Latest / Solving the World's Greatest Problems / Episode 13 - Why He Built His Factory in Kenya, Not Europe | David Payne

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Episode 13 - Why He Built His Factory in Kenya, Not Europe | David Payne · Solving the World's Greatest Problems

0:00
SPEAKER_01: Historically, Kenya used to grow about 300,000 acres of pyrethum, and farmers can make anywhere from three times to 15 times more money going this crop versus an alternative crop in the same land area.
0:11
SPEAKER_01: Wow, like what is this thing?
0:12
SPEAKER_01: What is this flower, right?
0:13
SPEAKER_01: And turns out it used to be the third largest export behind coffee and tea.
0:23
SPEAKER_00: Solving the world's greatest problems is an audacious proposal.
0:26
SPEAKER_00: And yet no generation has more talent, capital, or tools than ours.
0:32
SPEAKER_00: The time has come for entrepreneurs, investors, givers, ministry leaders to reclaim the church's ancient calling.
0:43
SPEAKER_00: The scale of brokenness is too big for us to do this in silos.
0:49
SPEAKER_00: Under its power, for his glory, together.
0:53
SPEAKER_00: Welcome to the Solving the World's Greatest Problems Podcast.
1:00
SPEAKER_00: For decades, Africa has supplied the ingredient, and then someone else comes in and captures the value.
1:06
SPEAKER_00: In Kenya, there's a flower called pyrethrum, a natural pesticide, once the country's third largest export behind coffee and tea.
1:16
SPEAKER_00: And now David Payne is helping this natural resource make its way back into the country.
1:22
SPEAKER_00: He and his team at Contegra have put the factory where the flower actually grows.
1:27
SPEAKER_00: They've built the first purpose-built hydrocarbon extraction facility in Africa in three decades and signed 20,000 smallholder farmers who now earn 3 to 15 times what they made on the same land.
1:42
SPEAKER_00: Let's have a talk with David Payne.
1:52
SPEAKER_01: Cacao is then shipped to Switzerland for companies like Lint or Nestle to go through a confectionery to make incredible chocolate, chocolate bars, chocolate products.
2:05
SPEAKER_01: Crazy idea.
2:06
SPEAKER_01: What if we push that confectionery factory where the actual raw material is grown?
2:13
SPEAKER_01: Yeah, crazy thought, right?
2:15
SPEAKER_01: Crazy thought for a creative enterprise value creation.
2:18
SPEAKER_01: Just everything you just mentioned.
2:20
SPEAKER_01: So that's exactly what we've tried to do at Contegra is to put that confectionery in Kenya for value addition.
2:28
SPEAKER_01: What you do when you do that is you reverse the trade imbalance because you're allowed to export that product, bring a hard currency in, while at the same time you're developing next level generation leaders that can run and grow and lead the country.
2:44
SPEAKER_01: And if you can do that at scale, you're shifting the GDP as you move that business.
2:51
SPEAKER_05: It's really exciting.
2:52
SPEAKER_05: It's exciting, and it's also like one of those things when you hear that story of chocolate or whether it be coffee or anything like that, we look at that and we're like, why hasn't this been the case sooner?
3:03
SPEAKER_05: But what do you think has been that barrier?
3:06
SPEAKER_05: What's been the reason why that that weird loop has taken place?
3:11
SPEAKER_01: I think it's difficult as a Westerner to understand the dynamics of an operating environment in an African or East African or Kenyan context.
3:25
SPEAKER_01: And the way that I think about it is almost like a sniper line.
3:28
SPEAKER_01: When a sniper takes a shot, I don't know if you know this, but the bullet actually sways due to cross currents in the wind.
3:36
SPEAKER_01: We know the target, we know what we're going after, but you actually can't see what's manipulating that bullet.
3:42
SPEAKER_01: So it's the same thing kind of in business as we operate.
3:46
SPEAKER_01: We know where we're trying to go.
3:47
SPEAKER_01: We want to infuse kingdom-based principles and how we operate with great integrity, giving God the glory, of course.
3:55
SPEAKER_01: At the same time, there's sometimes political nuance or cultural nuance that infuses in there that you can't see, but you know where you're trying to get to.
4:04
SPEAKER_01: And it's really hard to predict those cross currents as they uh come to fruition.
4:09
SPEAKER_01: Let's say it that way.
4:10
SPEAKER_01: And I think uh as we try to imbue Western principles into that operating environment, sometimes those are at odds with one another.
4:19
SPEAKER_01: And you have to learn how to dance with those with great integrity.
4:23
SPEAKER_01: It's a challenge.
4:24
SPEAKER_05: Great perspective.
4:25
SPEAKER_05: Well, take us back to the beginning for those people that are new and hearing this story for the first time.
4:30
SPEAKER_05: Who are you?
4:30
SPEAKER_05: Where do you come from?
4:31
SPEAKER_05: What's the story?
4:33
SPEAKER_01: Um, so my background, I'm uh hokey.
4:35
SPEAKER_01: I went to Virginia Tech, a finance guy by trade.
4:38
SPEAKER_01: Uh I ultimately landed uh an interesting job at Pricewaterhouse Cooper's doing assurance business advisory group.
4:45
SPEAKER_01: I ultimately started structuring bonds with a company called Freddie Mac.
4:49
SPEAKER_01: I've heard of them.
4:50
SPEAKER_01: Yeah.
4:50
SPEAKER_01: Ultimately started uh pricing bonds, got pulled up to Wall Street with Deutsche Bank.
