If you doubled your order to your key suppliers tomorrow, how many of them could afford to deliver it?
Faith Kaithia, who is a Senior Manager, Commercial Partnerships at agri-fintwch firm Avenews Kenya, says this year has made that question real for many of Kenya’s food buyers.
As milk and grain supplies tightened, she points out processors and retailers competed harder for reliable volumes.
In Nyeri for example, one dairy raised the price it pays for milk from Sh42 to Sh50 a litre and drew suppliers from its rivals.
When supply is tight, the most valuable supplier is not always the cheapest. It is the one that can still deliver, on time and in full.
Increasingly, that depends on cash. Payment terms move the cash gap down the chain
Most large buyers pay on terms. Thirty to 60 days is normal, and it makes sense. It protects the buyer’s cash and matches its sales cycle. But the supplier still has to buy stock, pay for transport and cover wages before it is paid. The bigger the order, the more cash it must find.
When a supplier runs short, the buyer feels it. Volumes drop. Deliveries slip. The supplier who used to say yes to a rush order starts saying “next week”.
