How to Start / Open A Sifted Maize Flour Business in Kenya

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Whole meal versus Sifted Maize Flour

In Kenya 3 types of maize flour are available in the market:

a)Whole Meal – Produced in Posho Mills

b)Partly Sifted Flour – Produced in Posho Mills by partly removing the germ and bran

c)Sifted Maize Mill – Produced by fully removing the germ and bran usually by commercial millers

This guide will help you as you set a small commercial sifted maize flour processing mill. The core final product of the processing will be Grade 1 sifted maize flour. This is as opposed to whole meal flour.

Whole maize meal flour – often referred to as Grade 2 - is produced from milling the whole grain

.Sifted maize flour such as Jogoo, Soko, Shujaa , Pembe and such others are produced by milling maize after removing both the husk and germ.

See Appendix for nutrient comparisons of the different flours.

Other Maize Products

In addition to flour maize can be processed into its constituent chemical components in a technical practice known as wet milling. End products of this could be ethanol and starches which are used in the food and paper industry for making adhesives, sweets and other confectionery.

Eldoret based Corn Products was the leading wet milling company in Kenya. The plant, established in 1973, was part of 54 wet processing units operated by a US based company. The firm largely produced starch and glucose which it sold to companies like Unga Limited and East Africa Breweries Limited (EABL)

Unfortunately in July 2012 the company shut down its manufacturing plant citing the uncompetitive maize prices in Kenya and inability to compete with imports. The plant had a capacity to process 2000 bags of maize every day.

Due to competition from millers the company at times had to purchase maize at retail prices, making the end products costly when compared to imported alternatives.

However the firm still maintains a sales office in Nairobi which imports starches from units in other countries for sale locally.

Maize can be also processed to different types of grits that are used for brewing, making breakfast cereals and other snacks.

Packaged Whole meal

With changing health preferences and an increasing number of consumers moving towards healthy natural foods some entrepreneurs have toyed with the idea of packaging whole meal flour targeting the ‘middle class’.

The challenge of whole meal packaging is preservation. Since it contains the germ it might only be ‘fresh’ for a month or so after which it expires. Often this is not enough time for the product move from the factory to the consumer’s plate.

Another challenge is the perception of the would be customers that the flour is not hygienically packed, the flour takes long to cook, the flour does not have a smooth taste and the flour is not easily digestible.

All these could lead to slow uptake. It also means a lot more investment will be required to educate the consumer though advertising and other marketing activities.

It’s important to note that there is demand for whole meal flour. In low income areas Posho meals and shops sell significant amounts of whole meal maize flour because often whole meal is cheaper than sifted flour and that is digested at a slower rate thus making the consumer full for longer.

Interesting though is that as the income level rises, people in low income areas shift to sifted flour. Time, hygiene and ‘prestige’ associated with sifted flour are some of the reasons given for the move.

In some Posho mills a customer has to wait for up to one hour before the maize is ground to flour. Modern Posho mils produce semi sifted flour by partially degerming and removing the husk.

In Posho mills and shops where whole meal flour is sold consumers prefer ‘Grade 1’ flour which is semi sifted as opposed to Grade 1 which is proper whole meal. The price difference between the two is usually Kshs. 2 to Kshs.

The price difference between packed sifted flour and whole meal from a Posho averages Kshs.10 but ranges between Kshs. 5 and Kshs.10. There are times when the price of sifted maize is equal or slightly lower than that of Posho meal.

A case in point is January 2015 when the price of 2 kilograms of Shujaa maize meal averaged Kshs, 80, while that of an equivalent amount of whole meal was Kshs. 100 in Nairobi and its environs.

The price of two of the leading brands, Jogoo and Pembe ranged between Kshs.85 and Kshs.88 in various supermarkets. However in the last quarter of 2013 prices of a 2 kilograms packet maize flour averaged Kshs.115 while whole meal was still Kshs.100.

Of note too is that many small millers are packaging sifted maize mill in bulk say 90kg , selling to retailers who then repackage in polythene papers and smaller quantities and sell to consumers. This is bridging the price gap between the sifted maize flour and whole meal flour. The more efficient small and medium sized millers are able to offer lower prices for sifted flour than what local Posho mills are selling whole meal flour.

A General Note on Cereal Processing

In the last 4 or so years a number of entrepreneurs have experimented with milling and packaging beans, peas, bananas, soya beans, peas, yams, sweet potatoes and other non traditional products not necessarily cereals. Sometimes as single products or mixtures for porridge.

The response in the formal market has been lukewarm. Consumers quote mistrust about the processing and quality control. Poor packaging and branding contributes to the negative impressions.

Ironically flour shops and mills selling over the counter the same kind of flours mixed to make different health or nutrients combinations have been growing. For example in Nairobi ,Central & Eastern province, Kirinyaga Flour Mills , located in the city and the pioneer of custom flour mixtures business used to enjoy a sort of monopoly .

Nowadays almost every sizeable town and estate has a flour shop. In such shops consumers get custom combinations depending on their health needs say Diabetic, 2 years, under weight and such attributes. When such flours are prepackaged and sold in supermarkets consumers are not so receptive.

Other alternatives in processing cereal involve cleaning, packing and selling as ‘polished’ products. Significantly in November 2014 Unga Limited joined the polished cereals market, cleaning and packing beans among other products. This is a good indicator of the potential of the business.

Quick Facts About Maize

øMaize is Kenya’s staple food.

øMaize flour represents 9 % of the consumption basket of low income households.

øKenya's low income earners spend about 28% of their revenue on maize.

øMaize provides daily food calorie uptake to over 30% of Kenyans and is the country’s most frequently produced and marketed crop.

øThe poor living in rural and urban areas spend 34 and 29 per cent of their budgets respectively on food, while the urban rich spend 27 and 21 per cent respectively.

øOn average majority of those who consume whole meal flour from posho mills have lower incomes and less education.

øMaize is largely consumed as ugali followed by githeri (mix of boiled maize and beans). This is irrespective of socioeconomic background.

-Only half of maize flour consumers take porridge for breakfast, with most of those being in the lower income groups.

øKenya produces around 3 million tonnes of maize per year; about 15 percent is sold directly to the National Cereals and Produce Board (NCPB) and large millers, most of which comes from medium and large farms in surplus regions of western Kenya.

øKenya faces a deficit in maize production, which is normally met through duty free imports from Uganda and Tanzania at prices below those in world markets. Since January 2005, regional maize trade between Uganda, Tanzania, and Kenya has not been subjected to any taxation by the Kenyan government with the exception of a 2.75% inspection fee. A reduction in regional trade barriers is very much in Kenya’s interests because the country is a food importer and it can generally procure maize more cheaply from its regional neighbors than it can from the world market.

øIn a normal or good year, domestic production from small- and large-scale farmers forms the major source of domestic supply. According to wholesalers, imports from neighboring countries account for 25-30% of total domestic supply in an average harvest year, while the world market supplies relatively little, especially when import tariff rates are high.

øParts of the Rift Valley Province and Western Kenya particularly the districts of Trans Nzoia and Uasin Gishu, produce a large maize surplus, primarily on medium and large farms. Most other regions are self-sufficient or face a maize deficit on an annual basis.

øGenerally there is little incentive by local farmers and traders to store maize for long due to the risk of imports from Uganda and Tanzania coming into the market and depress prices.

øOn average consumption of whole meal flour has declined but still significant among poorer households. This is because of the declining price differences between sifted and whole maize flours which can be attributed to the competition in the milling and retailing sector. (The number of supermarkets chains have increased and expanded in the last 10 years and with it price and shelf space competition ) In response to this, the large millers reduced the degree of flour refinement in order to cut down their costs. Consequently, the prices of maize meal have declined, thus reducing the price difference between the posho and sifted meal.

øThe majority of the households (64%) in the poorest income quintile prefer duka/shops to purchase flour. Open markets are the next most important means by which the poorest consumers obtain staple products, accounting for 14% of their expenditures.

øAmong the second poorest income group, the most important retail outlets are dukas/shops, roadside kiosks, small supermarkets, and markets.

øMaize is also the primary ingredient used in animal feeds in Kenya, accounting for over 80% of feed rations.

øThe average person in Kenya consumes 88 kgs of maize products per year. Wheat – 26kg, Plantains( Bananas) – 23kg, Potatoes – 31kg, Beans -11kg

øMaize accounts for nearly 20% of total food expenditures among the poorest 20% of urban households, declining to 1% of total food expenditures among the wealthiest 20%

øWholesale prices in surplus areas are in the range of 90-95% of the prices in the main deficit market of Nairobi. The remaining 5-10% is the portion of the wholesale maize price extracted by traders and transporters between surplus areas and Nairobi.

( Acknowledgements KNBS, Tegemeo Institute


A Few Things to Think About Before Starting

When thinking of processing maize it’s important not to be blinded by the attractiveness of the industry at the national level but to think of local conditions:

How will you distribute the products?

How will you market?

How will you differentiate?

For a product which does not offer much room for differentiation, such as maize flour, distribution is very important. And so are branding and marketing efforts that make the consumer distinguish from the competition or give a sense of ownership.

A small miller with limited capital may not have the resources to brand and invest in an intensive advertising campaign that will make her product known all over. Still her mill may not have the capacity to produce enough flour for a big market.

For such a miller distribution is a cost effective method to get her products to consumers even as she builds her brand.

Distribution has to do with strategies that are employed to get products to consumers.