4:55
SPEAKER_01: So I was an agency CMO trader.
4:57
SPEAKER_01: So I helped cause a lot of the 07 housing crisis crunch, for which I apologize.
5:03
SPEAKER_01: Uh which turned into the 08 meltdown as well.
5:06
SPEAKER_05: This is a first rush for somebody to say, I'm responsible for this.
5:09
SPEAKER_05: I don't know if I want to own that responsibility.
5:11
SPEAKER_05: I was gonna say that's a great bio line.
5:14
SPEAKER_01: At the same time, um, well, my head trader said, Hey Dave, for every year that you're here, you have to do two years of therapy.
5:24
SPEAKER_01: I don't know if God designed us to be like that, right?
5:28
SPEAKER_01: Psalm 144.4.
5:29
SPEAKER_01: We're here for but a breath.
5:30
SPEAKER_01: What are we doing with that breath?
5:31
SPEAKER_01: Do I really want to be doing therapy with that breath?
5:33
SPEAKER_01: Is that the way God wanted it?
5:35
SPEAKER_01: I don't think so.
5:36
SPEAKER_01: So ultimately ended up leaving New York.
5:39
SPEAKER_01: Uh I landed at a FinTech SaaS company, software as a service, scaled the company and uh sold it to Carlisle Group.
5:47
SPEAKER_01: And then you get into this space of do I want to make the rich richer or is there value addition that I can help out around the world?
5:56
SPEAKER_01: I started doing mission work in Kenya and in Africa in 2003, it was my first trip.
6:01
SPEAKER_01: I was on a medical mission trip.
6:03
SPEAKER_01: I know nothing about medical.
6:05
SPEAKER_01: I'm like, hey, put me in calling.
6:09
SPEAKER_01: I just want to carry bags.
6:10
SPEAKER_01: I just want to help.
6:10
SPEAKER_01: I want to learn about a different culture, never been to Africa before.
6:14
SPEAKER_01: And you see rural poverty, you see urban poverty like you've never experienced.
6:18
SPEAKER_01: And then you try to understand when helping hurts, or like, why would God design this?
6:22
SPEAKER_01: What is my place in this?
6:24
SPEAKER_01: Do I do I just go back into talking about sports 24-7?
6:29
SPEAKER_01: Or is there something that I need to initiate or transform or be a part of?
6:34
SPEAKER_01: Um, so this leader who went on a mission trip out of McLean Bible Church um came across a video that said, May the fields be white with pyrethrum again as they went to Kenya.
6:49
SPEAKER_01: And understanding, wow, like what is this thing?
6:54
SPEAKER_01: What is this flower, right?
6:55
SPEAKER_01: And turns out it used to be the third largest export behind coffee and tea.
7:01
SPEAKER_01: And understood that it had really good pest management properties.
7:07
SPEAKER_01: And it used to be such a almost a billion-dollar industry within Kenya.
7:12
SPEAKER_01: So it was like, wow, like what happened to this thing, right?
7:15
SPEAKER_01: So synthetics came online uh in the 90s.
7:19
SPEAKER_01: And as you know, uh, if you produce something in a lab, it's cheaper, faster, stronger, quicker, yeah, uh, predictable from a supply chain standpoint.
7:29
SPEAKER_01: But you know, when we go into man-made molecules, what happens in this space is that uh bugs build up a resistance.
7:36
SPEAKER_01: So you need to spray more of it.
7:38
SPEAKER_01: But then that also infuses toxicity in the water supply and the air we breathe, water we drink, food we eat, animals that ingest.
7:47
SPEAKER_01: And so it's like, hey, how do we minimize that, right?
7:49
SPEAKER_01: So the pendulum went from natural to then man-made.
7:54
SPEAKER_01: And then now, as you see cancer rates skyrocketing, one in two people in their lifetime will have cancer.
7:59
SPEAKER_01: How do we help minimize that toxicity worldwide?
8:02
SPEAKER_01: And so that kind of chewed at me a little bit.
8:06
SPEAKER_01: Uh, but after that mission trip, uh, a business plan was developed, and I had a chance to review that business plan to potentially invest or understand or coach as they knew I had a heart for Africa.
8:14
SPEAKER_01: I've been to Africa many times on other short-term missions.
8:18
SPEAKER_01: And I was like, wow, this is really interesting.
8:21
SPEAKER_01: Uh, I've got some ideas.
8:22
SPEAKER_01: Let's not invest now.
8:24
SPEAKER_01: Let's let's see if we can maybe participate or advise or help coach.
8:29
SPEAKER_01: And uh had a chance to dig in a bit and fell in love with the business.
8:33
SPEAKER_01: And so what happened is we actually had some incredible favor.
8:37
SPEAKER_01: I don't know if you know the Brookings Institute.
8:39
SPEAKER_01: Yeah, of course.
8:39
SPEAKER_01: I went to an event on uh a re-election that Kenya had.
8:44
SPEAKER_01: And in the process of that, ran into the deputy ambassador to the United States from Kenya.
8:49
SPEAKER_01: And he was like, What are you doing as a Mizungu talking about Kenya?
8:54
SPEAKER_01: And I'm like, We're looking to get into the Pirethrum industry.
8:57
SPEAKER_01: And he's like, You're crazy.
8:59
SPEAKER_01: I'd love to learn more.
9:00
SPEAKER_01: And brought us to the DC US Kenyan Embassy, and we ended up connecting with the ambassador, and we did a fundraising event there, and we raised$1.3 million from people who said, Hey, I actually believe in you and a management team to go execute and see if you can get this crop to work.
