SPECIAL REPORT : THE CONTRIBUTION OF (KALRO) TO THE BIG FOUR: THE CASE FOR AGRI-BUSINESS DEVELOPMENT
ISSUE ONE I JUNE 2018
KES 300, UGSH 8,000, TSH 5,000, FRW 2,500
INCREASING PRODUCTION THROUGH
TECHNOLOGY
PROMOTING AGRO-TECHNOLOGY TO ENHANCE FOOD SECURITY AND COMPETITIVENESS IN THE REGIONAL MARKET
Contents Introduction Editor-in-Chief Solomon Kyenze Staff Writers Afred Maluku Eric Kimani
Business Quote
3.
Editorial
4.
Expert Opinion
5.
Agri Technology
6.
i. How this mobile service is triggering a farming revolution
Commercial Director Eric Matheka Advertising & Business Development Staff Writers Eric Kariuki Christine Wangare Design & Production The ARCrayon Ltd
Special Report: Agri Business
9.
i. KALRO The BIG FOUR: The Case for Agri-business Development Agri Business Intaractive
15.
i. The role of modern farming practices in small-scale farming Agri Business Intaractive
17.
i. Former PS Mints Millions Growing Avocados ii. AFC invites farmers to apply for farm machinery loans iii. Solving human-natural resource conflict in Kenya
Administration Emily Wanjera
Agri Finance
22.
i. AFC pitches for increased income for rural based
Distribution Lasting Solutions
communities through PROFIT Program
Copyright © 2018 Agribusiness Today is a quarterly publication of Agpro Media House. All rights reserved. No part of this publication may be reproduced or transmitted in any form including photocopy, or any storage and retrieval system, without prior written permission from publishers. DISCLAIMER The views expressed in the articles herein are those of the authors and do not necessarily represent those of Agribusiness Today magazine. Neither Agpro Media House, its staff, nor contributors to this magazine shall be held liable in way for any loss or damage to business that might result from use of contents of this publication. We appreciate the fact that circumstances vary from one business to another, so we advocate that one seeks case specific professional assistance whenever necessary.
Agri Manufacturing
23.
i. Sweetening Kenya’s Future Horticulture
26.
i. Rwanda steps up investment in horticulture ii. Flower Industry in Kenya National News
29.
i. State of food security in East African region Agri Insurance
31.
i. The role of modern farming practices in small-scale farming
Also available at additional outlets. For further information on where you can find Agribusiness Today, Mitsumi Business Park, Muthithi Road. Westlands I M: +254 722 606 641 I T:+254 020 440 3180 B: 13904 - 00800, Nairobi, Kenya I Info@thearcrayon.com I W: thearcrayon.com
Business Quote
My Government aspires to transform agriculture by processing over 50% of agro-products and crops, Government’s efforts to encourage farmers to adopt mechanisation has also seen the establishment of agricultural mechanisation stations in the last six months to offer agricultural machinery to farmers across the country at a price within their reach. President Uhuru Kenyatta
Agribusiness Today Magazine No. 3
Editorial Welcome to this inaugural issue of Agribusiness Today. Agribusiness Today is Kenya’s premier agriculture magazine, which provides the updates of news and analysis on topical issues of national and international importance in agriculture. The magazine also Solomon Kyenze analyses sectoral issues Chief Editor involving biotechnology, farm mechanization, seeds, fertilizers, farm credit, crop protection, horticulture, animal husbandry, food processing, agribusiness, research and extension, marketing, high-tech agriculture etc. The Kenyan agricultural industry has a reputation for being an industry best practice producer and is a major player in many of the regional agricultural commodity markets.The competitive advantage of the industry has been achieved in (often) challenging and adverse climatic conditions. Perhaps as a result of these hurdles, Kenyan top performing agro-producers are known for innovation and staying ahead of the game, in terms of continually striving for productivity growth and value enhancement in their agricultural assets. Agribusiness Today is a content rich and information driven magazine with its unique style of presentation. The magazine provides comprehensive information on the market and industry, economic and policy issues, scientific advances, new agri-input products, new technologies and latest news and analysis on the developments in agriculture. Agribusiness Today is a totally independent and progressive locally owned media business servicing the Kenyan Agribusiness industry as well as the larger East African regions of Uganda and Tanzania. We provide the most up to date information and advice to our readers and industry stakeholders, including dedicated players in the provision of seed and fertiliser inputs, as well as general Agri-merchandise sales and associated agronomy services, all with the aim of achieving the best possible outcomes for our clients, whatever their production system. Along with our network of quality info-resource providers, reliable logistics and marketing strategies, we are able to Agribusiness Today Magazine No. 4
provide our clients and readers with the latest solutions and advice, matched with quality, affordable products, when and wherever they’re required. Being a locally owned business, we understand and are in touch with our community, working alongside our clients to meet the challenges posed by environmental and economic factors in order to deliver the best outcome for their business. Agribusiness Today also seeks to partner in a long association with supporting local community groups and events, farming and otherwise, and above all, take pride in supporting the community that supports our initiatives. The Agribusiness Today Magazine exists in order to foster linkages among existing and potential agribusiness value chain actors and connects Kenya’s agricultural sector to the rest of the world. We therefore act as a catalyst to the development of Kenya’s agricultural sector. We inform and connect the local farming society in the agriculture sector, business persons, agriculture programs and projects with modern technologies, practices, ideas and materials hence increasing Kenya’s human capital in Agribusiness. We create a market place where deals are made on a monthly basis. This helps Kenyan farmers develop independent, vibrant and profitable agribusiness enterprises which lead to increase in investments in agriculture, create more wealth for enterprising Kenyans, create employment opportunities and increase in value agribusiness products that will compete in the international markets. Our life cycle approach to the Agribusiness class includes entry strategy, strategic agricultural portfolio development, best practice management of agricultural and farming operations and exit mechanisms to maximise returns. AGPRO’s Corporate Solutions offers agricultural investors a holistic info-service including concept advice, strategic planning, structuring, implementation planning, performance reviews and portfolio management. This advisory is a value-add to Agribusiness Today’s readers and client consultancy divisions with the sole aim of providing “whole-of-life” solutions to the agricultural investors.
