Batian Nuts Ltd, which was incorporated in 2017 as a private limited liability company, is an agro-processing company primarily engaged in processing and exporting of macadamia nuts. The company was started with a view to capture and fill in a gap in the off taking of macadamia nuts, peanuts and cashew nuts produced in the larger Meru region, comprising of Tharaka Nithi and Meru Counties. These crops are grown by small-scale growers and the produce is processed and resulting products largely exported to the United States of America, Europe and Asia. Batian Nuts has a fully-fledged macadamia processing factory located in Nyagene village, Meru County, Kenya.
Batian Nuts is looking to diversify its product portfolio by venturing into processing other edible nuts including peanuts, for which the market is local and less volatile, and further in the future, cashew nuts. The market dynamics for macadamia nuts are likely to change in the coming years due to growing supply and changing consumer behaviour, and this brings uncertainty for Batian Nuts on how to best position itself in the market. On the peanut-side of the business, the production of aflatoxin-free peanuts is notoriously difficult yet critical to achieve for Batian Nuts in order to enter the market. Also raising affordable finances for expansion of capacity is considered a challenge. This challenge is exacerbated due to a COVID-19 triggered slump in macadamia sales, leading to Batian Nuts experiencing cash flow challenges.
This study sets out the key recommendations for Batian Nuts to sustainably scale up its business in line with its growth ambitions and are centered around Batian Nuts:
Securing consistent demand – Batian Nuts will secure consistent demand by positioning itself strategically in the macadamia and peanut markets. We explore the differences between the macadamia and peanuts markets, leading to different approaches respectively:
- A change in macadamia market dynamics may lead to a change in clients and their priorities, creating opportunities for Batian Nuts
- By selecting the most promising channels for its macadamia nuts, Batian Nuts positions itself to secure multi-year contracts
- Batian Nuts will differentiate itself from competitors by guaranteeing locally grown volumes of aflatoxin-free peanuts at a competitive price, but it needs to find a way to process peanuts at a profit
Expanding processing capacity – Batian Nuts will be able to expand its processing capacity by securing affordable financing:
- Batian Nuts’s plan to expand processing capacity leads to a projected spend of both working capital and CAPEX
- Batian Nuts’s financing requirements can likely be secured through a mix of traditional financing sources
- Batian Nuts’s projected impact at farm-level can be leveraged to finance business growth with more affordable impact finance
Securing consistent supply – Batian Nuts will secure consistent quality and quantity of macadamia and peanuts by strategically addressing farmer needs:
- Batian Nuts will differentiate itself from other nuts buyers by continuing to (i) pay a higher price than local aggregators, (ii) pay upon acceptance of produce and (iii) train farmers
- Batian Nuts will reach consistent quality and quantity of supply by ensuring that it invests in the most effective services for both farmers and Batian Nuts
- If necessary, Batian Nuts will further increase farmer loyalty by creating incentives for farmer groups to consistently meet agreed volumes and quality
- Batian Nuts will increase farmer retention by investing in services aimed at increasing farmer resilience