9:19
SPEAKER_01: So, why is this crop important?
9:21
SPEAKER_01: Uh, it's a smallholder-based crop.
9:23
SPEAKER_01: So, smallholders have the opportunity to grow this instead of big, big farm, let's say it that way.
9:29
SPEAKER_01: And farmers can make anywhere from three times to 15 times more money growing this crop versus an alternative crop in the same land area.
9:36
SPEAKER_01: So, now as the Wall Street guy, you're like, wait a second, a farmer can make more money.
9:40
SPEAKER_01: Uh, they can do it sustainably.
9:43
SPEAKER_01: We can grow a skilled labor force that we can put that confectionery within Kenya, we can export that, reverse the trade imbalance, bring hard currency.
9:53
SPEAKER_01: It's international.
9:54
SPEAKER_01: The world needs it.
9:56
SPEAKER_01: And then it gets really personal here.
9:58
SPEAKER_01: But my dad has cancer, my mom has cancer, and my brother-in-law died of cancer 10 years ago at 40 years old.
10:05
SPEAKER_01: So yours truly has an extra gear here that said, hey, I think we can try to help minimize it.
10:10
SPEAKER_01: I'm not saying it's all due to synthetic pesticides or fertilizer, but there's something in that where it's like, hey, can we do this better?
10:17
SPEAKER_01: And we know this man's way versus God's way.
10:20
SPEAKER_01: God's way will always win long term.
10:22
SPEAKER_01: And if we can do that to create a profitable, sustainable, generational business, yeah, put me in, coach.
10:30
SPEAKER_05: Well said.
10:31
SPEAKER_05: You know, I think when people look at entrepreneurship, oftentimes there's like this cliche thing of like, hey, what's the problem that you're trying to solve?
10:38
SPEAKER_05: And it feels like, you know, again, your story is such a reminder of it's not a problem.
10:43
SPEAKER_05: Entrepreneurship is a daily new problem that you're solving.
10:48
SPEAKER_05: But like when you break this down, like what are the top kind of problems that you're looking to solve?
10:55
SPEAKER_05: Is it convincing people on the the the uh validity of the product itself?
11:01
SPEAKER_05: Is it convincing people of bringing this back in this industry?
11:05
SPEAKER_05: Is it can what what how would you stack rank the problems that you go after every morning?
11:11
SPEAKER_01: Yeah, I think keeping it in a broader perspective of who we are and what we're about is really important to allow us to get up in the morning, drink that coffee, and get going.
11:22
SPEAKER_01: Um, the purpose of our business is driving sustainable human flourishing.
11:26
SPEAKER_01: So, how are we doing that practically is what you're asking on a day-to-day level.
11:31
SPEAKER_01: I think as you try to minimize cancer and try to minimize disease worldwide, that's a really interesting thing to focus on.
11:39
SPEAKER_01: And I think it's a worthwhile thing to pursue.
11:43
SPEAKER_01: Well, at the same time, if you have an ability to support a least of the smallholder farmer to get quote unquote out of poverty and then pivot into a middle class society that's appreciated and have dignified, sustainable work, that's really exciting, right?
12:00
SPEAKER_01: It's really exciting.
12:01
SPEAKER_01: And when you get a chance, I call it the tribal smell, when you go visit a farmer for the first time and see the impact that you have as you create your business, uh, Brian McKenzie, my uh business partner, anytime that we fight or have an issue, uh we take a trip up country, and for some reason that problem just totally disappears when we look in a farmer's eyes to see what the business impact is.
12:23
SPEAKER_01: Yeah, if that makes sense.
12:24
SPEAKER_01: Yeah.
12:25
SPEAKER_01: I think on a longer, maybe a medium-term challenge is how do we balance farmers that grow an organic material with the capacity within our business of manufacturing?
12:37
SPEAKER_01: But then you also have to have regulatory approvals to sell the product worldwide.
12:41
SPEAKER_02: Yeah.
12:42
SPEAKER_01: But then also trying to meet market demand as people understand banning of neonicotinoids or organophosphates or cancer-causing to pivot to a more natural product, right?
12:52
SPEAKER_01: And so unfortunately, you can't do any of that out of sequence.
12:55
SPEAKER_01: You have to have enough farmers to keep the factory busy, to have regulatory approvals to then sell the product.
13:00
SPEAKER_02: Yeah.
13:00
SPEAKER_01: And unfortunately for us, if you overbuild or bring in more farmers, then you have to pay for flowers.
13:06
SPEAKER_01: You're not going to stop paying a farmer as they grow flowers.
13:09
SPEAKER_01: It's an organic, natural product.
13:11
SPEAKER_01: And if you get too many flowers coming in, but you don't have the off-taker market to sell into, you've got to balance that, right?
13:17
SPEAKER_01: So it's a really interesting equalizer.
13:18
SPEAKER_01: So I would say that keeps me up late at night trying to figure out how to balance that.
13:22
SPEAKER_05: When people hear the story and they hear this, they they probably have something in their mind, whether it's less about your business, but more about just the stereotypes of Africa.
13:30
SPEAKER_05: When you talk about plants and you talk about manufacturing, I don't, there's there's just a perception that people carry.
13:37
SPEAKER_05: But when you see the footage, when you see this and you walk into it, like it's something at an elite level, I would say.
13:45
SPEAKER_05: Just talk about the scope in terms of like what does it look like to build like top-tier manufacturing at this scale?