From our experience most entrepreneurs seeking to start milling think of packaging in packets and distributing through supermarkets as their main channel of distribution.

Yet the reality is that getting shelf space in major supermarkets is not a walk in the park. It could take up to 2 years to be accepted by a major chain. Then for a product like maize flour the major supermarkets may never accept you considering the market seem to be caged by the traditional established millers and relatively highly capitalized and well connected newcomers. Also with over 100 brands in the market supermarkets can only stock a limited number of flour brands. The average number is 11 brands.

As you pursue supermarket shelf space it’s good to think of innovative distribution methods. It’s also important to try creating useful linkages in the market that go round the traditional distribution channels. Think beyond packets which are not only relative expensive to pack in but also tougher and more costly to distribute.

It’s now common for millers to pack sifted maize flour in large quantities like 50 kg and 90 kg which they sell to institutions like schools and medium sized hotels. They also sell to retailers who repack and sell to consumers. There are also more millers selling flour in open air markets.

A maize flour miller in Nairobi and a banana flour processor in Meru have managed to create a supply relationship with Kirinyaga Flour Mills, and now sells them significant quantities every month. This is as opposed to packing and selling directly through supermarkets or retailers. Such linkages can help move large amounts.

Many new entrepreneurs in the business initially tend to downplay the importance of kiosks and neighborhood supermarkets. Despite their small sizes these shops move significant volumes and due to their one to one interactions with customers can play a big part in pushing and promoting your brand of flour to consumers.

If you have limited resources start by focusing on a particular smaller market rather than thinking of the whole country.

There hasn’t been much innovation in the maize flour market for many years. Hostess, the super refined flour from Unga, is perhaps the most differentiated product. The other brands may vary slightly in terms of taste and refinement but they are more or less the same.

In packaging the most innovative that has happened for the mass market is the higher capacity bags 5 kg, 10kg and 20kg. At the wholesale level there are 45kg, 50kg, 60kg and 90kg.

The slow innovation in terms of the product is because many consumers just want their ugali to be just ugali, without experimental tastes. On the other hand it could be because of limited research on other ways the flour can be processed. In terms of packaging there could be more room for innovation not just in terms of quantities but the appearance.

The Market

The Kenya maize flour market can be divided into 3:

a)Medium to Large Maize Millers – These are 117 (but growing ) and members of the influential Cereal Millers Association (CMA)

b)Small Maize Millers – Many of these, numbering about 200, are members United Grain

Millers and Farmers Association. We haven’t given the exact figure because some are not members of the UGMFA.

c)Posho Millers – These are found in almost every village. They operate independently and number in the thousands.

-CMA estimates 19 of the medium to large millers have a combined milling capacity of about 1.41 million MT per year. This is about 80% of total national maize milling capacity.

-Posho mills are estimated to have 0.21 million MT per annum or about 10-15% of total national maize capacity.

-The unutilized capacity is overall estimated to be about between 35% and 50 % because of inadequate supply of maize, fluctuations in demand and power interruption.

-Total installed milling capacity is estimated to be 15 million, 90kg bags.

-Major millers are located in Nairobi, Mombasa, Eldoret, Kisumu, Thika, Nakuru, Kitale, Machakos and Meru.

Four maize millers and their subsidiaries control about 70% of the market. These are:

Mombasa Maize Millers

Pembe Millers

Unga Limited

United Millers Limited

Millers with the Highest Milling Capacity

Mombasa Maize Millers

Unga Limited

Mombasa Grain Milling Co.

Pembe Flour Mills

Mombasa Maize Millers-NBI

Capwell Industries

Kitui Millers

United Millers-Kisumu

Eldoret Grains Lt d

Maize Milling Co.

Unga Lt d-Eldoret


TSS Group

Chania Mills – Acquired by Capwell

Kitale Industries

Nairobi Flour Mills

Mombasa Maize Millers

Eastern Flour Mills

Eldoret Grains

Osho Grains

Kabansora Millers

Milly Grains

United Millers-Moi’s Bridge

The leading millers operate in an oligopolistic manner meaning that there is possibility they collude to set prices and build relationships, political, economic or otherwise that keep the competition to the lowest. The dominance of a handful of millers is because of their access to capital, political connections, operations and marketing efficiencies built over time.

However their supremacy is gradually being eroded by well funded medium sized firms which are investing in nationwide and regional marketing campaigns and aggressive distribution. Think of Soko Maize Meal by Thika based Capwell Industries.

Consumers Insight 2013 Reja report put Soko’s market share of the sifted maize flour market at 24 %, Jogoo at 21 %, Pembe 11%, Hostess 8 %. The other brands shared the rest with none having more than 8 %.

Soko’s success was attributed to very aggressive and targeted marketing. In the second half of 2014 Soko reduced its advertising after the Biodiversity commission accused it of using Genetically Modified Maize. The issue is yet to be fully resolved.

Still even a small mill controlling less than 1% but is successful could have revenues in hundreds of thousands. (We will see more about that in Revenue)

Of note is that the National Cereals and Processing Board announced in December that it will set up two maize milling plants in Trans Nzoia and Nairobi. By setting up the mills the government hopes to reign on the big millers who it has accused of fixing prices way above their production costs. Ideal price of maize flour according to the government should be Kshs.75 for a 2kg irrespective of the time of the year.

If the government keeps to its plan and actually sets up the mills then it could significantly affect the small millers who pack in packets as opposed to bulk bags. When compared to the big millers, the small ones are inefficient and can’t compete on price because their production costs are higher. Still it remains to be seen if the government can successfully maintain the prices and have a competitive production company.

Barriers to Entry


Many entrepreneurs have the capacity to raise at least Kshs 5 million or so (see exact figures in the capital breakdown) to start a basic low capacity sifted maize flour plant, the biggest challenge is in the working capital.

Big retailers like supermarkets demand a credit line. If they stock your flour they will pay you within 30 and 90 days. The duration depends on the size and policies of the supermarket. The bigger the supermarket the more easily they can bulldoze a new entrant.

Mini supermarkets which are dominant in residential areas will also negotiate to extend the credit period as long as possible because they too have cash flow problems.

So if a poorly capitalized small miller supplies 10 or so retailers with stock worth Kshs. 3 million with a credit period of 60 days the miller will struggle to survive. She might not have money to pay rent, salaries and buy maize. Thus she might be forced to reduce production or suspend orders.

Even neighborhood kiosks will demand credit. They know the new entrant is desperate to get a share of the market and take advantage of that to arm twist her.

Entrepreneurs who are aware of the facts and who have no access to short term working capital for instance through overdrafts or loans are reluctant to get into the business and if they do become inconsistent in their production.

Capital also plays a role when purchasing maize. This is more so when there is a shortage and the small miller now has to compete with the large millers in purchasing maize from the open market.

The large millers will have the ability to purchase at relatively higher prices and because they have a bigger capacity and are more efficient they will still make profits. Alternatively they are able to import lower priced maize in bulk, influence retail prices and make big profits.

Capital is also important in marketing. Bigger brands invest millions in advertising and other branding and publicity efforts which result in consumers trusting and recognizing the brands more. This has an effect on retailers who will give priority to the well marketed brands compared to the ‘unknown’ brands which don’t even have posters.

Lack of working capital to help survive in the business before break even keeps many off, or make the smaller players shut down or remain small for many years.

Government Regulations

The National Cereals Produce Board Act gives power to the government to decide who the National Cereals and Produce Board (NCPB) can sell grain too during shortfalls or who is awarded the tender or duty advantages when importing from the world market at such times.

Regulations tend to favor the bigger millers, pushing the smaller millers to the edge. This discourages some entrepreneurs from getting into the business or pushing those in the business out. This is more so when there are acute maize shortages.

The bigger more established millers have political connections built over time and when push comes to shove they are able to pull strings so that policy favors them.

With time it has become much easier to get the licenses required to start the business. However there are now more regulatory bodies involved in licensing and this could discourage some new entrepreneurs who want to invest as easily and quickly as possible. (See more in licenses)

Price Setting by the Major Millers.

Like mentioned above the big millers collude to set prices. Because of their influence the prices are what are said to be the market prices. This price could be much lower or just slightly higher than the production costs of a new small miller, who if she decides to equal the price will suffer losses or operate with minimal margins.

For instance if Pembe Maize millers is selling a 2kg packet at Kshs.115, and your production costs are say Kshs. 112 and you want to sell your brand at Kshs. 120 then you will be at disadvantage due to your relatively high price. After all Pembe and say other 5 major brands will also be selling at Kshs. 115 or thereabouts.

How can you, a small unheard of miller, sell your brand at Kshs. 120? You will be forced to sell at Kshs.115 or lower. Thus in a way your margins are at times and to some extent dictated by the dominant millers. This discourages some entrepreneurs from getting into the business or pushes those in it out.


Whereas it’s comparatively easy to start production there is no business if the products do not get to the retailers and then the consumers. A new miller starts by selling in the local market but then the local market can only take as much.

With time the miller will need to expand to other markets otherwise she will be operating way below capacity , suffering losses, forever remaining small or having way too much unsold stock.

The prospects of creating a wide distribution system intimidates some entrepreneurs. They picture lorries, staff, relationships and they keep off. Still they are many millers who start without even a vehicle and expand gradually. A bigger market means higher returns.

Should You Then Keep Off

The barriers to entry should not discourage you from starting a maize milling business. However you should be real to these facts and find ways of countering the hiccups if and when they arise.