Expert Opinion
Scolastica Wambua Agribusiness expert and head of business development at KALRO
The world population is expected to hit 9.6 billion in 2050. Population growth, growing incomes and urbanization form pure unprecedented challenges to food and agriculture systems, while natural resources necessary to support global food and non-food production and provision of services from agriculture will not grow.
Agriculture, including crops and livestock is one of the most important sectors in the Kenyan economy. It is the main source of livelihood for a majority of Kenyan’s rural population in terms of food security, household income, off-farm employment and foreign exchange. Kenya Vision 2030 identifies agriculture as a key sector through which annual economic growth rates of 10 percent can be achieved. Under the Vision, smallholder agriculture will be transformed from subsistence activities, to ‘an innovative, commercially-oriented, internationally competitive and modern agricultural sector. One of the key drivers for this transformation is agribusiness, defined as including all businesses involved in agricultural production, including farming and contract farming, seed supply, agrichemicals, farm machinery,
wholesale and distribution, processing, marketing and retail sales. Many farmers especially those in horticulture, grain and livestock production have embraced agribusiness however the biggest challenge they face is that of climate change. The impacts of climate change are evident through increased drought and floods, very high and low temperatures, loss of soil fertility and increased humidity. This has led to decreased production of both these crops and livestock products like beef and milk causing price spikes in the food market. Quantity and quality of livestock feed such as pasture and fodder has been negatively affected by climate change. Climate change affects the whole agricultural value chain because low production translates to less raw materials for the manufacturers and consumers which leads to less employment opportunities, slow business for financial providers like banks and micro finance institutions and eventually slowed economic growth. The government through the Big 4 agenda needs to prioritize climate mitigation interventions like harnessing water for irrigation, support research institutions in developing and disseminating drought-tolerant crop varieties and animal breeds, increasing forest cover by making tree planting mandatory for every farmer. The county governments should be in the forefront of coming up with climate smart interventions given that majority of the agricultural producers are in their areas of jurisdiction.
Agribusiness Today Magazine No. 5
Agri Technology
How this Mobile Service is triggering a farming revolution The Google Impact Challenge award winning solution that is transforming the way farmers worldwide access crucial data By Kevin Omondi.
I
n June 2010, Kenny Ewan, a social entrepreneur and start-up captain, together with Claire Rhodes, manager of Cafe direct Producers’ Foundation (CPF), a UK-based charity that supports small- scale farmers globally, embarked on the development of the Internet for people without the Internet. At first, the idea sounded a little ridiculous. Why would someone want to invent the Internet for people who do not necessarily use the Internet? But as it turned out, there were millions of people who for some reasons were not using the Internet. While working with CPF, Ewan learned that millions of farmers residing in remote areas experienced difficulties when searching for information or solutions to farming related problems. Ewan also learned that although six out of the seven billion people on earth were using mobile phones, according to the International Telecommunication Union (ITU), 75 percent of them still do not have access to the Internet. Most of them are small-scale farmers in remote villages scattered across the world. Continue next page
Google Image
Agribusiness Today Magazine No. 6
Agri Technology
I
How this mobile service is triggering a farming revolution
Continued from page 6
It was also more likely that the village farmers were the most deprived of information and support services. Unexpectedly, the Internet, the world’s largest information databank, has not made life any easy for farmers in the rural areas. They simply can’t afford it. According to ITU, despite the fast paced growth of Internet penetration rate in developing countries, access remains low in remote areas. Also, Internet connectivity is not free. You have to visit a cybercafé and pay Internet usage fee. Those accessing it on their phones must have an Internet enabled handset, which most people cannot afford yet. In addition, you must subscribe or buy data bundles. The alternative is to seek help from a government extension officer. But even this has proven to be problematic. In Kenya, for instance, the ratio of government extension officers to farmers is one to 1,200 against the recommended ratio of one to 400 farmers according to the Ministry of Agriculture, Livestock and Fisheries. As a result of the inaccessibility of the Internet and shortage of extension officers in most parts of the world, farmers have been experiencing difficulties in accessing information that can help them improve their expertise, increase harvests and boost returns, until WeFarm arrived.
Unveiling WeFarm WeFarm is a free peer-to-peer service that enables farmers to access and share information via Short Message Service (SMS) without the Internet. “Through this service, farmers can ask questions and receive crowd-sourced answers from other farmers around the world in a matter of minutes,” says Dennis Odera, WeFarm’s Africa business consultant. If you are in Kenya, you can register into the WeFarm system by simply texting “Join Kenya” to 22301. All you need, Odera says, is a basic mobile phone with SMS functionality. After the text is sent, you receive a thank you message for joining WeFarm and also instruction on the next step, which basically involves
texting back your name, location and main farming activity. “Once in the system, you are able to share information or send questions and receive answers on your mobile phone and without even leaving your farm,” says an enthusiastic Odera.
The service was designed, developed, tested and first implemented in Kenya. It has since been introduced in Peru, South America, and Uganda, with plans of introducing it in other countries underway. In Kenya, stories of how WeFarm is helping small scale farmers find solution to problems are already being narrated. For example, Joseph Mvunga, a coffee farmer, discovered the secret to success in rabbit keeping by simply sending a text message to the WeFarm asking for an advice on how to rear rabbits. And in Bomet County, Festus Tonui used the app to find a solution that saved his cow’s life. Similar testimonies have been given by several other local small scale farmers. Little wonder that the number of farmers joining WeFarm has been growing at an impressive pace. As of mid-April this year, some 52,100 farmers globally were already using the app, and about 7.6 million pieces of information had been shared using the platform. “In Kenya alone, we have clocked 44,000 users, whereas in Uganda, there are currently about 6000 users,” says Odera. Highly Prized In 2014, the WeFarm app bagged the Ksh million 71.65 million (US$ 707,885) or £500,000 grand prize in the Google Impact Challenge – arguably
Agribusiness Today Magazine No. 7
Agri-based Apps are increasingly helping farmers source crucial data that is helping them improved their efficiency and productivity.
one of the most coveted awards in the Silicon Valley. Odera says this enabled WeFarm to launch in Kenya in February 2015 and begin to scale significantly. The mobile solution went ahead to win several other accolades and awards including the October 2015 Mobile Ecosystem Forum (MEFFY) Innovation in Technology Award. But they also have to make money to be able to sustain the enterprise in the long run. “Besides being a free service that farmers all over the world can use to find solutions to agricultural problems, WeFarm is a social enterprise,” says Odera, meaning it’s a business like any other.
