Category Archives: maize

Unga 2013 AGM

The 2013 annual general meeting (AGM) of Unga Group took place at KICC, Nairobi on November 28.
Finance and Shareholders Q& A 
Milling & Distribution Issues: While wheat is now being milled at 100%, it tends to fluctuate in other months as they compete with other buyers for grain especially during the festive season. Maize is being milled at 60-65% of capacity as more and more, maize is moving to the informal sector, and small Chinese mills.
When asked about product shortages of Exe flour for mandazi and chapati, the MD said when there are shortages of product, they may decide to mill general purpose wheat flour which is 90% of their brand sales. He added that shortages at Uchumi may have been due to that company being outside their credit terms which are enforced strictly.   
Tax Status: What is the effect of the tax reclassification of the company’s products from exempt to zero status? Unga products are now exempt (no longer zero-rated) which means they can no longer reclaim the tax back from the government – so they have to pass it on to consumers (higher prices)
Uganda: The company bought the 40% balance of the business in Uganda they did not own, as the minority shareholders was not willing to put in any more money while the business was struggling.  Since the takeover, they’ve been trying to add value to products, but this is more difficult since July 1  when the Uganda government imposed a 10% duty on wheat imports (all wheat is imported), also have also imposed 18% VAT. The result is that wheat flour is informally imported to Uganda, and big millers are downsizing staff and cutting back on grain procurement. 
Breakdown of Other Income: Other operating income was Kshs 281 million, of which 189M was revaluation of pension assets (thanks to a good the stock market). Directors said the sale of gunny bugs (collected over time) accounted for most of the balance, they will provide a detailed breakdown from next year.
Finance Costs: Why increased borrowings and why the low returns on investments? A new wheat mill was commissioned on November 2 and is producing quality wheat meaning fewer stock-outs. Also, the fixed deposits which were earning 6% in 2012, are now getting 12% this year.  
Volatility: Can the company benefit from Price volatility? There are recoveries sometimes on unrealized forex losses, but since the publication of the report, the shilling has strengthened, nullifying that, until recently.
Swag: As usual, shareholders asked about an increase of dividends, but also for the company to give bales of flour as a Christmas gift to shareholders. The chairlady said that this had been done in past years when the company did not have ample cash for dividends, and the board’s current preference was to work to increase the cash dividend paid out. 
Customer engagement: Some shareholders lamented the company’s low marketing and absence on the web with no information available for investors. The MD lamented that several counties were charging national brands for painting on walls and vehicles in the counties and that many companies are now white-washing their vehicles of any logos. He also said their website is at an advanced stage. A previous one was ready, but scuttled by management almost at the last minute. They also have a call centre at Kencall from July 1 that death with customer questions and also coordinated their orders and distribution. 
Hot Button Issue: Shareholders were concerned that the minority shareholders are being driven out by NSE buyouts at other companies (e.g.Access Kenya, Vipingo, CMC) and wanted the main shareholder (Victus with 51%) to assure other shareholders that there were no plans to buy out minority shareholders at Unga. The chairlady said there’s no evidence from the share register, that the main shareholder is buying shares, but this did not seem to offer absolute comfort as questioner noted that takeover notices appear out of the blue in the newspapers, without any prior notice.
Extras Business:  The proposal to shareholders for the company to purchase Ennsvalley Bakery had been deferred a few days before. The chairlady said that an opportunity to acquire an established bakery had come up and that in view of limited investment cash available, and the high cost of borrowing, a share swap was proposed – however not approvals had been received in time of the complex transaction. She said it would be discussed at an EGM to be called in the near future but before next year’s AGM.
The other extra business item – the sale of the company’s stake in Bullpak Ltd (a company that provides high-quality packaging material) was approved – with the board intention to redeploy the cash in the company’s core businesses of food and animal feed.

Unga 2012 AGM

The annual general meeting of Unga Limited, which is listed at the Nairobi Shares Exchange (NSE) had some discussion on land sales, the use of genetically modified foods (GM foods), the possible impact of Kenya’s upcoming elections on the company’s operations, and, of course – SWAG. Read more at Coldtusker‘s blog.

Rockefeller helps Farmers cope with Climate Change

The Rockefeller Foundation involvement in Africa goes as far back as 1914 and one of their goals is to strengthen food security in sub-Saharan Africa.