13:52
SPEAKER_01: So I would say I'm not a manufacturing expert.
13:55
SPEAKER_01: Uh, you always hear the phrase higher up.
13:58
SPEAKER_01: Try to recruit people that are stronger or more specialized than you are, and then hang on for the ride.
14:03
SPEAKER_01: We were very fortunate uh to hire the number one industrial chemical engineer at a Moy University within Kenya.
14:12
SPEAKER_01: Understanding coming from the tea factory or prior industry, leveraging that experience to optimize our factory production.
14:19
SPEAKER_01: Um, our CEO Brian McKenzie has an incredible manufacturing background.
14:25
SPEAKER_01: Uh, used to produce over 95% of the Rolls-Royce aircraft engine parts metallic.
14:31
SPEAKER_01: All right, took a company from 200 million to 1.1 billion, right?
14:35
SPEAKER_01: So as we recruit, and the Lord has given us favor to align with people that are experts and know what they're doing or have the capacity or the willingness to engage and be courageous.
14:47
SPEAKER_01: We are fortunate also to partner with really small uh college universities that are not really well known, like MIT, uh, so that could help work with mass balance calculations and other folks that have been in the industry since the 1960s.
15:01
SPEAKER_01: Yeah.
15:01
SPEAKER_01: But I will tell you, I've gotten lots of uh new gray hairs.
15:05
SPEAKER_01: Um I would recommend you don't build uh the first purpose-built hydrocarbon solvency extraction process in Africa in three decades in the middle of COVID.
15:15
SPEAKER_01: That was really painful.
15:17
SPEAKER_05: That was really painful.
15:18
SPEAKER_05: A unique time, a unique time, a degree of difficulty not recommended.
15:21
SPEAKER_01: Yeah.
15:23
SPEAKER_00: Trafficking, structural hunger, a billion people without the Bible in their language.
15:28
SPEAKER_00: These aren't unsolvable.
15:30
SPEAKER_00: They're just uncoordinated.
15:32
SPEAKER_00: At solving the world's greatest problems, we're a community of givers taking on the root causes of the world's deepest suffering, and we're taking them on together.
15:40
SPEAKER_00: We've identified more than 30 of the world's greatest problems, and the list keeps growing.
15:45
SPEAKER_00: We work alongside the entrepreneurs, investors, and ministry leaders already in the fight, and we fund the breakthroughs happening right now.
15:53
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15:54
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16:00
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16:04
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16:08
SPEAKER_00: Come join the fight and find your people.
16:11
SPEAKER_00: Learn more at solving.org.
16:13
SPEAKER_00: Under his power for his glory, together.
16:24
SPEAKER_05: When you get into building that, you get that scale.
16:27
SPEAKER_05: I think part of what's also unique about this story is when we think about like faith-driven investing or faith-driven entrepreneurship.
16:34
SPEAKER_05: I for whatever reason, I think the church, we've kind of been in our silo.
16:39
SPEAKER_05: We've been in this space where it's been uh we build it, we fund it, we kind of do these things.
16:44
SPEAKER_05: But I think what's beautiful a little bit about this story here is there's a lot of, you know, unexpected partnerships.
16:51
SPEAKER_05: And unexpected partnerships with people when it comes to financing that say, like, hey, listen, you might come from this faith, we might come from this country and this government perspective.
17:00
SPEAKER_05: But gosh, you know what?
17:02
SPEAKER_05: We share this mutual passion for human flourishing.
17:05
SPEAKER_05: Can you just talk about as you guys have raised financing from this, some of the ways that that's been partnered or levered up just in unexpected places?
17:16
SPEAKER_01: So raising funds, someone said even recently, like, uh, I'm a professional beggar, right?
17:23
SPEAKER_01: I I call it a professional rock flipper, right?
17:25
SPEAKER_01: Like you have to meet a lot of folks and understand what's under the rock.
17:29
SPEAKER_05: Yeah.
17:29
SPEAKER_01: Um, within that, one of the things that's interesting culturally is we would love to espouse to leverage Judeo-Christian ideals and operating a business with good integrity within Kenya.
17:44
SPEAKER_01: And in doing that, I think we were intelligent to partner with institutions that are called DFIs, development finance institutions.
17:53
SPEAKER_01: So we partnered with the United States Government Development Finance Company, DFC for short.
17:59
SPEAKER_01: Uh, they were very generous to provide us with a$10 million loan.
18:03
SPEAKER_01: And in that loan, that comes with perks of basically a perception that the US government is tangential to your business, which cause for cultural challenges, if you've heard of corruption before, that they kind of block that a bit, right?
18:22
SPEAKER_01: And so it's almost like you have a little moat around your business.
18:24
SPEAKER_01: Yeah.
18:25
SPEAKER_01: So I think that was a strategic alignment that, hey, we would love to connect uh to support smallholder farmers.
18:32
SPEAKER_01: We'd love to do things with good integrity, we'd love to espouse good US business practices or Western practices.
18:37
SPEAKER_01: And we can do that within a framework that protects us because of that backing from the DFI.
18:43
SPEAKER_01: We also received some investment out of Helsinki in Finland, uh, organization called FinFund.
18:49
SPEAKER_01: And what's interesting with uh their approach is one of the first things that came to the pro of our business was our management team.
18:56
SPEAKER_01: Our management team operates with a spirit of excellence.
19:00
SPEAKER_01: And in doing that, the phrase that I've always been coached in investing is 85% of an investor's willingness to depart capital to invest in something is confidence in the management team's ability to execute.