Agribusiness Today Magazine No. 8
Basically, they work with individuals, agencies, companies and organizations that work directly with farmers. Using the WeFarm system, Odera says they are able to map trends within the farming communities, for example, to find out what particular problem farmers in a certain region have. “We then generate reports, which we supply to companies, agencies and organizations. Large businesses can improve supply chain sustainability with this data and other organisations can learn about the real needs of the farmers,” he explains.
“I can’t share financial specifics with you but I can say we are making good progress,” says Odera.
Why Farmers The Food and Agriculture Organization (FAO) estimates that there are over 570 million farmers in the world today, out of which more than 90 percent are smallscale farmers. Additionally, in its 2014 report dubbed “The State of Food and Agriculture”, FAO notes that small-scale farmers are Tresponsible for production of about 80 percent of the world’s food. Technically, without the efforts of the farmers, the world faces starvation.
SPECIAL REPORT: Agri Business:
The Contribution of Kenya Agricultural & Livestock Research Organization (KALRO) to The BIG FOUR: The Case for Agri-business Development By Lusike A. Wasilwa, Victor W. Wasike, Violet O. Kirigua and Scolastica Wambua
K
A gian sweet potato produced at the KARI Kitale station
enya Agricultural and Livestock Research Organization (KALRO) The Kenya Agricultural and Livestock Research (KALR) Act, No. 17 of 2013 led to the merger of Kenya Agricultural Research Institute (KARI), Kenya Sugar Research Foundation (KESREF), Tea Research Foundation of Kenya (TRFK) and Coffee Research Foundation (CRF) and establishment of the Kenya Agricultural and Livestock Research Organization (KALRO). KALRO is headed by a Board of Management, Director General, two Deputy Director Generals, a secretariat of eight Operational Units and Corporate Services Division based at the Headquarters in Nairobi. The organization comprises of 16 semi-autonomous research institutes, 47 centres, 4 sub-centres and field stations/testing sites spread throughout the country in 34 of 47 counties. To discharge its mandate, KALRO undertakes research in crops, livestock, genetic resources and biotechnology; and expedite equitable access to knowledge, information and technologies in agriculture. The
KALRO Act allows other institutes wishing to carry out agricultural research to become associate institutes under KALRO. KALRO makes significant contribution towards the national economy through advancements in agricultural research and development. The Organization is guided by the Kenya Constitution; Policies, Acts of Parliament and aspirations of agricultural based international, regional and national bodies. The implications of these statutes are highlighted in this strategy. To respond and deliver successfully on the result areas, KALRO has strategically adopted the Agricultural Product Value Chain (APVC). The APVC approach focuses on product value chains in all stages and steps right from production to consumption and waste disposal as opposed to focusing on commodities per se. The following five Key Result Areas ensure that the organization delivers on its mandate and catalyse agricultural sector growth to at least 7% per year as envisaged in Vision 2030: Result 1: Technologies and innovations for demand Agribusiness Today Magazine No. 9
Special Report: Agri Business
I
KALRO The BIG FOUR: The Case for Agri-business Development
Continued from page 9
driven agricultural products value chains generated; Result 2: Knowledge, information and products on demand driven agricultural products value chains research collated, stored and shared; Result 3: Policies supporting and facilitating demand driven agricultural product value chains developed and advocated; Result 4: Capacity to undertake research on demand driven agricultural product value chains strengthened; Result 5: Systems for coordination and regulation of demand driven agricultural product value chains developed and operationalized.
livelihood to 80% of the population. The growth of the national economy is highly depended on the growth and development in the agricultural sector. The agricultural sector significantly contributes to increased self-sufficiency, food and nutrition security, foreign exchange earnings and ensuring the generation of increased incomes and employment. The staple, horticulture and industrial crops sub-sectors have several commodities which contribute to their growth including staple crops (cereals, legumes and pulses, root and tuber crops), horticulture (fruits, vegetables, flowers, and medicinal and aromatic plants) and industrial (tea, coffee, sugar, nuts, oil, fibre and botanical crops) Value Chain Approach crops. Production variability over the years, Agricultural research in has created peaks and KALRO focuses on the troughs which often entire commodity value destabilizes national, chain from input supply to regional and global the consumed products and supplies. In addition, low disposal of by-products. In productivity attributed to view of this, KALRO has various factors and re-oriented their focus from challenges, ranging from “pushing of commodities” production, value-addition to “market responsive and consumption products” approach. In the continuum, continue to “pushing of commodity” affect the performance of approach, production of many of the agricultural Cassava processing at the KALRO Mtwapa station in Kilifi commodities is driven by crops product value chains. existing agricultural potential. In the Furthermore, major shifts in the world Kenya’s Agriculture “market responsive products” situation economy, society and technology have however, the purpose of production is to caused dramatic changes necessitating Agricultural sector is the mainstay of the satisfy the needs and preferences of the new approaches in management of these Kenyan economy. It contributes 51% to consumer. In this case, the analysis and sub-sectors. KALRO’s focus has the GDP, is responsible for 65% of understanding of the consumer needs and consequently been refocused to Kenya’s exports and 60% of foreign preferences is the basis for designing the developing market oriented product value exchange earnings. It provides 17% of whole chain to inform decisions on what chains that take cognizance of consumer formal employment and 70% of informal and how resources should be deployed. needs and environmental concerns. employment and is a source of raw The results are designed to position materials for agro-industries and provides KALRO strategically as the key driver Agribusiness Today Magazine No. 10
for increasing productivity, commercialization and competitiveness of the agricultural sub-sector. This will in turn contribute significantly to the achievement of the agricultural sector growth rate of 7% per year over the next five years envisaged in the Vision 2030 and the KALRO Strategic Plan 2017 to 2022. The achievement of this growth rate will significantly enhance the agricultural sector contribution to the Gross Domestic Product (GDP) over the next five years leading to the attainment of the 10% economic growth per annum recommended in the Vision 2030.