The above state of affairs is slightly changing as more small and medium scale millers get into the market. For instance some are attaining a level of efficiency and independence that they price at Kshs.10 below that of the dominant brands. The maize market is now more open giving new players a fair chance when sourcing.

There are successful small and medium sized millers. With the right management and strategy you too can make it. More on this will become clear below.

Competition & Survival in the Sifted Maize Flour Business

On the face of it there is not much differentiation between Grade 1 sifted maize flour whether produced by Miller A or Miller B. In reality though there are slight differences in the finesse and taste of the flour.

The definition of Grade 1 is not standard. Some millers will pass what is essentially Grade 2 for Grade 1. Usually this is done to save costs because the more you mill the higher the production costs such as electricity and labor. Sometimes the difference is because of the milling technology used.

In the minds of consumers sifted maize is just sifted maize and the general assumption is that it’s all the same grade. Still, consumers will talk of one brand being ‘smoother’, sticky’ bitter’ (insert attribute) than the other.

These are subtle differences consumers are able to live with especially if there is a significant price difference of the lesser brand. But when there are just marginal price differences between the brands the consumer will go for the one he trusts more. This will be the more established brand, the brand he has known for long or the one which is more visible. Visibility is a result of marketing and advertising activities.

Like we have noted there is not much room for differentiation in the sifted flour market. Other than Hostess which is super refined there is not much difference between the other brands. There are a few brands which insist on “No preservatives. Just natural” while others say High Fiber. But consumers, going by sales, are less responsive to such differentiation.

The high fiber enriched brands (enriched with amaranth, soya, millet, omena and any other mixer of cereals) is on average Kshs. 30 more expensive than the other brands. There is also Jogoo Wimbi which is millet flour and produces brown ugali.

The extra differentiation like saying more nutrients, high fiber, and moiré delicious don’t seem to have a big impact because they are not aggressively pushed to the market.

With differentiated maize flour products the consumer has a there goes another one mentality, which makes her distrust the attributes especially if it’s not from one of the recognized brands.

That said as you develop your brand of sifted maize flour think of a reason other than price and distribution that will make consumers purchase your product. And in case you can’t figure out any method of differentiation then have a brilliant distribution strategy.

In terms of packaging there is nothing radical. Almost all brands have an element of white and brown and other common colors blue, green and red. Pembe, with a largely khaki packaging stands out. There is also Chaguo la Mama milled by New Boogaloo from Tanzania. The flour is packed in 1 kg polythene bags.

The almost similar packaging is not a result of any limitations by authorities rather it’s a component of the marketing strategies of the companies. There is an element of trying to look like the competitor in order to perhaps confuse the consumer and gain market share.

Mid income consumers purchase sifted flour based on the much they trust a brand. Low income consumers tend to more focused on prices. However even for such consumers price is not the only consideration. When their income increases they go for more established brands and not necessarily the lowest priced.

Price works as a market entry strategy, however long time survival will partially be based on the strength of your brand and your distribution strategy. The price strategy is not the best for the long term because at any one time there will be the threat of a new miller coming into the

market and offering even lower prices.


Beyond the mass retail market there are some smaller millers who try to focus on institutional retailers like schools, colleges, hospitals, prisons, or such other. The advantage of institution retailers is the regular orders (depending on the institution), bulk and cost savings in that you don’t have to pack into smaller packets which raise the cost per unit.

With institutions you are able to plan better and at least get income to keep the business running.

The disadvantage is that sometimes bureaucracy can unnecessarily delay payment. Also a lot of politics could be involved in securing institutional tenders. Still the orders could be seasonal say when the schools open.

If you rely on a few large institutional customers and you lose them for example due to politics or change of policy then it could lead to the collapse of your business. Institutions also negotiate hard and this could reduce your margins when compared to direct retail sales.

Yet institutional customers are some of the best to keep a small miller in business by helping her break even and meet the monthly costs to run the mill. (See more in the consumer section)

Packaging & Marketing

In Kenya sifted maize flour is commonly packaged in 1 kg, 2 kg, 5 kg, 10 kg, 25 kg, 45 kg, 50 kg, 60 kg and 90 kg. There are no actual guidelines and the quantities depend on the marketing strategies of a miller.

2kg is the most common package and accounting for almost 60% of sales. However due to the intense competition in the packets market many small and medium sized millers started packaging in higher quantity sacks.

Such millers sell directly to consumers or distribute to retailers who then repackage in polythene bags and sell to consumers. Larger packages are also ideal for institutional consumers.

Large millers had been reluctant to pack in the bigger capacity bags like 50 kg because retailers repack in polythene paper bags thus making nonsense of the miller’s branding efforts. However with increasing competition from small and medium sized millers the large millers are enthusiastically getting into the bulk packaging space.

One miller experimented with 0.5kg but the experience in the market was not very good, because the quantity is often not enough unless for a single meal and an individual at that. Then the smaller the package the higher the production costs leading to an overall higher price.

The Four Marketing Ps

In this business the classical four Ps of marketing come in handy. Think of these as you set up. Remember as much as there is an overall high demand for sifted maize flour the biggest challenge is getting a share of the market big enough to help you break even and make profits.



Better quality appearance

Longer opening hours

Better taste

More attractive sales outlets

More variety

Popular location


Delivery service


Fast and Friendly Service



Targeted advertising to specific group of

Lower prices


Discounts for large quantities

Free samples

Special offers


Credit facilities for retailers

Special Promotions


In shop displays


Sifted Maize Flour Consumers can be generally classified into 2 broad categories:

a) Retail Market

This is the mass consumer market for sifted flour. Consumers purchase through supermarkets, shops, kiosks or even in open air markets.

Competition in this section of the market is very stiff with most millers trying to get a chunk of it. Shelf space is limited and it becomes cut throat to try get to the final consumer. The big brands have an advantage of price, efficiencies and cash flow which makes them extend longer credit to supermarkets and distributors, while some of the smaller players use dirty tricks including bribing, bad mouthing and so forth to get an edge.

On the other hand the small millers are gaining advantage by using guerilla marketing tactics. By leaving the packets to the relatively bigger millers and specializing in sacks while cutting the distribution chain by directly selling to retailers and consumers they are gaining ground.

Although the retail market is volatile with the right strategy you could get your slice. Promotions on local vernacular stations, product activation on the ground, reasonable discounts to win shop owners have been successfully used.

As a small miller it might not be possible to compete on price and it will be more a matter of strategy and implementation. Capitalize on any small competitive advantage you have.

Institutional Consumers

These include schools, colleges, armed forces, relief agencies and all organizations buying in bulk. This is a more stable market as buyers will often engage in long term contracts running annually or bi annually. This guarantees income, and helps you plan.

On the flip side if a contract is cancelled then the loss and effect on your business is bigger. Most institutional buyers use professional buyers say procurement officers. Professional buyers negotiate hard and compare terms in the market.

At times you might be required to bribe the authority or authorities with the final say on the purchase. Do this of course considering the possible margins. Sometimes with a little consideration the institutional buyer will hike the prices beyond the market rates and you share in the extra margins.

Institutional customers are a good option a new small miller. For organizations such as secondary schools and colleges you could offer options of custom milling such that a school can request that you don’t extract fully for the health benefits of the students or package in certain particular quantities.

As we have mentioned the retail market is more profitable but also more volatile. The institution market is more stable but sometimes it’s less profitable. When possible have a share of both the retail and institutional markets.

Competition is thus based on:

Marketing & Distribution

How a company is able to build and push a brand to consumers. How much advertising a miller is able to do. How a miller is able to use various strategies to get her products to the consumers.


How efficiently a miller is able to source. How she is able to play around with price differences in seasons, regions and even countries. How cost effectively she is able to source for raw materials.


How much a miller is able to sell his product relative to the competition and the strength of her brand.

Cost Leadership

How efficient a miller is. How much capacity she is utilizing. How she sources for maize. How efficient her machines are. How she enjoys economies of scale.


The quality of the product. The extraction rate. Her storage. The quality of maize.


Major Players in The Maize Chain from Farm to Table:





Posho Millers




Large Farmers




Tanzania /




























Board (NCPB)

















Assemblers /











Posho Mills

Value Chain Notes

Small scale farmers largely sell their surplus to small time brokers found in small town centers. These assemble the grain for onward sale to large wholesalers with buying depots in major towns. The wholesalers sometimes come pick the maize from local brokers.

Large-scale farmers sell both to wholesale traders and to the NCPB.

Millers buy from wholesalers, the NCPB and from small but significant traders.

Millers then mill the flour, pack and sell to retailers through kiosks, shops and supermarkets.

When there is a shortage wholesalers and millers opt for Uganda and Tanzania first. There are no import barriers except for the 2.75% import inspection fee and transport costs, which are relatively low.

Millers also go to Uganda and Tanzania when the prices are attractive as compared to Kenya. There are at times when the price differences between the two countries and Kenya is 50%.

If the quantities cannot be satisfied by the East African market then the country imports from the international market. Usually wholesalers and big millers lobby the government to waive the 50% duty on maize imported through Mombasa.

During such times small brokers, traders and millers become less active. Only large wholesalers, opportunistic traders, large millers and NCPB fully participate in the market. Small scale millers at times join together so as to have the capacity to make large imports.

As a new miller you need to create relationships with local and East African maize traders. There are many such traders. Have them deliver the maize to your premises rather than you having to go source. This will save you transport costs.

