Cracking Kenya’s peanut business one machine at a time

Before starting the business, Mr Kimani worked at an agricultural non-governmental organisation, while Mr Kamau was in advertising at an agribusiness company. The expertise gained at their workplaces came in handy.

In 2022, the two entrepreneurs founded Banseok Kenya, a company that assembles and supplies peanut peeling machines.

“Each of us brings our own wealth of expertise to the business. I am conversant with advertising, and my colleague has a background in agribusiness and production. We have managed to scale up the business because of collaboration,” Mr Kamau says.

Groundnuts are primarily grown in Homa Bay, Kisumu, Migori, Siaya, Kakamega, Kisii, Busia, Bungoma, and Vihiga, but on a small scale, with large-scale production hindered by the tedious exercise of shelling.

“Peanut farming is a very lucrative venture. However, hand-threshing the grains is very labour-intensive, and this gap hinders the growth of peanut production,” says Mr Kamau.

Armed with Sh2 million as seed capital, they imported spare parts from South Korea and started assembling them in a warehouse in Gitaru, Kikuyu, Kiambu County. They also have an outlet in Homa Bay County.

“With the challenges that impede groundnut farmers in the country, we identified a niche. We have since experienced growth. We started with a supply shop in Busia County, and now we have expanded and have a warehouse,” said Mr Kimani.

Production capacity

They assemble the units on order.

“On average, we produce about four units per month, each going for Sh40,000,” he says.

The hand-operated machine peels an estimated 30 kilos of peanuts per hour. That translates to threshing about 240 kilos in eight hours or 360 kilos in 12 hours.

“Using human labour, it would take days to peel a 90-kilos bag to full capacity,” he says.

Scaling to profitability, Mr Kamau said, has not been easy.

“Introducing a new product is not a walk in the park. First, you have to make customers understand what it is, what it does, and then multiply the effect to others,” Mr Kamau says.

Growth plans

Three years into the business, they are eyeing export markets, with customers from Tanzania, Uganda, and Malawi already showing interest.

According to the latest data from Kenya National Bureau of Statistics, the area under peanut production increased from 13,188 hectares in 2022 to 14,899 hectares in 2023, leading to an increase in production from 13,140 tonnes in 2022 to 16,558 tonnes in 2023.

However, peanut productivity remains low, averaging 0.45 tonnes per acre despite growing demand from markets such as the UK, Holland, Germany, France, Canada, and Japan account for 65 percent of global groundnut demand.

What is curtailing production, experts say, is the widespread recycling of groundnut seeds for planting, poor agronomic practices, and a lack of farm mechanisation, resulting in high production costs.

Creating employment

They started with four employees and have maintained that number to date.

The top challenge they have faced is the high cost of importation.

“Additionally, transport costs from the port of Mombasa to Nairobi are another major hurdle for the entrepreneurs, as spare parts are shipped in containers. We sent a consignment to Busia, but the expenses were excessively high,” Mr Kimani says.

For most entrepreneurs, their fear of going into the machinery business is space. Assembled machinery also requires space for storage hence higher rent which eats into the profits. Mr Kamau says theirs is set up in a warehouse that occupies a 12-by-24-foot space.

“We don’t really need additional space, as the parts come in smaller, easy-to-assemble pieces,” he says.

Biggest lesson

On breaking even, Mr Kamau says, “not yet. However, we have many prospects from county governments in peanut-growing regions, as well as women and youth groups, and individuals.”

If there is one lesson that they have learned is the importance of eliminating financial drains, such as high rental costs.

“For instance, since such machinery business requires significant space, it is best suited for an investor who owns their premises,” he says.

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