Kenya Agriculture: Osho Chemical Industries to Build Further Capacities in the Region

Interview with Manoj Shah, Owner of Osho Chemical Industries Ltd

What is Osho Chemical Industries’ story?

Next year, we will be celebrating 30 years in business. We started in 1993 and, initially, it was more as an import supplier of various raw materials for the textile sector. Of course, when we talk about textiles, it touches on a bit on tanneries, some chemicals for pharmaceuticals, and paints. So, it was more of a trading entity fitting into the markets that were already consuming raw materials. Around 1998 or 1999, we saw a window for agro chemicals. Agriculture chemicals then used to be the big packs of half a liter, or one liter, so we said okay, let’s try to feed into a market which is the small-scale farmer who needs small packs. We used to import the ready product, either in bulk or pre-packed for selling. Then we realized that packaging had to be localized because we needed flexibility, so we went into packaging. While that was happening, we also realized that there was a lot of local value to add. We had to create a capacity because after 50 odd years of independence, you cannot remain just a trading entity. There are certain functions that need to be localized so we went into technical registrations, then into formulations. So we starting evolving. Then we looked at the huge gap in the market on plant nutrition. Besides chemicals, fertilizers are also very critical and that gave us more ideas about soil conditioning, rejuvenating the soils, and that brought us into the biological field. We keep learning and we keep upgrading. Since 2004 or 2005, there has been more and more focus on agriculture and today, 90% of the business is agriculture. We have moved away from importing raw materials to agriculture sector support. When we realized that we also needed to take this expertise to neighboring countries, we opened in Uganda, Tanzania, Malawi and Zambia. Earlier, we thought the southern part of Africa would be dominated by South Africa, but we now know there is a window for companies like ours. Our footprint as per our plan will be eastern central Africa. It is a bloc and Kenya has a bit of an advantage in terms of having a bigger economy than other states, although production costs in Kenya are not inexpensive and it is still cheaper to bring in products from overseas. We have room to grow our public health, meaning anything to do with malaria control, termite control and the like. Also, the veterinary sector because when we got into plant nutrition, we saw a window for us on local production of nutritional products for animals. Those three departments give us strengths and we are getting more inclined towards manufacturing and supporting our distribution network that we have created. Our success, or our pride, is the success of the small-scale farmers in each of the countries where we have done it. Not many people have concentrated there, so there has been an opportunity. It comes with a lot of hard work and a lack of support from each government, but that is okay because I still want to be a good brand. That is where we are.

What are Osho Chemical’s competitive advantages?

Our flexibility and looking at markets differently. After 50 years of independence, everything is still coming to Kenya pre-packed for sale, but we are saying no, the country needs to have certain functions localized. And in the process, wherever we have a huge component of carrier material in any formulation which is local, we are enjoying that slot because we have control on the availability of raw materials, and on costings of raw materials. Remember, one of our goals is to offer quality at an affordable price to have a customer base and we are able to control costs and quality and reach out to the market a bit faster. I think those are competitive advantages we have unlike the rest who are more on the trading platform. It is not easy to do what we are doing, but I think in the years to come it will pay off.

What is your assessment of the industry in Kenya, or East Africa as a whole?

The biggest employment sector in most countries is agriculture and to make it even better is self-employment. There are a lot of advantages in supporting that sector because the government used to have an extension service which stopped a long time ago because of funding issues, mismanagement of the funds that we were receiving, so the responsibility has now come onto the industry to do the right thing in terms of educating the farmer. When we do that, while of course the rationale is really to position our products in the market, we are seeing that there is a huge gap in terms of misuse and abuse of chemicals, so we are playing a small role in correcting that area, but more the reception of the farmer from helping out and the brands are getting more support, so the brand valuation is increased. Earlier, they would not trust a local brand or a locally manufactured product, but today they see it is a very good solution. We cannot save them so much money by reducing costs in terms of the purchase price, but we can definitely enhance the performance of various products, either resulting in a higher yield, better yield, faster yield, and those are the advantages that we see happening within our sector. Remaining engaged with the Minister for Agriculture and other parliamentarians because they are the biggest administrators of funds for departments and we can point out the underfunding, point out the gaps that exist. This is the biggest world bank for our politicians and the biggest self-employment sector, so if we can bring them into a taxation bracket and national social security fund, national health insurance fund, then everything sort of starts equating differently in compliance because we are exporting to developed countries. If we can remain compliant with the regulations of those countries it is also an upgrade of our customer base. These are our big advantages and where we see some good success and good returns for a long time.

What are some of your flagship products?