19:16
SPEAKER_03: Yeah.
19:16
SPEAKER_03: Yeah.
19:17
SPEAKER_01: If you can show and demonstrate a track record or a capacity or an eagerness or a passion for what you're doing, then let's jump in, right?
19:26
SPEAKER_01: I think personally, um, I don't know where you are in a prophetic word or hearing God's voice, but like God actually spoke to me to say you need to move to Kenya.
19:38
SPEAKER_01: And that's a crazy calling.
19:39
SPEAKER_01: And just so you know, I've never had that happen before.
19:42
SPEAKER_01: And I get goosebumps talking to you, but it's a really scary experience.
19:46
SPEAKER_01: God is authoritative, he's almighty, he's also loving, um, he's also supportive.
19:54
SPEAKER_01: And you have two options right there.
19:56
SPEAKER_01: I either accept it or I don't.
19:57
SPEAKER_01: Because I'm like, Lord, I, you know, I'd love to be a profitable business, even a positivity.
20:00
SPEAKER_01: We have a factory, we've got staff.
20:02
SPEAKER_03: Yeah.
20:03
SPEAKER_01: No, he's like, move to Kenya, right?
20:06
SPEAKER_01: And then, of course, you know, the second question is I gotta call my wife and say, with our four daughters, yeah, hey babe.
20:13
SPEAKER_05: Yeah, how does Nairobi sound?
20:15
SPEAKER_01: Yeah, God just kind of spoke to me to move to Kenya.
20:17
SPEAKER_01: What do you think?
20:18
SPEAKER_01: And you're like bracing for impact.
20:20
SPEAKER_01: And my wife was like, if he's for it, let's go.
20:23
SPEAKER_01: Right.
20:23
SPEAKER_01: And then if you get that confirmatory message, you want to give him the honor and say, Hey, uh, it's a sin of omission not to be obedient there.
20:31
SPEAKER_01: And so we've been trying to be obedient.
20:33
SPEAKER_05: It's such a beautiful story when you hear that, because I think that um we talk about this idea of like we want to be biblically based, we want to be informed by data, we want, but we want to be spirit-led.
20:43
SPEAKER_05: And that's messy to figure that out.
20:45
SPEAKER_05: But I think in all of that, I I love this commitment again that we want to be excellent, we want to be innovative.
20:51
SPEAKER_05: When you talk about the experiences that you've come from, some of the leadership team has come from, that like excellence matters.
20:57
SPEAKER_05: It gets the, you know, to stand before kings, to get the chance to share some of the story.
21:02
SPEAKER_05: There's some beautiful opportunities that what you see in that.
21:06
SPEAKER_05: But what I love is here you have unsuspecting typical partners of different ministries, different or not ministries, or organizations that pursue human flourishing and common good.
21:18
SPEAKER_05: You see government organizations, and at the center of that, you see God at work through a group of faithful men and women saying, okay, what does it look like to bring all that together?
21:27
SPEAKER_05: And I think that that says something of a word of encouragement to face-driven entrepreneurs globally to say, hey, if you do this with that level of excellence, like we don't want to compromise our why.
21:38
SPEAKER_05: But the people that will follow in behind this will be unsuspecting, uh, not unsuspecting, but uh atypical maybe partners.
21:48
SPEAKER_05: But what an opportunity it is to ch share the reason that really kind of drives you.
21:53
SPEAKER_05: And I think that's a beautiful thing for people to see.
21:55
SPEAKER_05: And so I want you to take us in a little bit when people hear smallholder farmer.
22:00
SPEAKER_05: Like most people in America, if I'm honest, don't know even what that means.
22:06
SPEAKER_01: A smallholder farmer is someone who has a farm that they grow food subsistence, right?
22:17
SPEAKER_01: Subsistent that's a hard word to say.
22:19
SPEAKER_01: Smallholder farmer is someone that grows food to support their family.
22:24
SPEAKER_01: And typically, our definition for a smallholder farmer is someone that has maybe an eighth of an acre to maybe up to five acres to grow food to provide for their family.
22:36
SPEAKER_01: In the pyrethrum space that we operate, you know, most of our farmers have basically an eighth of an acre to three acres that they're growing.
22:44
SPEAKER_01: What's really magical though is that a farmer can do one acre in pyrethrum, one acre in potatoes, and one acre in corn or maize, we call it, where we want to produce ugali, which is an infamous staple food from cornmeal that we eat in Kenya.
23:00
SPEAKER_01: And that one acre from pyrethrum of those three acres will provide over 90% of the cash flow for a farmer.
23:07
SPEAKER_01: So you can imagine we get the question like if you grow too much pyrethrum, are you cannibalizing the food supply in Kenya?
23:14
SPEAKER_01: No, not at all.
23:15
SPEAKER_01: Historically, Kenya used to grow about 300,000 acres of pyrethrum.
23:20
SPEAKER_01: Right now, uh we're growing north of 5,000 acres.
23:24
SPEAKER_01: 5,000, 300,000.
23:26
SPEAKER_01: There was lots of room to grow more land in that space.
23:31
SPEAKER_01: A smallholder farmer typically uh is challenged for water supply.
23:37
SPEAKER_01: Uh electricity can be difficult.
23:39
SPEAKER_01: Um housing could be a mud hut.
23:42
SPEAKER_01: Uh transportation form is going to be walking, maybe a motorcycle.
23:46
SPEAKER_01: We call them picky pickies in uh Kiso Healy.