Special Report: Agri Business
I
KALRO The BIG FOUR: The Case for Agri-business Development
Continued from page 10
Location of KALRO Research Centres
Mandera
Turkana Marsabit Uasin Gishu
Trans Nzoia
Wajir
Samburu
Busia
Livestock Research Centres Apiculture Research Institute Biotechnology Research Institute
Isiolo Kakamega
Kericho Homabay Kisii
Laikipia
!
Kisumu
!!
Nakuru !
!
! ! ! ! !! Kiambu !! Nairobi
!
Kirinyaga
Meru
Embu
!
Narok
! !! ! !!
Kitui
! Tana River
Kilifi
Taita Taveta
!
KALRO conducts its research on Crops and Livestock. The crop commodities include staple, horticultural and industrial crops. The staple crops comprise grain Legumes (dry beans, pigeon-peas, Dolichos, cowpea and mung beans), root and tuber crops (sweetpotato, cassava and Solanum potato), and cereals (finger-millet, sorghum & millets, maize, wheat, rice, amaranth and quinoa). The horticultural crops include tropical (mango, banana, avocado, papaya, passionfruit, pineapple), temperate (strawberry, apple, plum, pear, raspberry), underutilised (guava, melon, mulberry, tree tomato, pomegranate, sweet granadilla, gooseberry, loquat, dates, Annonas spp., white sapote, jack fruit and bread fruit) and indigenous (marula, baobab, mkwaju, mtandamboo, zambarau, Rubus spp., Indian plum, Vitex spp., desert date]). Vegetables include exotic (tomato, cabbage, French
Garissa
Muranga
! ! ! !Machakos ! !! ! Makueni Kajiado ! !! ! ! ! ! ! !
Agricultural Commodities
Industrial Crops Research Institute Genetic Resources Research Institute Tea Research Institute Coffee Research Institute Sugar Research Institute
Agriculture Mechanization Research Institute
Elgeyo Marakwet
Bungoma
Crop Research Centres Centres Food Crops Research Institute Horticulture Research Institute
Lamu
!
!
!
Kwale
!
!
Dairy Research Institute Beef Research Institute Veterinary Research Institute Arid & Range Research Institute Sheep & Goat Research Institute
Non Ruminant Research Institute
Crop Centres Livestock Centres
Counties are mandate of KALRO Centres
!
bean, kales, bulb onion, garden pea, spring onion, butter nut, carrots and garlic); African indigenous and traditional vegetables (Amaranth, African nightshade, pumpkin, Nderema [Basella alba], spider plant, jute mallow, slender leaf, cowpea, Ethiopian kale, mtsunga [Launaea cornuta], Malaba guard and stinging nettle]); (3) emerging/underutilized vegetables (mushroom, horned melon, baobab leaves, bamboo shoots, banana male bud, cassava leaves) and (4) Asian vegetables (chillies, eggplant, okra, pigeon pea, valore, karella, guar, dudhi and turia). Flowers include summer flowers (moby dick, arabicum, statice, ammi, agapathus, zantedeschia, molucella, eryngium, gladiolus, ornis, tuberose); cut flowers (anthurium, carnations, chrysanthemums, orchids, roses, hypericum, alstromeria, estoma and gerbera); ornamental and cut foliage (landscape plants, anthurium, Thika palm, emerging flowers, leahery
leaf fern, ruscus, asparagus, eucalyptus). Medicinal and aromatic crops include medicinal [aloe, moringa, mushroom]; (2) aromatic (chamomile, vanilla, mint, lemon grass, rosemary); (3) natural dyes [bixa, hena, hibiscus, safflower]; and (4) spices [coriander, garlic, ginger, chillies, curry leaves]. The industrial crops are tea (black, purple, brown, yellow and green tea), coffee (Arabica and Robusta), sugar (sugarcane, sweet sorghum, stevia and sugar beet), nuts (cultivate - groundnuts, cashew nut, macadamia, coconut, cocoa, and emerging nuts - baobab, doum palm, oil palm, oyster nut and screw palm), fibre crops (cotton, silk, sisal, jute and kenaf and hemp); and botanicals (pyrethrum, neem, titonia, tephrosia). There is rapidly growing interest in these crops especially in agribusiness (one of the pillars of The Big Four) that has the potential to significantly contribute to income generation, job creation, food and nutrition security and carbon credits.