Wholesalers are reluctant to store grain even during the harvest seasons. Instead they prefer to buy and sell quickly even if it means lower profits. Some wholesalers fear a change in government policy could affect negatively affect future prices leading to losses. Say if the government waives import duties or the NCPB floods the market with large amounts of maize. This means that a lot of maize is bought and sold by traders during the harvest season and there is shortage and price spike during the lean season.

Nyamakima Market in Nairobi is a major maize wholesale marketplace. Though a few millers occasionally buy maize there the prices at the market are relatively high compared to other sources say importing direct from Tanzania or Uganda.

Most of the traders at the market import from the East African countries purchase from farmers directly. They target relatively smaller retailers and wholesalers dealing in cereals or running posho mills in urban centers.

When the source of maize is local millers largely purchase from brokers in the maize surplus areas. A couple of millers have experimented with setting up maize buying centers in the North Rift areas like Uasin Gishu, Trans Nzoia and Kitale. However managing such centers is tricky largely due to the unreliability of workers and logistics. For instance you need to test the quality and moisture content of the maize, and sometimes it’s not possible to do that out there in the field.

Also farmers and brokers often want to be paid in cash, while financial prudence of a miller requires the use of cheques.

A better option is to have the traders deliver the maize at your premises. Be sure to sample and test the maize for moisture content, weevils and other insects. Don’t compromise on quality. With time develop relationships with a number of reliable maize traders and large scale farmers. Some will approach once you start operations but also be proactive and go to the markets in the North Rift and East African countries.

Some small millers are only operational during the maize harvest seasons or when maize prices are favorable.

Millers both small and medium have relatively little storage capacity, and if they have to store then they rent space from warehouse operators. This increases their costs.

Low capital also restrains the smaller millers from stocking large amounts of grain during the peak seasons. Big millers not only have own storage facilities, some with silos that can store maize to mill for 6 months, but are also able to access finance in form of overdrafts and other loans to purchase maize when the prices are depressed.

It’s advisable to have enough maize stock to mill for at least 3 months. If you have the capital and facilities stock aggressively during the harvest season when prices are low. When prices go up you will be retailing flour at higher prices though you had purchased maize at lower prices and hence higher margins.

Brokers and large farmers selling to the large millers at the mill’s gate complain of corruption by the mill managers or other staff involved in purchasing. This could involve paying bribes to have the maize approved as good quality, processing payments or just be allowed to sell the maize.

When purchasing maize consider the following:

-Moisture Content

-Weevils and other insects

-Immature grains – This leads to lower yields. And since equipments are made for standard size grains, immature small grains will pose a problem.




A bigger percentage of millers in Kenya are located in urban areas away from the major maize producing areas. Thus you find relatively more millers in Mombasa, Nairobi and Thika and less in such places such Uasin Gishu. Urban areas are attractive to the millers because of the large market that is Nairobi and urbanized towns.

In terms of maize supply there are no significant disadvantages when you locate in any of the major towns. Maize wholesalers are able to supply maize to the premises of millers. Imports from Tanzania and Uganda find their way to the towns easily.

Of course a miller located say in Uasin Gishu will purchase maize at a lower price than a miller in Nairobi. On the other hand if the miller in Nairobi is purchasing in bulk then he can negotiate prices so that there are very minimal differences between him and the one in Uasin Gishu.

The trend nowadays is for small and medium millers to establish away from Nairobi, Mombasa but in towns with significant populations. This is more so since counties administrations came into being. Their strategy is to create a sense of ownership among consumers. The miller tries to ‘own’ a local market and expand from there.

When choosing a location for your mill, consider the following:

Size of the Local Market

As much as your sights could be set on conquering the national or regional market ensure you have a big enough local market to sustain the business. Conquering larger markets will take time and resources.

For instance you need vehicles to deliver to supermarkets or retailers. If your local market is big enough and clustered you can survive without a vehicle by hiring, or purchasing a single pick up.

But if the local market is not big enough to help you break even then you will need more money to purchase vehicles to reach other markets. And there is no guarantee that you will succeed in those markets.

That does not mean that you should not look beyond your local market but have base, a market you can conquer and say this is yours. This is more so if you don’t have enough capital.


Look at facilities such as water and electricity. Whereas there could be electricity in every major town in Kenya, some towns tend to have more frequent power rationing than others. Ask about the power history of the location you wish to set up.

Power disruptions will also disrupt your production. A generator will increase your production costs and make you uncompetitive. Disruptions could also make you unable to satisfy your market. Inconsistent supply will disappoint retailers and consumers leading to loss of market share.

Water is also important for any production plant. Make sure there is reliable water supply, and in case there is no water have a good plan B.

Roads and good communication network are also important. Customers and suppliers need to reach you at all times. And whether it rains or not you need to be able to get your products to the market.

Raw Materials

It should be cost effective to get raw materials, which is largely, maize, to your location. If the cost is significantly higher than what competitors are paying then you will be at a disadvantage when it comes to prices, margins and long term growth.


Possible Layout of A Maize Mill





Flour Store








Toilet / Water









Office/ Workshop












Milling machines require a solid concrete foundation and mills should be securely bolted to the floor using foundation bolts with a minimum length of 45–60 cm. There should be a space around the mill of at least 60 cm for maintenance and cleaning. (Do not allow too much space – it will be used by operators for storage, thereby reducing the amount of space for maintenance.)

You need a room(s) big enough to handle all production activities. Whereas a milling unit could squeeze to a space 10 meter by 10 meters you need space to handle related activities:

-Receiving / weighing space

-Maize Storage

-Flour storage

-Working space


-An office, however small


-Toilet / bathroom


-Waste disposal / storage / utilization

-Relaxing room where workers can take a breather or have a meal

-Equipment room

This does not mean you need really big premises to start with, just plan and utilize whatever reasonable space you have in the best way possible. Don’t pay for space you don’t need. Any extra costs will add to your overheads. As a new miller you need to keep your costs as low as possible.

Other important considerations when thinking and designing the premises include:

Making sure maize passes from one process stage to the next in a straightforward way, without causing operators to block each other’s workspace

Sufficient space is left around equipment for maintenance and cleaning.

High ceiling are preferable in a production unit to allow heat and dust to rise from operators

Make sure there are no cracks in the walls as dust could settle there and attract insects

Floors should be smooth and without cracks. They should also be thick enough to accommodate bolts


The rent you pay should be reasonable so that it does not drain in the few months before you break even.

Compare different locations and premises. Sign leases of reasonable lengths to protect yourself from landlords who throw you out at their own whims. Or throw you out and set up a similar business.

Before signing the leases and making paying payment have the authorization of the county government and National Environmental Management Authority so as to avoid any come backs.


You need to renovate the building making it suitable for a flour mill. During renovation you should keep in mind:


A milling plant will produce an amount of dust during processing. In a poorly ventilated room the dust accumulates and becomes a health hazard, the working conditions are also not conducive and given a chance workers will want to be away from the factory as soon an as much as possible.

This will affect ct productivity, lead to a high turnover of employees and possible action by health officials.

When purchasing equipment ask about the amount of dust they are likely to produce. Very efficient equipment produces fewer amounts when compared to lesser efficient equipment.

Contaminants – Rats, insects, Dust

Food, and especially cereals, will attract insects and rats. You need to keep these away for the health of your customers and also to avoid losses.

Design the stores where you keep the maize before milling and the flour before dispatch to consumers in a way that they are fool proof to rats and insects. You can consult a pest control specialist to advise on the best way to do this based on your location and building. Weevils can destroy large volumes of maize very quickly.

Still good hygiene practices will help you control the contaminants. It might not be possible to control rats and insects 100% but keep them to the minimum.

Questions to ask yourself when choosing the premises:

Is your site close to supplies of raw materials?

How can you reduce the cost of transporting raw materials to your site?

Are the walls easily cleaned? What do you need to do to improve them?

Are doors and windows protected against insects?

If not what improvements do you need to make?

Is the floor free of cracks and easily cleaned?

Do you have drainage that is protected against entry by rodents?

Are lighting and power adequate? What do you need to do to improve them?

Are the amounts and quality of water adequate for processing?

Do you have facilities for disposal of solid wastes and water that will not cause localized pollution?

Do you have toilets and hand-washing facilities?


A sifted maize milling system consists of the following main parts:


Degerminator /Huller



Packaging system


The purpose of a cleaner is to remove stones, dust, cobs or any other residual material that is not fit for consumption. Basic cleaners consist of a sieve where maize is poured, spread and the stones another residual material falls down.

However for a commercial plant using this kind of cleaner could be time consuming and less effective. Thus nowadays there are mechanized cleaners which use vibrators and cyclone separators to remove the dust.

The cleaning system could be set in various ways but at the end the purpose is to make sure the maize is free from any residual that will affect the quality of the flour or damage the machinery.

Huller / Degerminator

This is used to remove the bran or hull which is the outer husk of the maize. It has two sections, one which removes the husk and a second which removes the germ. A fan separates the bran when the grain emerges at the bottom.


Once the husk and germ have been removed the maize is crushed to small particles so as to prepare it for milling. This could be optional but helps save time and reduce power consumption.


The roller mill fine tunes the crushed maize to fine flour. Depending on the level of extraction and grade of flour that you wish to produce you could have more than one roller mill.

When grinding maize in a posho meal the husk and germ are not removed rather they are ground together.