23:50
SPEAKER_01: Um the incredible component of us running our business is that we find I think it's 94% of our farmers, as they make money through Pyrethrum, they invest in other income generating projects.
24:08
SPEAKER_01: So let's think about that for a second.
24:09
SPEAKER_01: Yeah.
24:10
SPEAKER_01: So if I'm making 3 to 15x, I don't know about you, but I would love to make three to 15x.
24:15
SPEAKER_01: That sounds great.
24:16
SPEAKER_01: But with that cash, what do I do with it?
24:19
SPEAKER_01: Yeah.
24:19
SPEAKER_01: So we're really intentional about training our farmers through biblical-based financial stewardship.
24:24
SPEAKER_01: So we partner with Crown Financial.
24:26
SPEAKER_01: It's a great partner.
24:26
SPEAKER_01: Yeah, right?
24:27
SPEAKER_03: Yeah.
24:27
SPEAKER_01: How do we educate what a budget is?
24:30
SPEAKER_01: What do we do with our money?
24:31
SPEAKER_01: Well, at the same time, we're partnering with Foundations for Farming based out of Zimbabwe to do regenerative organic agriculture practices God's way.
24:42
SPEAKER_01: So now if you think about it, not only pyrethrum, but the other crops I'm growing, I'm learning how to infuse biodiversity in our soil, water retention, right?
24:51
SPEAKER_01: And supporting minimization of toxicity.
24:54
SPEAKER_01: Now we're getting into that driving sustainable human flourishing at a smallholder level.
24:59
SPEAKER_01: Now what's interesting is communities enjoy competition.
25:05
SPEAKER_01: And if you're radically different as an individual farmer, other farmers will kind of bring you back down into the community.
25:12
SPEAKER_01: So the reverse is true.
25:13
SPEAKER_01: If we can get a community to rally around something, they can drive for betterment and then compete with other communities.
25:20
SPEAKER_01: So we usually share how much money we're paying communities, what uh quality of the pyrethrum flowers that they're selling, and share that information with other communities.
25:30
SPEAKER_01: So at a community level, you can compete with one another.
25:33
SPEAKER_01: This gets really interesting because a smallholder farmer doesn't have an ATM machine to go access banking or financial to provide for their family.
25:42
SPEAKER_01: So we've worked uh really hard to partner to create these things called village savings and loans associations.
25:49
SPEAKER_01: So a smallholder farmer isn't bankable.
25:52
SPEAKER_01: They don't have credit history, right?
25:53
SPEAKER_01: There's no credit score, there's no FICO score.
25:55
SPEAKER_01: So what we've done is we've grouped our farmers into groups of 15 to 25 and think of it like a table banking.
26:04
SPEAKER_01: Like we basically come together as a community, put a little money in.
26:07
SPEAKER_01: Let's say hypothetically, you know, one of your children, God forbid, has a medical issue.
26:12
SPEAKER_01: You can draw from that pool of assets and then pay interest back.
26:15
SPEAKER_01: But you have access to capital to provide for the urgent need that you have, right?
26:20
SPEAKER_01: And that's really special.
26:22
SPEAKER_01: And so our farmers have pushed in way more north of a million US dollar equivalent.
26:30
SPEAKER_01: And our default rate, I think, is less than 500 bucks.
26:34
SPEAKER_01: It's unbelievable.
26:36
SPEAKER_01: Unbelievable.
26:36
SPEAKER_01: Yeah.
26:37
SPEAKER_01: Right.
26:37
SPEAKER_01: And so if you do that at scale, having access to capital, again, crowds draw crowds.
26:44
SPEAKER_01: It allows for that cycle of money to transpire.
26:46
SPEAKER_01: And communities we've seen go from three butcher shops to 15 butcher shops, right?
26:52
SPEAKER_01: And they've pivoted from goat as the major source of protein to cow, right?
26:57
SPEAKER_01: Now all of a sudden you're having these positive deviance locations where it's like, hey, how do we scale that with other communities?
27:04
SPEAKER_01: Another thing that's interesting with our smallholder farmer partners is we actually have farmer relationship officers, which are almost like agronomists or community leaders that visit the farms and we use uh UNICEF's probability of poverty index tracking.
27:22
SPEAKER_01: So we actually geofence our farmers and we look at, hey, what's your starter amount for Pyrethrum?
27:27
SPEAKER_01: What's your potential amount within Pyrethrum?
27:30
SPEAKER_01: But what's your roof made out of?
27:31
SPEAKER_01: Do you have pots and pans?
27:32
SPEAKER_01: What's your electricity source?
27:34
SPEAKER_01: So we can actually see and track the community development at a smallholder level over time.
27:40
SPEAKER_01: That's incredible, right?
27:42
SPEAKER_05: I mean, it I don't know, and oftentimes we talk about some things, and some things can have good or bad baggage, like your nation builder, building nation, building communities.
27:50
SPEAKER_05: Like this really is that you're building multiple different layers of to it, of like, because you know, one set of flourishing can either be get, you know, more opportunity for flourishing or it can be a greatest opportunity for things to get derailed.
28:04
SPEAKER_05: I mean, if you talk about three to fifteen acts of an increase of income, how do you responsibly manage that?
28:09
SPEAKER_05: How do you responsibly steward that?
28:11
SPEAKER_05: How do you responsibly save that?
28:13
SPEAKER_05: And you see those kind of things, and you know, people might say, okay, the butcher going from a goat to a cow, what does that mean?