Agribusiness Today Magazine No. 11
Special Report: Agri Business
I
KALRO The BIG FOUR: The Case for Agri-business Development
Continued from page 11
Agricultural Commodities KALRO conducts its research on Crops and Livestock. The crop commodities include staple, horticultural and industrial crops. The staple crops comprise grain Legumes (dry beans, pigeon-peas, Dolichos, cowpea and mung beans), root and tuber crops (sweetpotato, cassava and Solanum potato), and cereals (finger-millet, sorghum & millets, maize, wheat, rice, amaranth and quinoa). The horticultural crops include tropical (mango, banana, avocado, papaya, passionfruit, pineapple), temperate (strawberry, apple, plum, pear, raspberry), underutilised (guava, melon, mulberry, tree tomato, pomegranate, sweet granadilla, gooseberry, loquat, dates, Annonas spp., white sapote, jack fruit and bread fruit) and indigenous (marula, baobab, mkwaju, mtandamboo, zambarau, Rubus spp., Indian plum, Vitex spp., desert date]). Vegetables include exotic (tomato, cabbage, French bean, kales, bulb onion, garden pea, spring onion, butter nut, carrots and garlic); African indigenous and traditional vegetables (Amaranth, African nightshade, pumpkin, Nderema [Basella alba], spider plant, jute mallow, slender leaf, cowpea, Ethiopian kale, mtsunga [Launaea cornuta], Malaba guard and stinging nettle]); (3) emerging/underutilized vegetables (mushroom, horned melon, baobab leaves, bamboo shoots, banana male bud, cassava leaves) and (4) Asian vegetables (chillies, eggplant, okra, pigeon pea, valore, karella, guar, dudhi and turia). Flowers include summer flowers (moby dick, arabicum, statice, ammi, agapathus, zantedeschia, molucella, eryngium, gladiolus, ornis, tuberose); cut flowers (anthurium, carnations, chrysanthemums, orchids, roses, hypericum, alstromeria, estoma and gerbera); ornamental and cut Agribusiness Today Magazine No. 12
foliage (landscape plants, anthurium, Thika palm, emerging flowers, leahery leaf fern, ruscus, asparagus, eucalyptus). Medicinal and aromatic crops include medicinal [aloe, moringa, mushroom]; (2) aromatic (chamomile, vanilla, mint, lemon grass, rosemary); (3) natural dyes [bixa, hena, hibiscus, safflower]; and (4) spices [coriander, garlic, ginger, chillies, curry leaves]. The industrial crops are tea (black, purple, brown, yellow and green tea), coffee (Arabica and Robusta), sugar (sugarcane, sweet sorghum, stevia and sugar beet), nuts (cultivate - groundnuts, cashew nut, macadamia, coconut, cocoa, and emerging nuts - baobab, doum palm, oil palm, oyster nut and screw palm), fibre crops (cotton, silk, sisal, jute and kenaf and hemp); and botanicals (pyrethrum, neem, titonia, tephrosia). There is rapidly growing interest in these crops especially in agribusiness (one of the pillars of The Big Four) that has the potential to significantly contribute to income generation, job creation, food and nutrition security and carbon credits.
Agribusiness and Value Chains The country has adopted the agriculture product value chain as an approach to strengthen the agricultural sub-sectors that feed agri-businesses. Several priority value chains have been selected and prioritized nationally, by KALRO and ASDSP (Agriculture Sector Development Support Project) and at each of the counties. To strengthen these value chains different strategies are being deployed. These include; (i). Innovation/Quality Strategy - This is a pro-poor upgrading strategy. It aims at improving quality management and
process innovation at production and service providers’ level. This would lead to production of better product/new product in terms of quality and varieties among others to the end consumers as well as new markets. The volumes taken and prices offered by the end consumers will increase, hence increasing the incomes of the producers. (ii). Cost Reduction Strategy - This is also a pro-poor upgrading strategy. It focuses on management and technologies, to reduce costs and increase volumes at production and service providers’ level. This would create new market outlets and stable prices at the consumers’ level. Consequently, volumes consumed will increase, hence increase incomes at producers and service producer’s levels. (iii). Investment Strategy - This is a pro-poor upgrading strategy. It focuses on industrial investment at production/service levels and creation of new market outlets at end consumers’ level. This would lead to creation of additional jobs as a result of a growing market and diversification and new jobs as a result of local outsourcing of functions. (iv). Redistributive Strategy - Mechanisms used to strengthen the commodity value chains include upgrading strategy that focus on creation of producer associations to enhance their negotiation power and economies of scale. The
strategy also focuses on uptake of processing functions by the producers and hence the value added staying with the producers, direct marketing (reducing the chain length). Upgrading strategies aim at building producers’ capacities to
Special Report: Agri Business
I
KALRO The BIG FOUR: The Case for Agri-business Development
Continued from page 12
enter into terms of contracts , like contract production and out-growers’ schemes among others. All these strategies facilitate increased share of chain incomes at primary producers’ level.
Factors Affecting Agribusiness Studies undertaken on different value chains has indicated that the following constraints contribute to decreased agri-business opportunities. Production Level • Breeding challenges - low genetic potential in some crops/varieties • Low production and productivity levels • Some varieties susceptible to pests and diseases • Inadequate access to timely and sufficient quantities of quality planting materials • Untimely availability of seed • Low access of technologies by beneficiaries • Economic and socio-cultural issues on resource control and access • Climates change effects of over-reliance of rain-fed agriculture Processing Level • Insufficient supply of raw material for ‘industrial’ processing • Low diversity of products • Poor pre-and-postharvest practices • Limited skills/ technologies in value addition • Insufficient aggregation or collection centers • Location of processing facilities makes them inaccessible by farmers • Production outstrips consumption for
most agricultural commodities • High cost of acquisition and maint nance of equipment • Poor infrastructure (roads, high cost of energy, insufficient processing infrastructure etc.) Marketing Level • Uncoordinated and poorly organized marketing channels and systems • Poor crop commodity marketing strategies • Poorly developed product retail markets • Inadequate articulation between demand and supply • Poorly understood consumer preferences • Poor roads and infrastructure • Unpredictable price fluctuation • Postharvest losses due to spillage • Low diversity of products • Inadequate product traceability • High cost of energy
Product Value Chain Upgrading Strategies Agriculture product value chains and upgrading strategies aimed at strengthening value chains that feed the agribusiness sector include: 1. Process upgrading: an increase in the efficiency of production processes, resulting in reduced unit costs. Process upgrading can involve improved organization of the production process or improved technology. 2. Product upgrading: An improvement in the quality of a product or variety that increases its value to consumers. 3. Functional upgrading: Entry into a new function in the value chain that generates higher returns.
4. Channel upgrading: Entry into a marketing channel that leads to a new end market in the value chain; for example, from the domestic to the export market for the same product. Sweetpotato value chain was ranked number one among the staple crops value chains. The crop has several opportunities that have not been exploited. The purpose of analysing Sweet-potato Value Chains is to identify these opportunities and the constraints and then upgrade the chain.
Co-Innovation Platforms to Advance Agriculture by Engaging Public and Private Sector Partners KALRO has recently embraced partnerships by Engaging Public and Private Sector stakeholders to establish a Partners. A co-innovation platform. This platform is a multi-actor platform that brings together growth diamond actors (private sector/public sector/ research and knowledge/ civil society) led by the market to drive commercialization of agriculture. The Platform is a culmination of demand driven research and training agenda implemented by KALRO with the support of Wageningen University and TradeCare with funding from NUFFIC. The platform therefore provides a space for: - Sharing of a vision and ideas - Planning together - Coordinating activities - Identifying captive market opportunities and development of shared frameworks to realize the opportunities - Creating enthusiasm within the community and especially women and the youth to invest and participate in commercial agribusiness.
