketing in super-
markets
! Once customer demand increased for good
quality honey, marketing became easier
! Jiwa partnered with Rob Hale of Africa Now
having similar operations in other parts of Africa
! Both exchanged ideas and refined operations
! Both partnered to share operational facilities for
mutual benefits and expansion
 The Trust
! Some farmers tried to migrate to more
profitable brokers
! But came back once they disappeared
! Honey Care͛s consistency was appreciated
! Made schemes for farmers to own the entire
beehives in contrast to supers owned by
Honey Care previously
 Unexpected Opportunities
! World Vision requested Honey Care to include
the farmers to whom they had their hives
distributed through a partner who left in
between
! With increasing efficiency of the farmers,
Honey Care field officers had more time to
devote to newer responsibilities
 Operational Challenges (Contd.)
! Financing
: Needed new financing sources as the NGOs were not
enough
: Africa Now helped Honey Care to partner with K-rep Bank
: Business expanded at a very fast pace
! Payment
: With higher operations the officers were handling more
cash and was at risk
: Higher business volumes required more working capital to
bridge the cash conversion cycle
 Operational Challenges (Contd.)
! Collection
: Increasing volumes made collection difficult
: Community centers were made for farmers to deposit their
harvest and collect cash
! Quality
: Maintain stock levels, check the heights of the fill and
prevent crystallization
: bottling process needed micro-filtration and improved
honey pasteurization
: additional investments needed in technology and human
resources
 Operational Challenges (Contd.)
! Partnership
: NGO partnership term got over
: Africa Now strengthened the relation
: Helped in expansion, operational issues and facility
development
 Reasons for Success

! Maintained a trusted relationship with farmers

: Collection Centers were close to farmer͛s home
: Training provided was very practical to make the
farmer͛s understand easily
: Feedback was taken to address the issues faced by
farmers
! Leveraging on its collaborating with Africa Now
! Followed triple bottom line philosophy and
focused more on sustainable & long term growth
of farmers
! High Quality products
Opportunities
(Growth Path)
Downstream
Expansion

Upstream
Expansion

Horizontal
Expansion
 Downstream Expansion
! Product Diversification
1. Introducing Flavored Honey variants ʹ to cater to
urban, high income buyers

2. Launching products for farmers ʹ low cost,

convenient to get, added flavors

3. Selling beeswax ʹ competitive market

 Downstream Expansion (contd.)
! Market diversification strategies
1. International Expansion of business
Challenges :
! Stiff competition from low cost Chinese products
! Rigid regulations
! Getting fair trade certifications
2. Regional Expansion of business
Challenges:
! Price Sensitive Product ʹ cannot survive competition from
traditional method
! Would require high volume production
 Upstream Expansion
! Growth in Kenya
Challenges
! Non availability of Financing facilities
! Wanted to lower cost but could not compromise on quality

! Growth in neighboring African Countries

Challenges
! Domestic market was very competitive
! Faced with operational concerns
! Fear of deviating from the traditional business model of ensuring
farmer commitment
 Horizontal Expansion
! Replicating Business Model in other industries
and countries

! New partnership with international NGOs and

Humanitarian Organizations
 Q) Whether Honey Care could or should entice rapid
growth in its supply network?

! SEKEM was successful in its supply network due to:

: Diffusing the idea of organic farming among people
: Educating farmers
: Supplying directly to large stores and supermarkets
: Including proper distribution and warehousing facilities

! Honey Care can also adopt a similar strategy as SEKEM

was having a business model comparable to that of
Honey Care

! Strengthening both Upstream and Downstream Supply

Chain
Q) How would scale change its key relationships with its
farmers?

! If Honey care goes for higher scale production

then it will strain its relationship with the
farmers so it should be cautious in increasing
its scale of production
! Farmer training wold become
Q) Should it seek a different way to compete in honey
production or distribution?

! Strengthening the company͛s marketing and

distribution capabilities
! Finding alternative ways to finance the
business
! Introducing an efficient collection system &
stringent quality control measures
! Achieving economies of scale by increasing its
production volume
á