28:20
SPEAKER_05: But there's a lot of what that means in terms of nutrition, only a lot of what it means in the society and growth of what can happen there.
28:27
SPEAKER_05: Talk about the scale of this.
28:29
SPEAKER_05: Like how many smallholder farmers are there, and how many work with you guys?
28:41
SPEAKER_01: So the numbers that we saw is anywhere from 250,000 to 350,000 farmers used to grow pyrethrum in the 80s and 90s within Kenya.
28:53
SPEAKER_01: They used to produce over 80% of the world supply.
28:55
SPEAKER_01: Again, as I mentioned, this used to be the third largest export crop behind coffee and tea.
29:00
SPEAKER_01: So that's kind of where the capacity was of the country, given very, very high demand.
29:05
SPEAKER_01: Currently, we have over 5,000 active acres growing.
29:09
SPEAKER_01: And if you assume one farmer to one acre, about that active level growing.
29:15
SPEAKER_01: Now, if we have farmers that are eight third acre or whatever, so we've contracted about 20,000 contracted farmers currently with the potential to do several scores of thousands of farmers to dive into it.
29:30
SPEAKER_01: Now, the rate limiting step is you don't want to recruit too many farmers again, not having the off-taker or market demand on the other side.
29:37
SPEAKER_01: So for our business, we're seeking regulatory approval to ensure we can recruit more farmers to participate in the in the platform.
29:46
SPEAKER_05: When you talk about off-taking, give us a status check here.
29:49
SPEAKER_05: Where are the conversations, where's the market adoption happening?
29:53
SPEAKER_05: Where is it facing some of that resistance?
29:55
SPEAKER_01: Sure.
29:56
SPEAKER_01: So as anything is a dangerous, good labeled item, as it's a pesticide or it's killing insects, repelling as well.
30:08
SPEAKER_01: Country governments want to ensure whatever's being imported that does that type of killing is regulated.
30:15
SPEAKER_01: Makes perfect sense.
30:16
SPEAKER_01: It's almost like issuing a new drug, right, through the FDA, right?
30:19
SPEAKER_01: Like it's got to go through a lot of series of trials and testing.
30:22
SPEAKER_02: Yeah.
30:23
SPEAKER_01: What's unique about this molecule is it's been around for 2,000 years.
30:27
SPEAKER_01: The Egyptians used to use it.
30:29
SPEAKER_01: And so many governments around the world understand the molecule that we work with.
30:34
SPEAKER_01: What we have to do as an organization is to say, hey, if this is how the molecule is going to perform, when Cantergra produces that molecule, does it behave and act exactly like the molecule we expect it to perform?
30:47
SPEAKER_01: So that's called technical grade chemical equivalence.
30:51
SPEAKER_01: So as a business, we're looking to obtain technical grade chemical equivalents all across the world in every country that wants to leverage using this molecule.
30:59
SPEAKER_05: Where do you start?
31:00
SPEAKER_05: Do you start in the US?
31:02
SPEAKER_05: Do you start Europe?
31:03
SPEAKER_05: What's the best foothold?
31:04
SPEAKER_01: That's a great question.
31:05
SPEAKER_01: So we try to position the market between an unregulated market.
31:09
SPEAKER_01: So this could be an area that's a little bit quicker to get registration, uh, not as much rigor around testing, uh, speed of cash in, which you want right to provide for the business.
31:20
SPEAKER_01: At the same time, the larger markets are in highly regulated markets.
31:24
SPEAKER_01: So think the EU, the US.
31:26
SPEAKER_01: Yeah.
31:27
SPEAKER_01: So I don't know if we were glutton for punishment or uh trying to do the right thing, but we said, hey, let's go to the hardest place to get approved to prove that we have a world-class molecule, leverage that approval for grandfathering into other jurisdictions to sell into.
31:43
SPEAKER_01: So we chased after ECHA, which is the European Chemical Agency.
31:48
SPEAKER_01: They do the bio-cide space.
31:49
SPEAKER_01: So think the Western term would be more like uh home and garden, or think like hospital, hotel, restaurant usage of pest management.
31:58
SPEAKER_01: And it took us over two years to obtain that approval.
32:01
SPEAKER_01: Wow.
32:02
SPEAKER_01: So it's a lot of work.
32:03
SPEAKER_01: You have to do what's called a five-batch analysis, very technical for physical chemical properties of that molecule.
32:09
SPEAKER_01: But now we're one of six companies that have that approval.
32:12
SPEAKER_01: The next thing we did is we went to gain approval through ECHA, which is or sorry, through EFSA, which is the European Food Safety Authority, which supports crop spraying, agriculture, to make sure that um it doesn't harm us as humans as we ingest, right?
32:28
SPEAKER_01: So we took uh at least three and a half years to obtain that approval.
32:33
SPEAKER_02: Wow.
32:34
SPEAKER_01: I can tell you, as those approvals have come in, I start crying because the amount of lift to get to that approval from a Western standard is the hardest in the world.
32:44
SPEAKER_01: At the same time, as you obtain those approvals that allows us to recruit more farmers, educate them on biblical-based financial principles and regen agriculture, support our skilled staff to grow the capacity of our factory.
33:00
SPEAKER_01: Now we're putting more intellectual property within Kenya.
33:03
SPEAKER_05: Yeah.
33:03
SPEAKER_01: Right.
33:04
SPEAKER_01: And allowing Kenya to be a mainstay of producing an incredible molecule that helps minimize disease in the world.
33:12
SPEAKER_01: I mean, this is awesome.