Agribusiness Today Magazine No. 13
Special Report: Agri Business
I
KALRO The BIG FOUR: The Case for Agri-business Development
Continued from page 13
A co-innovation platform can address several objectives including: 1. The agricultural sector actors to identify captive markets for County agriculture products 2.Develop a mechanism to bring together different actors and stakeholders working in the agricultural sector in the County to share ideas on agricultural products and potential captive markets through common planning strategies and sector frameworks. 3.To bring together different stakeholders in the agricultural sector to share the challenges experienced in the marketing chain and how this can be addressed through behavioral change. 4.To develop a network under which different actors in the agricultural sector can package research technologies and innovations in a collab rative way to fast-track development of coastal agriculture through easy access of information 5.To develop strategies on how capacities and expertise in different organization within the County can be amassed to achieve the required benefits in the agricultural sector.
16 Agribusiness Opportunities to Watch in Kenya 1. Oil crops – sunflower, soybean, canola, sesame, safflower and oil palm 2. Fruits – mango, banana, passionfruit, avocado, guava, gooseberry, pomegra ate, bread fruit and jack fruit 3. Nuts – macadamia nuts, groundnut, cashew nut, coconut and cocoa 4. Medicinal and aromatic crops – bixa, vanilla, moringa, lemon grass, chia seed and boabab 5. Tea – purple tea, green tea, orthodox tea 6. Coffee – Arabica and Robusta 7. Sugar – stevia, sugar beet and sweet sorghum 8. Cereals and grains – millets, amaranth, quinoa and teff 9. Pulses and Legumes – beans, green gram and Bambara nut 10. Vegetables – African indigenous vegetables, bird eye chilly and tomato 11. Root and Tuber Crops – Potato, sweetpotato, cassava, arrow root and yams 12. Fibre Crops – cotton, kenaf, jute, sisal and coconut 13. Soil-less Potting Mixtures – coconut coir, pumice, etc. 14. Green Manures and Nitrogen Fixing Crops – mucuna, titonia, etc. 15. Biological controls – to strengthen integrated pests and disease management 16. Capacity building - product
Conclusion
Kenya achievement of her Vision 2030 will largely be driven by achievements in agricultural innovation and research for development. The numerous research technologies, innovations and products must reach farmers, entrepreneurs, and consumers. Moreover, the environment in Kenya allows her to grow a range of crops from tropical, temperate and sub-temperate types. The country is also endowed with water resources whose development can allow food production all year round. Kenya’s geographical location affords its ease to the rest of the world. It has researchers, academics and a private sector that continually churns out technologies, innovations and products. The country also has a robust environment of SMEs (Small Micro-Enterprises), CIGs (Common Interest Groups), CBOs (Community Based Organizations), FBOs (Faith Based Organizations) and family owned businesses. Harnessing of the multiple contribution of these groups will feed the ever growing agribusiness sub-sectors to cement Kenya as member of a world community of middle income countries
Farmer observing the process of solar drying pumpkins
at the KALRO Katumani station in Machakos
Agribusiness Today Magazine No. 14
Agri Business Interactive
The role of modern farming practices in small-scale farming By Lucy Gitonga
W
hen one mentions farming while in Kieni Constituency in Nyeri County the name Daniel Gakuo will not miss in the conversation. Daniel is a ‘farming sensation’ not only for his success in onion farming but also for his agro-mentorship and onion farming expertise.
Staring out with one acre a few years ago, Daniel has seen
his passion for farming expand to more than 15 acres. Daniel’s story is a pure indication that small-scale farmers can move from subsistence farming into agribusiness. You could ask, how is this possible? Daniel will openly let you in on the secret. ” Success is in the details. We must understand the important role of modern farming practices; choose the right seeds, correct application of chemicals & fertilizers,
Agribusiness Today Magazine No. 15
Agri Business Intaractive
I
The role of modern farming practices in small-scale farming
working with agro-experts, being eager to learn and exchanging notes with fellow farmers.”
healthy crops in and out of season and regardless of the changing weather conditions.
Through decades of partnerships with Kenya’s large and small-scale growers, Amiran has become a ‘one stop shop’ for most agricultural needs. While playing a significant role in the floriculture and cereal industry in Kenya, Amiran has remained focused on the needs of small scale growers.
Drip divides the water to all plants equally and enables control over accurate amounts of water that irrigate the plant which result to even crops and higher yields. Drip is also used for fertigation as soluble fertilizers are added to the irrigation water and dispersed equally among the plants through the drip lines. Introducing fertilizer through the drip pipes ensures full utilization of the fertilizer properties as it is not washed away after being applied in large quantities
The company seeks to encourage growth of small-scale farming by; Agro-knowledge Born from the school of thought that ‘Learning is an everyday process’, Amiran believes that it is important for farmers to continually indulge themselves in new trends in the field of agriculture, learn about how to deal with new pests and diseases in addition to the best seed varieties suited for their geographical area. Amiran trainings and field days have brought knowledge, new farming techniques and modern agro-inputs to the farmer’s doorstep. The interaction with stockists and farmers also offers Amiran agronomists an opportunity to engage with farmers and learn more about what they require. This helps to ensure that Amiran products and services are customized to the farmer’s needs.
Being smart amidst unpredictable weather patterns The unpredictable weather patterns calls for farmers to practice climate-smart agriculture such as the use of drip irrigation systems that allows one to grow Agribusiness Today Magazine No. 16
There are also crop protection benefits to using drip irrigation. Most fungal diseases thrive in moist environments that are created by sprinkler irrigation. Drip is applied underneath the plant’s foliage which preserves dry surroundings. In addition, pesticides are not washed off the plants which ideally should be left on the leaves for as long as possible to prolong their effect.