For plant nutrition, we have a couple of strong brands. There are other soil conditioners for rejuvenating the soil conditions. Some work needs to be done for them to benefit the customer base. On insecticides, we have quite a range. And fungicides. The fact that we hold a couple of technical raw material registrations gives us the flexibility of localizing certain populations. We did a project with some university students to generate sufficient data support for our works and products board and now we can work on those two fronts. Herbicides is another big window. The products in use have been there long enough, the rates of application have gone up, so we are able to bring in more innovative products on herbicides. We have just launched one which is reducing half the rate of others on the market, so it is a 50% saving for the farmer in terms of just the application rate. That means less labor, lower costs, more efficacy. It brought some challenges because customers couldn’t believe it would work at that rate. On human health, especially against mosquitoes in tropical zones, we have mosquito coils that burn overnight. In Europe they are also in use during summer in gardens and animal barns. We have aerosols to control flying or crawling insects. Rodents are a big problem in most countries and if you don’t handle them, they can cause the plague and other problems and that is another window in the same sector. On animal health, meat and milk is what we consume, and we need to make it a bit safer. Most of our customer base is the farming community which is the biggest self-employed sector. Almost 70% of the Kenyan population, and a similar percentage in the neighboring populations, is in the farming sector. Because it is an integral part of their ecosystem, we saw it as a ready market for our products. We protect the farm, we protect animal health and even the farmer himself needs to take precautions because he is exposed to weather conditions, to chemicals, to mosquitoes or some other problems. They are all integrated. The animal system, plant system and human system are similar in terms of physiology and have worked hand in hand and those are the opportunities that we keep building on because once you already have the market ready for you, the customer numbers are there, so what else can we feed into the supply chain? One of the products we have is an iron oxide which people use for coloring the floor when they are doing their flooring and constructing. You need different colors which are achieved through a synthetic process because natural ones do not last as long. Iron oxides are used in paint, tires and ink and we saw a need and already had the product. We came up with a 1 kilo pack and have about 30% or 35% of the market share. We are more on the end user markets, the up-country markets in the supermarkets channel. Our products are suitable for supermarkets, so we need to take them to the masses. The bottom of the pyramid, as we would call it, is where the numbers are, and you need to keep feeding into that. Sanitation is another problem that has come up during the coronavirus phase, so we have sanitizers and disinfectants. Those were opportunities we had identified years ago but now is the time for us to sell small packs at the right price. We tried drip irrigation in the past because rain-fed agriculture cannot be sustained. We have not been successful with the small greenhouse concept, but the awareness has been created and the synergies are there.

What is the company’s international reach?

At the moment, because the expertise and the needs are more in Kenya, that is where we are concentrating. We have higher costs of energy and transportation, sometimes almost double what it is in other countries, so we realize that not everything is possible for manufacturing in Kenya and shipping to neighboring countries. We are bringing in readymade packs from China and India, our main two sources, for selling. We are investing in local manpower and are trying to enhance capacity. We may not be able to produce in other countries because the economies of scale or the market sizes are quite small, however, we will import the bulk and package them in those countries. Zambia can cater for six or seven neighboring countries, Tanzania likewise, so depending on how many borders we can touch maybe we can take the Kenyan experience of production and put certain products into those markets. That will happen in the next seven or eight years.

What is your medium-term vision for the company over the next three years?

In Kenya, we are probably double the size of the other regions combined and we see the regions becoming more than 50% next year in terms of our turnover, so we will need to build further capacities and put more investment in infrastructure for neighboring countries. In Kenya, we may not grow so much, so the next five years is really to stabilize as a region and open more markets. And remember, Congo recently became a member of the East African Community (EAC) so that is an additional 89 million people market for us. Ethiopia, once they overcome their current turmoil, is another 120 million people market for us. Right now, we are servicing from here, but maybe long-term we need to put up at least the packaging or formulation unit there. We need to take it beyond Kenya. Still build on the Kenyan strengths but take those strengths to other regions. That is the only way we see making a bigger impact, a social one.

What is the inspiration that drives you?

When we started this, the goal was to make a living then support the family little realizing that was a very small thing to do in the overall business concept. The biggest satisfaction that we are deriving is that we are putting more savings and more food on our customer base, which is our biggest employer in the agriculture market. That is a driving force for us. Opportunities will be very many, there will be many alternative investments, but I think Osho is a progressive and quality brand. The more connection we have with the farmer, the more information we can take to the farmer in terms of weather change and regulatory pressures that are coming in, if we do a good job there, we will provide a good service for our customer base.

FAIR USE POLICY
This material (including media content) may not be published, broadcasted, rewritten, or redistributed. However, linking directly to the page (including the source, i.e. Marcopolis.net) is permitted and encouraged.