After the flour is ready it’s time to package. The packaging system will vary depending on your needs and capital. Most start up mills use manual packaging systems to save on the cost of fully automated packing equipment.

Other Equipment


The above are the main items, however there could be other secondary equipment which help in making the process more efficient and the final product of better quality. Key among them is a moisturizer which is used to wet the maize before hulling.

Moisturizing helps loosen the seed coat and ensure the maize is of the optimal moisture before milling. At the very basic a tank with water is sufficient. You deep the maize then remove for hulling.

A more professional moisturizer will help you determine to what level to wet the maize in addition to giving you control of the process. Most of the modern milling units have a moisturizer included.

Control Unit

A control unit is a small electronic l panel consisting of buttons and switches which help you monitor and manage production. A control unit makes it easier even for low skill staff to manage the production process.

Moisture Meter

You need to know the maize you are purchasing and milling has the required moisture content.

The recommended moisture content for milling is 13.5% .There could be slight variations. Large millers have fully fledged labs to test the moisture content.

However as a small miller you could use a moisture meter, which is a relatively small and portable device.

Experienced milling staff can test the moisture content of flour by placing maize on a hard surface and knocking with a hammer.

Another method that can be used but which is more time consuming is to dry a sample of maize in an oven at 100°C for five hours (or 104°C for two hours), cool and re-weigh it. The weight loss is calculated as moisture content using the following formula:

Initial weight of grain final weight of grain – Final weight of grain


% Moisture Content = __________________________________________________________

x 100

Initial weight of grain


A moisture meter or analyzer though relatively expensive is the convenient solution for a beginner miller.

The above is a standard setting of flour milling. There could be minor differences depending on the vendor. Different vendors could have slightly different designs depending on the designing engineers, how they want to differentiate and prices.

Suppliers could sell individual items or the whole milling unit. Most have demo units which illustrates how the equipment work and what you can achieve with it.

As a beginner it’s advisable to purchase the complete unit rather than individual parts, which you then have to assemble.

Once you purchase the best option is to have the supplier deliver the mill, install, test and commission it. Then if there are any problems then they can sort there and then.

Even with basic knowledge or training at the suppliers’ premises the equipment could be intimidating.

You could have members of your staff participate in the training. This might be at an extra cost. But it’s worth it and gives you peace of mind.

When Purchasing Equipment Consider:

Cost of equipment

Price is tied to the vendor, capacity of the machine, costs of the vendor, how they wish to differentiate and such factors. There are no exact pricing standards and often there is much room for negotiation.

Still there are ranges within which price of equipment fall. Look at the price not just in terms of the momentarily savings but also the warranty, technical support, and any history of the company. Ask for references.

Consider the price in terms of the amount of capital you have. Remember that the machinery is just one of the significant costs. You need working capital to pay rent, staff, electricity for a few months before you break even, branding and marketing, renovation of premises and much more.

(See capital section for more on price)

Capacity of Equipment

This should be tied to the size of the market that you hope to win. If for instance you hope to sell 10 tonnes of flour every day then your unit should have the capacity to produce an almost equal amount.

There are machines which can be scaled to a higher capacity once you purchase through modifications. If a vendor offers the option then get the details in terms of cost and efficiencies and decide whether to go for the option or out rightly purchase a higher capacity unit.

Availability of local After Sales Support

After sales support and warranty should be important considerations when purchasing equipment. Be wary of vendors who are reluctant to give a warranty of sorts. Warranties range between 6 months and 2 years.

Let the vendor be clear in terms of what support he offers. Some vendors will only provide the equipment and expect you to do the electrical work or assemble the equipment. Vendors who offer to install and commission the mill are preferable.

Packaging Equipment

A packaging system can be manual, semi automatic or automatic. A basic manual system could involve getting the flour as it pours from the mill putting it in bags then taking to a weighing machine. This could work well if your capacity is limited and you are selling in bulk.


Even for the same capacity of mills different companies have mills of various sizes (bulk) depending on how they have constructed the equipment. Depending on the size of your premises consider the bulk of the equipment. If you are in a relatively small space go for a compact mill.

Power consumption

Keep in mind the power consumption of the equipment. If the kilowatt consumption of the equipment is not available you can convert the horsepower to kilowatts and then multiply by the current rates. 1 horsepower =0.745699872 kilowatts. You can use this website to see the current rates and get an estimate of how much you will pay for power.

Ease Of Use

Look for a machine that is easy to use and does not necessarily require professional millers who will cost you more.

Milling technology

There are various milling technologies available in the market. Though the general milling concept is similar there are slight differences in the equipment and processes. For instance some mills don’t have a moisturizer, others don’t have destoners.

Go for the equipment that will produce the best quality of flour. We recommend that you go for equipment with moisturizers, as evidence shows that the final quality is better and the wear and tear of the machines is reduced. Most important moisturizing reduces losses during milling resulting to a higher yield.

Equipment Suppliers

We are reluctant to recommend any particular supplier. We advise that you visit or contact the various suppliers compare terms and use the above criterion before making a decision. That said the market is awash with anecdotes of the pros and cons of various suppliers and brands of equipment.

With disclaimer we note that the general view in the market is that Chinese equipment are affordable but compared to other suppliers in the market are less durable.

Muharata Foods is in between. ABC Hansen from South Africa has a great reputation in terms of customer service. Buhler from Switzerland has a reputation in terms of quality but is relatively expensive.

There are many other suppliers in the market who fall below the radar and neither have a good or bad reputation. The equipment should at least last until you break even. Ask for recommendations and evidence of work done.








Chinese Huangpai

Jamhuri park (show ground) –

-Been in Kenya since 2006





but have managed to






establish a significant local






[email protected]

- Deal in a variety of Chinese









ASL Kenya

ASL Trading TD-2,

-Part of the Ramco Group




Lusaka Rd, Industrial Area,

-Offering solutions to small




Nairobi, Kenya

and medium millers





Tel: 0719-767-149






Email: [email protected]







Bühler Ltd-


-Swiss company with



















Sukari Industrial Estate, Ruiru



branches in over 140






Cnr. Eastern Bypass & Thika












- Deals in a variety of food






P.O. Box 44553



processing technologies






00100 Nairobi, Kenya









Phone: +254 720 18 00 11











Muharata Food Company



Kariobangi Light Industries,



-Most established local






Outer-ring Road,



company having been in the






P.O. Box 56161- 00200



business since 1983






Nairobi, Kenya



-Started with Posho mills









before advancing to sifted






+ 254 020 201 3271









M: + 254 706 618 847 / + 254









735 597 509









E: [email protected]


















T: + 041 2230332,









M: + 254 733 953 015















ABC Hansen Africa 25354



-Delivers with 6-8 weeks








-Will do installation
















































Chinese Company Equip Exporter Representative +8615231139903 / 0721 686 268

Ex Factory Milling Equipment – 0770 333034 , Lusaka Rd, Shop No.29

Camco Equipment – Msa Rd, Tuffsteel Entrance , Nakuru , Harry Thuku Road – 0702829268/0717 059739/0719594630

Capital Breakdown



Cost of the premises will depend on the location; size of the building and. Cost of location will depend on the economies of scale. For instance if you set up in Industrial Area, Nairobi the rent will be higher.

On average small scale maize millers spends Kshs. 80,000 on rent. Of course the rent could be lower or higher depending on location and landlord. Owners of commercial buildings usually ask for 3 to 6 months rent. You will not have broken even in 3 months so have cash back up to pay rent for a few more months.


The building you rent is unlikely to be ready for production. You might need to do wiring, partitions, extra ventilations, painting, branding and so forth. This could cost as much as Kshs.300, 000 depending on what you need to do.


As stated above cost of equipment will vary with supplier, capacity and brand. On average a flour mill with a capacity of 10 tonnes a day will average Kshs. 2.5 million. None of the suppliers in the Kenyan market has a fixed price. There exists a lot of price discrimination based on the sales person’s judgments. Still the prices will fall within that range. Of course higher capacity equipment will cost more. Shop around.


County Government Licenses – This is issued by the county government to anyone doing business within the county. The cost depends on the size of the building, location and nature of the business. For a milling plant budget at least Kshs.20, 000 though the figure could rise to as much as Kshs.40, 000 per annum.

Public Health License – This is issued by Public Health officials of the Ministry of Health to anyone dealing in preparation food for human consumption. The officials look at the conditions of the premises, walls, floors, drainage, toilet, weather, roof and such factors that have an impact on hygiene. The fee averages Kshs.5000. Public Health officials are found at the County Government offices or Level 5 Hospitals.

Kenya Bureau of Standards (KEBS) – KEBS looks at the quality of your flour and if the formulation and production process fits the required standards. Before inspection you could purchase a detailed guide from them which explains the elements that they take into consideration when inspecting your premises. Ideally they will look at the whole process,

conditions of your production unit, ask about moisture content and quality of maize that you are using to grind, your packaging among other things. KEBS sells the inspection guidelines at Kshs.2000. The actual license will cost about Kshs.70, 000.

Medical Certificate – All workers in your production unit need to have a medical certificate so as to ensure that there are free from any disease that they can communicate to consumers while handling the flour. The medical certificate is issue to an individual at Level Five hospitals or any other recognized health institution. The price averages Kshs. 1,500.

National Environment Management Authority (NEMA) License – When you are setting up a manufacturing plant you need to have it approved by NEMA. You need to provide them with an environment impact assessment (EIA) which then NEMA approves.