The Beginning of a Plant’s Life Seeds represent the beginning of life of a plant and its quality plays a crucial determining factor on yield and quality of the crop’s production. Superior genetic material enables the hybrid varieties to have excellent diseases resistances which make it possible for farmers to produce healthy crops in times when Open Pollinated Varieties (OPVs) pose a challenge. With the F-1 seeds, the post harvest losses usually incurred by the farmers are drastically reduced due to the high fruit keeping quality that also ensures the produce reaches the Market place in the desirable state.
In addition, early maturity of the Amiran hybrid varieties reduces farm operational costs hence increasing the farmer’s net revenue. The adaptability to variable climatic conditions makes the hybrids suitable across a wide section. Most hybrids can be cultivated throughout the year irrespective of the season.
High quality seedlings are now a call away Farmers lose a lot of seedlings during the nursery stage. Courtesy of Amiran’s partnership with Plantech, this is now a thing of the past. Farmers can get high quality fully germinated seedlings delivered right at their doorstep.
Chemicals and Fertilizer customized for the needs of the farmer For years, Amiran has remained focused on the making the small farmer more profitable by reducing the risks brought about by weeds, pest and diseases. The company has sort partnerships with world renowned manufactures in the field of Chemicals and Fertilizers. With the small-scale farmer at heart these partnerships have brought to Kenyan farms high quality products that make farming enjoyable and less tedious. The field-proven products have been repackaged to suit the pockets of the farmers. With every emerging challenge in weed control or pest management such as the destructive army worm, Amiran’s team of agronomists research and provide solutions that contain a unique mode of action that is effective and improve yields at a pocket friendly price.
Agri Business Interactive
Former PS Mints Millions Growing Avocados By Lucy Gitonga
W
hen Joseph Mathenge retired from the civil service in 1990, he wanted to do something new and familiar. Armed with Kshs 400,000, the former Permanent Secretary in the Ministry of Agriculture started a 30 hectare avocado farm in Mbeere, Kenya. Mathenge says this was a big gamble as avocados aren’t grown in that area. “I went to Mbeere along the slopes of Erna River and surveyed the piece of land. It had good soil and with effective water conservation methods, one could almost grow anything on that farm,” says the former PS. Mathenge says that when he started, he was too cautious not to invest too much owing to the uncertainties involved.
Gamble that paid off But the gamble taken by Mathenge, also a former Chairman of Public Service Commission is proving to be profitable. “This is my second year in business. I usually make up to Kshs 10 million (US $ 117,647.06) per harvest. A tree takes upto four years before it matures and just like a fisherman who casts his net, you have to be patient,” he explains. He mostly sells his avocado to Kakuzi Limited, located some 70 kilometres from his Erna Farm which saves him the cost of having to transport to Nairobi or other far-flung markets.
Agribusiness Today Magazine No. 17
An Avocado farm. Avocado exports have been on the rise following increased global demands particularly for the Hass variety.
The 77 year old farmer also says he has introduced irrigation in his farm which has had very positive returns on his profitability. “In a dry area without water, it could have been extremely difficult to operate even if the crop requires very little water unlike some horticultural crops like beans and cabbages,” he said. Because his land is sloppy, he has secured the lower area of the farm with bamboos to avoid soil erosion. His short-term strategy is to expand his farm and recruit more farmers. “I have demonstrated to them that it can be done. I want them to join me in growing this crop,” says Mathenge.
Recommends Hass variety Mathenge who also served as Provincial Commissioner in Nyanza specializes mostly on the Hass avocado variety. Hass has a long shelf life and is in high demand in the European Market (EU) as opposed to the other ordinary avocados Agribusiness Today Magazine No. 18
that have a short shelf life. His farm employs up to 80 workers particularly during the peak harvesting season and he has engaged an Avocado specialist to oversee the day-to-day management of the crop. Mathenge describes the specialist as passionate about the project and recommends to anyone venturing into any kind of venture to identify and work with specialists who are excited and passionate about the sector if they are to succeed. Like any other business, challenges are abound. He often runs into the challenge of getting skilled laborers for most of the menial roles. “Simple tasks like harvesting will often require skilled hands to avoid damage to the crop and loses which is hard to get at times”, he says. The former PS has also tried his hand in exporting, but has at times ran into further challenges including currency fluctuation and limitations in availability of space in cargo airlines which ended up
hampering his ability to export big volumes.
Value Addition Mathenge is however optimistic about the future of the crop and sees value addition as the next natural progression. “We are looking at producing edible oil in the future. I’m selling avocados to people so that they can produce oil so why can’t I do the same?” he says with a chuckle. His advice to farmers is they should select the right variety of seedling when they are planning to plant to guarantee success. “You must work with the right diversity because some of these varieties cannot be exported while selling them locally is very difficult, “said Mathenge. Statistics indicate that Kenya produces 115,000 metric tonnes of avocadoes annually, 70 percent of which is grown by small scale farmers. Most of the crop has often been sold locally until more recently when markets opened up in the Middle East and now Europe.
Agri Business Interactive
How graduate turned deadly human-natural resource conflict into profitable venture Horizon Business Ventures changed perception of residents from cutting down trees to conserving them for commercial gains. Locals now benefit from agribusiness
M
ore than a decade ago, Nanyuki and Naro Moru residents were at a crossroad. With the population rapidly growing and locals cutting down trees to accommodate new generations, massive deforestation would soon have a devastating effect on the climate. Nanyuki, for instance, being of warm and temperate climate, where farming was the lifeblood, crop production would be seriously affected if the trend continued. Something drastic had to be done to save both the crops and trees. “We got down researching how we could help locals have sustainable sources of income from their natural resources. Thus, had to create economic value in available resources such as trees so it was obvious they would conserve them whilst embracing local farming,� says Benard Muchiri, a Director at Horizon Business Ventures, a firm that produces essential oils from seeds and leaves. A graduate from the University of Nairobi with a Bachelors degree in Botanic Science, Muchiri teamed up with few professionals to initiate Help Self Centre, a
non-governmental organization, in 2008. The NGO would identify amicable solutions to the local agricultural challenges and attract donors and potential environmentalists to partner with. Under Help Self Centre, the organizers created two other ventures; one that would help advocate for climate change through maintaining natural resources and another that would offer technical support to local farmers. And in the course of their research months later, Muchiri says, they discovered that some of the local crops, majorly trees, had industrial value. And their parts would be processed into bio-fuels and oils- essential for cosmetics and driving machines- without having to cut them down.