Climate change is affecting food security and the current floods in Pakistan attest and African farmers are seeing wild swings in weather, coping with higher temperatures, less dependable rainfall, and experiencing longer droughts. In Kenya, the Rockefeller Foundation estimates that maize production could decline by 30% in the next 20 years.

Africa countries need to recognize their vulnerability to climate change as ½ billion people depend on agriculture for their livelihoods, yet some governments are instead selling off buying tracts of productive land to other countries who are themselves investing to enhance their own food security through geographic diversification

The Foundation has thus made agricultural investments improve their productivity of farmers by reducing the risks they face through key innovations including

– Developing new affordable insurance products for small farmers & pastoralists that are indexed to weather; this encourages farmers to increase land & agricultural investment with the knowledge that they may be compensated if weather conditions adverse affect their harvest

pastoralists & their cattle camp in Nairobi’s kileleshwa suburb during 2009 drought

– Funded the World Food Program to develop a software platform to predict most destructive elements; Known as RiskView, it can be customized or every district in every country in Africa and allows governments and aid agencies to when and where a drought will occur.
– Funded Kencall to implement a national helpline for farmers, staffed by a team of experts to answer farmer question on climate change, seeds, fertilizer, agro-dealer location etc – this will help overcome a challenge many famers don’t try new techniques or seeds because they don’t have enough information to take a risk. The information collected will become a research resource even outside Kenya.
– Partnered with Kenya-based Alliance for Green Revolution in Africa (AGRA), in a $50 million loan program through Equity Bank’s ‘kilimo biashara’ program in which the Foundation undertook some risk guarantee enabling the Bank lend to small farmers at below market risks who take up other products like fertilizer weather insurance, and use the help line.

read more

Urban Inflation Index: March 2010

Tracking changes in the three month ago in December 2009, as well as to six months as well as one year ago in March 2009

In 2010 government has shifted adjusted inflation basket to have a better measure of inflation that is less weighted on food. Let’s see how they compare

Gotten Cheaper
Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs 84 compared to Kshs. 83 in December 2009. It’s relatively unchanged, but overall cheaper than the Kshs 96 seen a year ago in March 2009

Free milk

With the onset of rains there is a surplus of milk in the country which has resulted in some sad scenes of dairy farmers and processors having to pour milk down the drains. For urban shoppers there is a boom of milk in the form of larger packets and 1 free packet for every 2 purchase at most supermarkets, and overall shoppers are paying ~45% less for milk now.

About the same
Communications: Safaricom’s Supa Ongea tariff is now six months old (September 2009, and is still being hyped by Safaricom. M-Pesa and SMS charges are unchanged. Price changes are being seen in data (Safaricom tried a one month February to march 2010 of unlimited internets for a price of 1,000 ($13) per week), Orange now has Bunda data bundles, Zain Africa is about to change hands again (new investor is Bharti of India), while Yu is the cheapest, but not making much of dent yet in the market where Safaricom remains the default operator.

Meanwhile equipment prices continue to drop, for smart phone and computers. Banks have gone into computer financing, the latest being KCB Laptops for all last week. And at Safaricom shops, the popular Nokia E63 now cost Kshs 16,000 ($208) compared to 20,300 last September and 23,500 in June last year.

Other food item: Sugar (2 kg. Mumias pack) is at 200, no changed for the last six months

More Expensive
Fuel: A Litre of petrol fuel (at local petrol station) is now Kshs 84.9 (~$5.0 per gallon) which is about 5% higher than it was six months ago. In face since the post-triton fall of early 2009 when shell knocked the price down to 75/= there has been a steady gradual rise of petrol prices.

Utilities/ Electricity: While my electricity: my bill last month is Kshs 1 700 (~$22) less than the 2,100 of December 2009, but about the same as March and September 2009. So despite the prolonged drought of 2009 and rains late on the year and first quarter of 2010, impact yet to hit my electricity bill. However the electricity bill has a component called fuel cost adjustment that is twice hat it was a year ago, it’s billed at 783 cents/kwh, which is 88% higher than the 416c/kwh of a year ago. Not the cost of fuel passed on to energy producers or the government continues to exceed household consumption by 1 1/3 times. So the cost has gone up, but household usage, minimizing use, using better bulbs, better planning has kept the costs in check

With Water bills, this is erratic for most with the Nairobi water company hitting customer with some crazy bills sometimes 3 or 4 times higher than what they have been paying. It has happened to others. Their billings I erratic, mine actually shows a cost reduction from 851 in 2009 to 509 in 2010. However the method of measure and billings has changed and it may only be a matter of time before I get hit with a crazy bill

Foreign Exchange: 1 US$ equals Kshs. 76.6, compared to 75.9 of September and 75.6 in December; but much improved from the 80 of a year ago last March.

Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 150 ($2.00) up from Kshs. 140 in December 2009 at most places I know. East African Breweries is upping their dormant war with SAB Miller and having settled over Tanzania, there are rumours that SAB will re-enter Kenya, perhaps prompting some price wars.

Urban Inflation Index – June 2009

Tracking changes in the three months since the March 09 index and to approximately a year ago with the July 08 index

It’s going to be a tough year given the financial results that we have seen so far. Safaricom had reduced profits, while Zain and surprisingly Kenya Airways also recorded losses for the financial year. And while most banks have growth of 30 – 40%, GTV went bust.

The arrival of the submarines/fibre cable are expected to bring down the cost of communications sometime in the future, but at the same time it is expected that the Kshs. 109 billion ($1.4 billion) to be raised from local financial markets in the next few months to finance the services, programs, and deficit of the Government of Kenya will in the process also push up interest and borrowing costs for individual and businesses.

Gotten cheaper

Fuel: A Litre of Petrol fuel (at local petrol station) is now Kshs 72.5 (~$4.18 gallon) down 3% from 75 in March 2009. A year ago, petrol was retailing at over 100 shillings per litre.

Staple Food: Maize flour which is used to make Ugali that is eaten by a majority of Kenyans daily. A 2 kg. Unga pack at Uchumi today costs Kshs. 92, down from 96 in March. However this is still much higher than the Kshs. 73 a year ago and a high food prices remain a sore point for many consumers – both urban and rural.

Communications: While phone calls through leading mobile company Safaricom are largely unchanged at about 8 shillings per minute (~$0.10), calls are cheaper at Orange and Zain, but probably from subsidizing consumers to lure them away from Safaricom. What has gotten cheaper is the cost of data. A Safaricom modem now costs Kshs. 4,000 ($51) and has been dropping periodically since it was introduced in 2007. Safaricom has also several ongoing promotions for laptops, blackberry’s and data-enabled phones as it competes with the likes of Access Kenya, Orange who sell the I-Phone, and Zuku from Wananchi who last month slashed in ½ the price of unlimited broadband.

Foreign Exchange: 1 US$ equals Kshs. 77.94 having appreciated from 80.07 three months ago. It was 67.4 a year ago, but few expect it to edge downwards for the next few months.


Entertainment: A bottle of Tusker beer (at local pub) is Kshs. 130 ($1.60) unchanged from three months ago, and also priced the same as last July. While prices have not changed, beer sales may on shifting sands. Former Trade Minister and member of parliament Mukhisa Kituyi was interviewed a few weeks ago on TV and he made some remarks on how the economy is impacting the mwananchi (ordinary man) – he said before someone would go and watch a soccer match on TV in a sports pub and have 4 beers, today that same person will nurse a single beer for the duration of the match (was he talking about himself?)

More Expensive

Electricity: my bill last month is Kshs. 2,100 ($27) up from 1,800 three months ago (comprising fuel cost of 436c/kwh, and forex adjustment of 63c/kwh – it was lower 649c/kwh last July). The expectation is that with drying rivers and water dams, electricity generation and consumptions costs (Kenya is still hydro or diesel fuel dependent) will become more expensive. In his Budget Speech last week, Kenya’s Finance minister proposed to remove taxes on generators and other power production equipment, perhaps in anticipation that more companies may be buying these soon. Already, blackouts (announced and unannounced) are becoming more common either from transmission failure or vandalism (some brave people steal wires or fuel from transformers!)

Of concern also is the quality of electricity supplied. In the last week, my microwave and kettle have been knocked out, while a neighbour lost both water heating boilers in her house. The inconsistent electricity supply also knocked out my TV a few months ago and I’m scared of charging my laptop except late at night when i expect supply to be stable!

Other food item: Sugar (2 kg. Mumias pack) is Kshs. 175, up from 165 three months ago, and a year ago it was 145 (now costs 21% more than a year ago).