Basically The EIA should give details of the impact of your plant on the environment. Positive and negative impact, and for the latter mitigating measures. The EIA is prepared by an approved environment professional. You can contact NEMA for recommendations. The NEMA website ( has a list of approved professionals.

Once NEMA approves the EIA it will charge a minimum of Kshs.10, 000 or 0.1 % of the capital investment of the project whichever is higher.

Company Registration – You also need to register your company with the registrar of companies at the attorney general chambers. The whole process will cost you about Kshs.30, 000.


Maize is the raw material when producing sifted maize flour. Large price fluctuations are experienced during the harvest and low season. If you are able to stock during harvest the harvest season then you will protect yourself from price spikes and also earn higher profits during shortages.

For a start you could have at least 10 tonnes. This translates to about 120, 90kg bags, which is the standard measure. Working with an average price of Kshs. 2500 per bag this translates to Kshs, 300,000. Note that this is a working figure based on 2014 averages. Prices could be higher or lower.


For a 90kg bag.

Price of maize in December 2014 (North Rift) – Kshs. 1500

Price of maize in January 2015 – Kshs. 2300 to Kshs.2500

Price of Maize in September 2014 (North Rift) – Kshs.2000

Price of Maize in May 2014 (North Rift) – Kshs.3800

Average NCPB Buying Price of Maize (Since 2013) – Kshs.3000

Average Price of Maize in Kampala (January 2015) – Kshs.1500

Average Price of Maize in Dar salaam (January 2015) – Kshs.1530


You need to come up with a name of your product, decide on the colors and logos. A professional designer can charge as much as Kshs. 30,000 to design a packet. Lesser charges are in the range of Kshs. 10,000.

There are regulations guiding the labeling of food products. For instance you have to indicate the expiry date, don’t make false claims, the weight should be clear and correct, you should clearly state what the product is i.e. Sifted Maize Flour.

You then need to have packets and various sacks/bags branded with your colors and logo. The cost includes:

-That of the actual bag or packet

-That of the mould to be used in the printing

-Actual cost of printing

A mould used to print on a polythene sack costs an average of Kshs.6000 per quantity. This means if you say have 10kg, 45 kg, 50kg and 90 kg then it will be Kshs. 6000 * 4 = Kshs. 24,000

Branding the sack will vary with the size and company but a 90 kg averages Kshs. 48 per sack, 60kg Kshs. 44, and 50kg Kshs. 42. This includes the price of the sack and branding. Usually companies involved in the business will insist on a 500 pieces minimum per quantity. Thus if you have 3 quantities 90kg, 60kg, and 50kg it will cost you (Kshs. 48 * 500) + (Kshs. 44 * 500) + ( Kshs. 42* 500 ) amounting to Kshs. 24,000 + Kshs. 22,000 + Kshs.21,000 = Kshs. 67,000.

The average cost of a 2 Kg packet is Kshs.6 and 1 Kg. Ksh. 4. The exact price will depend on the quantities ordered, number of colors and the packaging company. Most paper manufacturing companies in Kenya can only do a maximum of four colors.

You also need a mould which costs an average of Ksh. 25,000 per each quantity. So if you are packing in 2 and 1 kg packs you need Kshs. 50,000 (Kshs.25, 000 * 2) for the moulds. When packing in packets you will also need balers to pack the packets in bales.

Minimum quantities for the packets will vary with the packaging company; however the average is 30,000 pieces. So if you are packing in 2 kg and 1 kg then it will be (30,000 * 6 + 30,000*4) = 180,000 + 120,000 to make Kshs. 300,000. This will be enough to pack 120 tonnes.

Thus on average if you are packing in a sack/ bag you will need Kshs. 91,000 to start off and if in packets at least Kshs. 350,000.

Working Capital


At least 4 months’ rent. Working with a figure of Kshs.80, 000 per month that adds up to Ksh. 320,000.


At the very least you need 2 operators, 6 workers for loading and packing, 2 salespeople, one administrator cum manager, 1 driver. You might also need to occasionally hire casual staff to assist with loading or packing.

Salaries will vary depending on the position and skills of the staff. However in the above scenario expect your wage bill to be at least Kshs. 200,000 (See Manpower for breakdown). If you budget for 3 months that will be Kshs.600, 000 (Kshs.200, 000 * 3)


Power charges will depend on how often the mill is in operation. For a 10 tonnes per day production power costs average Kshs.30, 000 per month. The total for 3 months will be Kshs.90, 000


There will be miscellaneous expenses to do with communication, transport, minor repairs, stationery and so forth. These could amount to Kshs. 20,000 per month or Kshs.60, 000 for 3 months.


Sample Capital Breakdown

Based on averages of small millers (10 tonnes / day) within and outside Nairobi.



Cost per Item





Cost (Kshs.)





























(1Tonne / Hour)









Rent + 3 months



























Maize Initial




120 bags



























Packaging Initial




















Sub Total





Working Capital ( 3 Months)




























Grand Total 4,520,000+930,000




Cost of equipment can be lower depending on the features, suppliers and capacity. At the very least, and going by the present market prices budget Kshs.2, 000,000 for a 10 tonnes / day mill.

Rent could vary depending on size and location of premises.

Price of maize could be higher or lower depending on the time of the year, sources or the quality of harvest.


In a packet / sack of maize that is on a shelf, the costs are:

Cost of the maize

Cost of sifting the maize

Cost of packaging

Cost of distribution and marketing

Cost of Maize

A bag of 90 kilograms does not result in equal amounts of sifted flour. Though the extraction rates vary from miller to miller the average is 80%. ( It requires about 2.5kg of maize to produce 2 kg of flour) .This means that on average a 90 kg bag will result in 72 kilograms of sifted maize flour, of course assuming there will be minimal losses during the milling and packaging. Thus to pack 90kg of sifted maize flour you need:

72kg – 90kg

1 kg – 90/72 kg

90 kg - 90/72 *90

112.5 kg

If the market average of a 90kg bag is Kshs.2500

Then 1 kg is 2500/90 = 27.77 approximate 28 per kg

112.5kg will cost 112.5*28 = Kshs. 3150

Cost of sifting the maize

This includes the variable costs per unit (cost of labor, electricity, water) and the fixed cost per unit. The exact amount will vary will the efficiencies of the plant, whether it’s operating full or limited capacity, salaries and all other related costs. For small and midsized millers the average is Kshs.6 however the market range is between Kshs. 4 and Kshs. 7

Cost of packaging

As noted above (Packaging) a 90kg sack will cost Kshs. 48, and if in packets then those are 45 packets at Kshs. 6 each that is Kshs. 270.

Cost of Distribution and Marketing

This includes the cost of transport to retailers, discounts to retailers, advertising through posters or any other media. The cost varies depending on location, target market, distribution efficiencies and own budget. However the range is between Kshs. 0.50 and Kshs. 4 per kilogram.

Sample Production Cost for 90 kgs of Sifted Flour

Maize (Assuming price per 90 kg bag is Kshs. 2500). 112.5 kilograms of maize are required to produce 90kg of sifted maize thus 112. 5 *28 = Kshs.3150

Cost of Milling – (Kshs per kg.) 112.5 kg * Kshs. 5 =Kshs. 562.50

Cost of packaging - (Kshs. 48 per bag) – Kshs.48

Packets – (45 packets @ Kshs per packet) - Kshs.270

Cost of Distribution – Kshs. 2 per kg * 90 = Kshs.180


Sack (Kshs.)

3150+562.50 + 48 + 180= 3940.50

Cost per Kg - 3940.50/90 = 39

Average Retail Price in January 2015 – Kshs. 43 / kg

Packet (Kshs.)

3150+562.50+270+180 = 4162.50

Cost per Kg – 4162.50/90 = 46.25

Mark Up.

The industry mark up along the distribution chain ranges between 7% & 10 %. This means in this example you are making an average of at 10% you will be making Kshs.394 if in bags and Kshs. 416.50 per 90kgs if in packets.

Margins will be higher if say you had sourced the maize cheaply, stocked then sold when prices are higher.

Prices are also determined by the market forces within a region. For instance if in Embu there are many millers as compared to Nyeri then prices in the former will be higher. The bigger millers have established distribution networks which help keep their transport costs per unit low.

Factor miscellaneous costs of Kshs.50 to Kshs.100 per 90kg bag.

Average Sales in a Month of a small miller – 90 Tonnes

Average Breakeven Point – 1.6 years.

The break even will also be determined by your efficiencies, distribution, marketing and supplies.


The above are working figures based on a particular example

Prices of maize fluctuate a lot; the figure above is just a working figure. Of course if prices are higher that of the end product will also rise. If lower then prices are lower or margins are higher. A small miller who has to go the extra mile to source the maize could incur extra cost of transport which eats into the margins.

Don’t under price despite the competition or market pressure. Make sure you are making profit

however small in every consignment you sell. The easiest way to price is to calculate the production costs then add a percentage. The challenge is that your price will be influenced by

those of competitors of which you don’t have much control over.

Cost Control

The main costs in milling are raw materials, labor and power charges.

Raw Materials

You can manage the cost of maize by purchasing during harvest times when prices are low, using market intelligence to compare prices in different regions to find the best and managing the buying costs like transport.

Power Consumption can be controlled by:

Ensuring that the grain is milled at its optimum moisture content to maximize the efficiency of the mill.