33:13
SPEAKER_05: It is awesome.
33:14
SPEAKER_05: And when you think about that time frame of two and a half, three years, I mean, that's a that's a long time.
33:17
SPEAKER_05: I think somebody listening to this is gonna say, well, gosh, if there's been that much um growing happening, where has it gone up to this point?
33:26
SPEAKER_05: Has it been maybe more of domestic?
33:27
SPEAKER_05: Has it been on continent?
33:29
SPEAKER_05: Uh what has been before the approval has been granted, where has it been used?
33:35
SPEAKER_01: So really we like to build by our rent access.
33:38
SPEAKER_01: I think understanding the uses of the product is probably pretty important.
33:41
SPEAKER_01: So we talked about crop protection, we talked about uh biocide, which is like home and garden.
33:46
SPEAKER_01: It's also used in the pharmaceutical space.
33:48
SPEAKER_01: So think flea tick, life shampoo, et cetera.
33:51
SPEAKER_01: So I think if you've ever had an issue with your kids having lice, right, this product is really good for that.
33:56
SPEAKER_01: And so the idea is could we sell into other markets that had lower regulation hurdles that would facilitate sales?
34:02
SPEAKER_01: So yes, absolutely, starting with the local market, as you have the ability to produce and sell locally, that's great for near-term cash flow.
34:10
SPEAKER_01: What's a little unique about our business is the Kenyan government is amazing and created a export processing zone, which allows us basically to have a 10-year tax moratorium.
34:22
SPEAKER_01: We don't pay VAT or duty for that 10 years, which allows us to basically grow and scale the business.
34:29
SPEAKER_01: And it's really the Kenyan government saying, hey, let's get going to export product out, and we'll give you tax advantages with that.
34:36
SPEAKER_01: So we established an export processing zone facility, and we have what's called an 80-20 rule.
34:41
SPEAKER_01: We're we're allowed to sell 20% of our revenue locally while we build up the markets to sell internationally.
34:48
SPEAKER_01: So currently we export to six continents, north of 30 countries.
34:52
SPEAKER_01: And so it's taken some time to work through those regulatory registrations and sales channels to support the business growth.
35:00
SPEAKER_05: Amen.
35:00
SPEAKER_05: Well, as we come to a close here, where does this go?
35:03
SPEAKER_05: What's the hope and the dream of where you feel like this can go in the next few years?
35:08
SPEAKER_01: We've been so fortunate to recruit some of the best engineers and chemical engineers and electrical engineers and mechanical and civil in in Kenya.
35:20
SPEAKER_01: If you can imagine as you recruit that talent, you know the phrase crowds draw crowds.
35:24
SPEAKER_01: Yeah.
35:25
SPEAKER_01: As we recruit that talent, and they've been able to master something really difficult as a hydrocarbon solvency extraction, they're saying, what else can we do?
35:35
SPEAKER_01: So we're looking at expanding our extraction techniques that would allow us to horizontally expand based on other things that grow really well along the equator or in East Africa or Africa.
35:48
SPEAKER_01: Do the value addition just like that confectionery within Kenya, and then export that worldwide.
35:55
SPEAKER_01: So think cosmetics, think essential oils, think uh presses of other types of botanicals, right?
36:04
SPEAKER_01: So as you get into that space, it gets really exciting.
36:07
SPEAKER_01: Wow, there's a lot of work.
36:08
SPEAKER_01: Where you can recruit more farmers.
36:10
SPEAKER_01: You've created the supply chain, just expand it horizontally from recruitment of farmer, QA, logistics, um, to be the extraction gurus of Africa.
36:21
SPEAKER_01: That could be an incredible dream to go chase.
36:23
SPEAKER_05: Extraction gurus of Africa.
36:25
SPEAKER_05: Great domain name if that's not available.
36:28
SPEAKER_05: Maybe you've already got it, but that love that idea.
36:30
SPEAKER_05: Grateful for you.
36:31
SPEAKER_05: Thanks for spending time with us.
36:33
SPEAKER_01: Thanks, brother.
36:34
SPEAKER_01: Appreciate it.
36:34
SPEAKER_05: Well, friends, you know at the end of every episode, we like to leave you with this idea of just like, what does it look like to take action?
36:39
SPEAKER_05: We don't want this just to be a bunch of hype and conversation, but what does it look like for you to get in the game?
36:45
SPEAKER_05: And as faith-driven entrepreneurs, uh, God might have you in a place to build differently, to build a product that can be leveraged for some human flourishing in some incredible ways.
36:54
SPEAKER_05: But also, we want to challenge you as God owns your business.
36:57
SPEAKER_05: He also owns the fruit too.
36:59
SPEAKER_05: He owns the idea of whether you invest, whether you give, what does it look like to bring that biblical perspective to it?
37:06
SPEAKER_05: And so I would encourage you to check out some of the tools here on the Solving the World's Greatest Problems website.
37:10
SPEAKER_05: Check out Faith Driven Investor is also a great place to learn what it looks like to deploy capital, not with just a financial bottom line, but also with a kingdom bottom line of flourishing.
37:21
SPEAKER_05: And that both of those things can be true.
37:24
SPEAKER_05: And they can be true in the same opportunities that are in front of you there.
37:27
SPEAKER_05: So I'd encourage you to check those out.
37:29
SPEAKER_05: And we look forward to seeing you on the next episode.
37:32
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37:34
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37:38
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37:43
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37:47
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37:50
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37:52
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37:55
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37:59
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38:01
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38:04
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