Ensuring that the mill is correctly set up and regularly maintained

Ensuring that machinery is switched off when not in use

Minimizing re-processing due to damaged or broken grains.

The profitability of a mill also depends on the productivity of the workers and equipment. Wages and depreciation on machinery are fixed costs, and these cannot be covered by sales income if a mill operates at a small percentage of its capacity.

Thus Costs will be higher if working below capacity. You still pay the same rent and you still have to pay the salaries.

Proper production planning to maximize output for a given number of workers and preventative maintenance to reduce machine downtime

Cash flow can be managed by keeping control over the number of debtors and the amount of money that they owe a business, and by arranging with suppliers to have a larger credit limit or a longer period before payment.

Financial Mistakes to Avoid

Treating profits as your personal income, instead of paying themselves a salary (the profits belong to the business and should be used to develop it)

Failing to cost and price products correctly, so you do not make a profit

Poor record keeping, so you do not know if they are operating profitably

Over-spending or having a loan that is not repayable

Having too many debtors or creditors.

Cost of packaging is tied to the unit costs. The more units you order the lower the cost. It also depends on the packaging company.

General Observation

Of the retail price of sifted maize flour on average 45% goes to the farmer, 14% to the traders and 40% to the retailer and miller. The 40% is minus the production and marketing costs, which range between 25% to 30%.

Sample Production Costs of A Miller

Type of Expenditure

% of Total Production Costs



Raw materials




Rent / Utilities/ Labor




Some Financial Tips

If you don’t have much capital start small

Do not take money for personal use out of the daily takings, have an allowance instead

Don’t try to undercut others by offering lowest prices, this is very dangerous and most, if not all, such people soon go out of business. First try work on your distribution.

Have sufficient working capital to buy grain during harvest.

Make weekly deposits for utilities so that bills don’t overwhelm you when they come in

Pay your taxes

Be in the good books of your bankers (no matter how small you are) and be open to them, don’t tell them half-truths

Cost your products whenever there are changes in raw materials or other areas of production. This will help you decide when you need to raise the price.

Shelf Life

Even in the most efficient of mills flour could take some time before it gets to the consumers. Thus shelf life is an important consideration in the marketing of flour. Shelf life of maize flour depends on the:

-Fat content of the flour

-Moisture content of the maize


-Other contaminants in the maize or flour

The fat content is determined largely by the extraction. The germ contains the largest amount of fat in maize, and if it’s not fully extracted then the shelf life will be lower.

The average shelf life of sifted maize flour in the market is 4 months. This depends on the extraction rate. Thus the shelf life could be lower depending on the extraction rate of the miller. Kenya Bureau of Standards insists on at least 3 months shelf life for sifted maize flour.

Whole meal will last for an average of 5 weeks. The exact duration which the flour will last will also depend on the storage conditions. The shelf life will be shorter if the flour is stored in humid and high temperature conditions.

If you mill maize which is not properly dried the resultant flour will have a shorter shelf life and have a sour taste.


The government has been trying to encourage the fortification of sifted maize flour with essential vitamins. Presently fortification is optional but there are plans to make it compulsory in 2015. Only 16 of the big brands are fortifying their flour. Fortifying give you an advantage but you will require hire capital as you will need a micro dowser and a blending silo. `

By Products

A milling process produces germ and bran as by products. These are used to make animal feeds. Most small millers specialize in milling flour and don’t engage in animal feed manufacture. This is so as to not spread thin before consolidating the market. The basic equipment to make animal feeds is a mixer. This will be subject of another guide. You can sell the germ and bran to animal feed companies. Prices range from Kshs. 50 to Ksh.80 per kilogram. Have a proper system to dispose the byproducts so that they don’t accumulate and become a nuisance.

Consumer Behavior

On average consumers purchase flour to last them a week.

Higher income consumers purchase flour to last an average of 2 weeks.

Purchases are highest in the last and first week of the month.

2 kilograms is the most common quantity if in packets

For whole meal and sifted flour repackaged by retailers 1 kilogram is the most common weight.

For sifted or whole meal repackaged by retailers who have purchased in wholesale sacks from millers consumers have no brand preferences. Price and convenience are the key influencers in the purchase decision. This emphasizes the importance of distribution for the miller.

For flour in packaged in packets advertising and branding influence consumer purchase decisions.

Average flour consumption per adult in urban centers – 1.5 kilograms per week

Women make 75% of maize flour purchases

Consumption of maize flour decreases as income increases.

Consumption of sifted maize increased with income. (Consumption of whole meal decreases as income increases)

Reasons for consuming Sifted Maize Flour versus Whole meal Flour


Sifted (%)

Whole Meal (%)

Relatively Inexpensive



Convenience when






Easy to Cook



More Nutritious



Better Taste



Easy to digest



Sifted flour is preferred by consumers because of appearance, ease of preparation, ease of digestion and reasons of hygiene.

Generally consumers of sifted maize flour are aware that whole meal is richer in terms of nutrients but it does not seem to bother them.

The lower the income the more price sensitive consumers are.

Among the lower income earners consumption of sifted maize flour is seen as a sign of modernity.

Shelf life is not a crucial consideration when purchasing sifted maize flour. Though consumers will look to see the expiry date of the flour, they don’t go round looking comparing expiry dates of different flours to see which lasts long. Largely this is because they purchase flour for short term consumption, and if it’s within reasonable range then that is enough. Still consumers will prefer relatively fresh flour as opposed to one that has been in the shelves for long.

Among the middle class if the price of sifted maize increases they do not shift to whole meal even if it’s relatively cheaper, rather they shift to other alternatives like rice. Partly this is because of the relatively dim view they have of the whole meal but also it’s difficult to access the whole meal in their residential areas. There are no posho mills or shops selling hygienically prepared and packaged whole meal.

If the price of whole meal flour increase while that of sifted maize remains constant, lower income groups are more likely to shift to sifted flour. And if the price of sifted flour is high they will seek other alternatives.

The largest market for sifted maize flour is in urban areas. Even in areas where maize production is low consumers prefer to buy maize and take to a posho mill rather than purchase sifted flour in packets.

Production Planning, Management and Miscellaneous Tips

This means workers who are not just good in one role but can comfortably perform a variety of duties. This will save you costs of extra manpower. But as the business grows then it’s better to let the workers specialize in particular roles so as to increase efficiency.

It’s important to plan for production. Think about what you need and where to get it. Make sure you have adequate supplies of maize and packaging materials. Think about possible sources of both short term and long term finances. Know who to call or what to do in case the machines break down.

Poor production planning leads to the mill operating below capacity. When this is the case fixed costs become a big part of production costs. The flour produced is below expected levels, customers get disappointed and income reduces. If you are on credit then you start straining to pay your debts, your suppliers stop selling to you. Finally your products become expensive and uncompetitive and naturally business suffers negatively.

Questions To Ask

Are enough raw materials available for next week’s production and are they of the correct quality?

Is the equipment ready for the expected production levels?

Are there enough packaging materials available?

Are trained workers going to be available, or should extra workers be hired for the week?


Based On Expected Sales



Questions to ask

Are there enough

Are there enough

Are sufficient

Is the


raw materials and





ingredients to





meet production









Actions to take if

Place orders with

Place orders with


Service the





equipment or

answer to the



staff or offer


question is ‘no’




an engineer to





repair it. Order





spare parts from






Actions to take

Develop good

Develop good

Have a

Have a contract

in the

relationships with

relationships with

register of

with an

longer term



trained and

engineer or


so that they will

so that they will




supply orders on

supply orders on

staff to call on

supplier and


time or

time or


develop a


at short notice

at short notice

short notice






relationship so










they respond






Keep good sales records. Keenly observe the market trends, competitors and also national economy policies which affect inflation, import duties and other factors that will affect your maize milling business. Locate good sources of quality maize

-Develop good relationships with suppliers

-Reduce costs associated with buying activities for instance by having suppliers deliver to your premises

-Recruit reliable and professional staff to ensure uniform products and high productivity

-Have at least some staff with experience and not all newcomers

-You can recruit through word of mouth , or advertisements on the internet or newspapers

-Offer fair salaries so as to motivate the staff. Pay overtime.

-Honesty should be a consideration when you are recruiting

-Recruit friends and relatives only if they are professional and reliable

-For greater efficiency have an activity chart for the staff which clearly defines what they should be doing and at what time.

-Properly train the staff

-Interact and listen to staff

-Offer non monetary benefits like lunch breaks, protective clothing, coffee / tea, discounts on products, t-shirts and motivating words which don’t cost any money.

Take good care of your equipment to avoid breakdowns

-In addition to the suppliers who sold you equipment have a reliable technician who can repair your equipment within short notice.

Utilize staff and machinery in the best way possible to ensure maximum productivity

Productivity can be improved by:

Improved efficiency (e.g. lowering operating costs, reducing idle machine time and reducing waste)

Better procedures for buying materials

Reducing losses of raw materials

Improved decision-making and communication

increased output by minimizing equipment breakdowns and reducing other causes of lost time

Improved organization, better staff morale and co-operation.

In order to assess whether improvements to productivity are taking place, it is necessary to measure and record consumption of materials, amount of labor used etc. These figures can then be used to calculate for example:

Amount of packaging per kg of product

Labor costs per kg product

Energy used per kg product etc.

Productivity can also be improved by changing the design of the product or the layout of the production facilities, changing raw materials suppliers or work organization. Improving efficiency in a process involves reducing wastage of time, materials and space, or unnecessary movement of foods, staff or equipment.

Motivated staff will go a long way to increasing efficiency by reducing wastage. The layout of a production unit is another factor that can affect efficiency. When deciding where to fix permanent machinery, care should be taken to plan the layout to allow for a flow of product through the process, sufficient space to avoid congestion and to ensure safe operations.


Selected Packaging Companies.

These are some of the more established companies but there are tens of others in the market.









Paperbags Limited







Physical Location

Funzi Road, Industrial Area, Nairobi






+254 (20) 559491 / 559060 / 553051 / 555429





0723 938777 / 0734 579070






+254 (20) 555289 / 531678






PO Box 18167, Nairobi - 00500, Kenya



Dune Packaging Limited

Dune Packaging Limited






Physical Address: Station Road, Thika





(0) 20 3503350/3503351/3503352/3503353





0 713 595595, + 254 (0) 735 595595






Fax - 254 (0) 20 3561100






[email protected]








P.O Box 46395






United Bag

00100 GPO







Magana Lane, Off Magana Road













Email: [email protected]






Telephone: 020-3562567/8






Mobile: 0725-545520









Nampack Kenya Limited

Postal address:







PO Box 109 Thika, Kenya, 01000






Tel: +254 20 236 5101/2






Fax: +254 20 236 5103







PolySack Limited

PolySack Limited







P O Box 1272







Thika Kenya




















Telephone:+ 254-20-2623412






FAX: + 254-20-2062509






E-mail: [email protected]







TexPlast Industries Ltd

TexPlast Industries Ltd






Tel: +254-20-2017683/4/5






Fax: +254-20-2017682






Email: [email protected] or [email protected]




















Head Office


P.O. Box 11349 (00100) Nairobi


Office Phone: 0732 989 006


020 2587 116


Sigona 66,


Nakuru – Nairobi Highway


Email:[email protected]




[email protected]




[email protected]

Allpack Industries


Selected Millers Members of the Cereal Millers Association

(Source NCPB, CMA, Crack A Business Kenya)














Bags of
















Flour /






































P.O. Box








87074 80100
































mobile: +254-
































Ngano House,
















Street. P.O.








Box 30096-








00100, Nairobi














Mbsa Grain








Milling Co.
































Flour Mills


































Area. P.O.








Box 17955








00500 Nairobi
















Runyenjes Rd,








Off Nanyuki
























Area. P.O. Box








17630 00500
























Thika Off








Garissa Road,








Block 5/551.








P.O. Box








































Lane, Off








Lumumba Rd.
















Box 42160
































Iten Road.






Grains Ltd


Near Kipchoge



Jahazi &





Stadium. P.O.








Box 6284








30100 Eldoret
























Eldoret Sirikwa






Milling Co.


Street. P.O.








Box 8216,














Unga Ltd,
















Uzuri Ltd


Off Mogadishu








Rd. Industrial








Area. P.O.








Box 53366-








00200 Nairobi






TSS Group


Dare salaam
















Shimanzi. P.O.





































































Kisumu Obote


















Area, Kisumu.






P.O. Box 620






40100 Kisumu


































Flour Mills














Area. P.O.Box






46395 00100






GPO Nairobi












Sabuni Road.






P.O. Box 9494




























Flour Mills
































Old Airport


















P.O. Box






78284, Nairobi

































Safari &





































Small Scale Millers











Bags/ 24 Hours

MT/ Day





Cateress Milling
























Meru Central




Afya Rahisi




























Aberdare Maize




Aberdare MPA




Milling Ltd
























Investments Ltd
















Beada Millers








Besoko Millers
















































Kapari Ltd




Chapa Royo












Family Flour Ltd




Family Flour












Midland Millers




Hybrid Swara












Joli Millers
















Kalwa Maize
























Centaur Milling
























Organic Virgin
















Kifaru Maize
























Umoja Flour Mills




Lucky Star












Mama Millers








Maycorn Kenya
























































Msafiri Flours Ltd
















AUM Maize
























Meru Pendo
























Kwest Millers
















Batian Grain
























Sava Industries
















Katex Enterprises
















Pan African Grain
























Sunrise Grain
























Njora Food
























Sweet Meal Flour




Sweet Meal












Valley Posho




Valley Star




















Mabrouk Flour
























Daiga Millers




Rift Valley












Uchumi Grain
























Summer Millers
























Snow Maize
























Gakenge Maize








































Nanyuki Grain
























Sabco Millers
















Embu Food
























Nicely Nicely




Nicey Nicey




















Glory Posho
























Subukia Millers &
























Faru Flours
























Jamhuri Grain
























Kirima Millers
















Bima Grain Millers




















Wamunyu Star




Garissa Maize
















Queens Food
























FAJ Safeway




Insta Health












Royal Maize
























Pripal Millers




Kep Unga












Amos Ndungu
















Jikaze Maize
















Miriru Millers 5
















Crown Foods








Thika Grain




























Umande Millers





Gilgil Grain Millers





Migosi Cosmos





Victor Posho





Riconero Agency





Ng'ang'a Posho










Belgut Enterprises





Gatakari Millers



Bora Bora


Mums General










Milimani Stores





Sifa Millers 35










Proctor Allan EA










Bemar Ltd





Muki Maize










Karanda Millers










National Enviroment Management Authority (NEMA)

Popo Road, South C, off Mombasa Road National Environment Management Authority, P.O.BOX 67839-00200,


Fax :+( 254)-020-6008997 The Tel nos. are:

020-2101370, 020-2183718, 020-2307281, 020-2103696 Mobile: 0724 253398, 0735 013046.

Kenya Bureau Of Standards (KEBS)

Landline : (+ 254 20)6948000

Mobile :

+ 254722202137 / 8

+ 254734600471 / 2

PVoC : + 254724255242

Email : [email protected]

Fax : (+254 20) 6948575

Nutrient composition of different types of maize meal


Whole meal

Bolted meal

De-germed meal



(partly de-






Moisture (percentage)




Calories per 100 gr




Protein (percentage)




Fat (percentage)


Variable (>2)


Carbohydrates (percentage) 73.4

Variable (>74)


Fiber (percentage)




Ash (percentage)




Calcium (mg per 100 gr)




Iron (mg per 100 gr)




Thiamine (mg per 100 gr)




Niacin (mg per 100 gr)




Riboflavin (mg per 100 gr)




Source TA

The Science of Maize Seeds (TA)

Cereal grains contain a complete embryo and all the structural components and enzyme systems needed for the growth of a new plant.

Grains have four main parts: the tip cap which is the point of attachment to the stem or cob, The bran or protective outer covering, the germ or embryo which forms the new plant, and the endosperm – the reservoir of starch needed to support germination.

It is the starchy endosperm that is used to make flour. The proportions of other parts of the grain that are retained in the flour are determined by the extraction rate.

Grain storage and aflatoxins

After harvesting, cereals are normally dried in the field on earthen or concrete slabs, on roofs of buildings or on roads, which can result in contamination by insects, dirt, animal excreta etc.

Inadequate capital and poor financial returns prevent farmers from investing in crop driers to minimize contamination.

However, other low cost techniques, such as drying grain on raised platforms or covering with netting, provide adequate methods of reducing contamination by insects and birds. If farmers sell inadequately dried crops, there is a significant risk of mould growth, particularly in crops

such as maize that are not shelled before drying. The mould grows out of sight under the shell and contaminates the grains. Certain species of moulds produce a range of poisons, collectively known as mycotoxins in cereals.

Aflatoxins are the most common of these. The symptoms of poisoning include kidney and liver damage, cancer and bleeding in the brain and lungs. Mycotoxin contamination can be prevented if crops are dried sufficiently to prevent mould growth and then stored in structures that keep them dry.

Safety Tips

Do not allow customers, children, visitors or animals into the mill or bakery building. Ensure that only trained staff enters the premises and operate the machines.

Prevent staff wearing any loose clothing (e.g. ties, un-buttoned or long-sleeved shirts) that could become caught in running machines. Provide them with overalls.

Do not allow staff to start a machine unless they know how to stop it. Only one person should operate a machine at any one time.

Make the layout of machinery logical, and leave sufficient space around it so that there are few chances for operators to get in each other’s way.

Do not try to attract operators’ attention by touching or calling them from behind if they are using a machine. Always speak to them from the front, or wait until they have finished what they are doing.

Train staff to be familiar with potential hazards (e.g. potentially dangerous machines or hot surfaces), and make sure they know what to do in the event of an accident. Use charts hung on the wall near each machine to show safety precautions.

Ensure that guards are fitted and in place over all moving parts of a machine and alert staff to machines that appear to be standing still when running at high speed.

Never allow staff to clean, adjust or lean over moving machinery and do not allow them to leave a running machine unattended.

Encourage operators to report any loose parts on a machine.

Do not allow staff to work with equipment that is defective. Put a note on any machine that is under repair saying ‘DO NOT TOUCH’.

Do not allow anyone to touch inside electric equipment while it is connected.

Regularly check the cords of electrical appliances to ensure that outside covers are not broken and wires are not exposed.

Prevent staff from running inside a building. Immediately clean up any water, oil or grease on the floor using sawdust, sand, husks etc.

Ensure that staff who work in dusty conditions protect their mouth and nose with a mask. Clean the building each day.

Have a first aid box containing sterilized dressings, cotton wool, adhesive plasters and bandages. In

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