Introducing Ethnobotany To gather more on the crops, they engaged ethnobotany, an approach that would directly involve locals in gathering traditional knowledge on the natural resources, their practical uses and economic value. “We discovered some highly economically viable crops; among them Croton, whose seeds are rich in oils and also used as fuel,
Agribusiness Today Magazine No. 19
Agri Business Intaractive
I
Solving human-natural resource conflict in Kenya
baobab, Leleshwa, Marula, Cape Chestnut, German Chamomile, among others.” Muchiri says. And with the impactful idea, relevant resources and a viable business plan, Help Self Centre pitched to a variety of donors, among them Fins embassy, that funded them in 2014. Continue next page They would later partner with an Indian investor to purchase a crude distillation machine that processes seeds from crops, including croton seeds into paint- shifting focus from making biodiesel which they realized were not as commercially viable in the country. Local seed collection groups, mainly women, would then be engaged to supply seeds and leaves to the women-and-youth managed collection centres, where the enterprise purchased and delivered them to the factory for processing. With the products gaining market foothold and more customers showing interest, the enterprise contracted more farmers from Kiambu, Mount Kenya region and Ngong, to satisfy the increasing demand. “So far, the firm has about 2800 women and youth supplying it with the raw materials, creating employment and sustainable income to this significant group of the society,” Muchiri says. “And while doing this, the enterprise follows a market-led conservation strategy where commercial products are produced for a growing market while helping to preserve biodiversity. Nothing, thus, is left to waste as we also convert by-products into animal feed and organic pesticides.” Agribusiness Today Magazine No. 20
The impact Human- natural resource conflict has been a thorn in the flesh for Kenya’s Agriculture and Environment Ministries for decades. Late 2009, government evicted close to 30,000 families from Mau forest for allegedly settling in the country’s largest water catchment area illegally; after about a quarter of the forest was lost to human activity in the past 20 years, threatening the country’s lifeblood tourism, tea and energy sectors, as well as millions of lives in other parts of the country. Another close to 5,000 families would later be evicted in 2015 and about 1000 more a year later, hence government advocacy for reforestation. But despite the tree planting initiatives by the Kenya government, more conflicts have erupted with charcoal burners who cause devastating effects to the climate, justifying need to embrace more cohesive strategies of maintaining the natural resources whilst supporting local livelihood. For its impact in addressing some of these shortcomings, Horizon Business Ventures was among few African eco-agribusiness firms to receive the 2017 SEED Awards, an award by the UN environment, UNDP and IUCN that recognizes the most innovative, environmentally friendly start-ups in developing countries and provides them with business know-how support regionally to help them grow and share their experiences. “SEED is all about helping spur innovation that protects our natural environment and accelerates
development,” said Erik Solheim, Head of UN Environment. “Past winners have delivered grass-roots solutions on issues including waste management, renewable energy and sustainable agriculture. They see environmental protection not as a cost or a burden, but as an opportunity. As such, they are laying the foundations for what our planet needs; a fundamental shift towards a green economy.” Muchiri says the award has since publicized their venture and its impact to the country’s economy, an issue that has attracted goodwill from various stakeholders. Supporting Eco-agribusiness Owing to the challenges farmers faced in marketing their produce to potential markets, HBV ventured into yet another niche, Eco Agribusiness Ltd, in 2015. The enterprise organizes farmers, mainly women and youth, to deliver fruits such as mango, tree tomato and strawberry to collection centres. The fruit is then graded and sent to the production facility in Naro Moru where it is processed into jams and chutneys. “Since this is a start-up, we work with small-holder farmers, small horticultural businesses, supermarkets and retailers to take advantage of local opportunities,” Muchiri says. He, however, hopes the firm will move from the Ksh9million (US$86,850) annual revenues to Ksh20million (US$193,000) by end of 2018 and further to US$900,000 (Ksh93million) by 2020 once they commercialize some of the products currently in demonstration.
Agri Business Interactive
AFC invites farmers to apply for farm machinery loans By Daniel Mwangi
The loan facility has a repayment of 2-5 years with annual installments and is designed for individual applicants or groups.
How to apply
T
A coffee Huller. Kenyan farmers can now obtain loans to acquire farm machinery from AFC.
he Agricultural Finance Corporation (AFC) is inviting farmers to take advantage of a loan facility it has launched for the purchase of farm machinery to facilitate production and transportation of farm produce.
According to AFC, there is generally a low uptake of technology and mechanized agriculture which continues to negatively impact on productivity levels. “This facility has been launched as a direct response to the low uptake of technology and mechanized agriculture that continues to negatively impact on productivity levels”, the AFC says.
Applications can be done online on the AFC portal. Applicants will need to state their projected income flow from the business and expound how the project is managed. They are also expected to explain the business’s cycle, i.e. after how long the first sale is expected and how often subsequent sales are to be made. The Corporation will also be keen to see a proposed growth plan for the business and an explaination as to how the applicant hopes to go about servicing the loan. While submitting online, applicants will need to state their full names, email address, National ID/Passport number, phone number and project branch where they intend to implement the project. While supporting the project, AFC says apart from the convenience, increased mechanization and yields, an individual who comes for this loan product is assured of getting extra revenues from their farm machinery through hiring out to those who don’t have it.
Agribusiness Today Magazine No. 21
Agri Finance
AFC pitches for increased income for rural based communities through PROFIT Program By Philip Malaki
T
A poultry farm. The government through the AFC is seeking to empower rural based communities financially through a recently launched program dubbed PROFIT.
he Agricultural Finance Corporation (AFC) is pitching for increased incomes for rural based communities through a Government initiative dubbed Programme for Rural Outreach of Financial Innovations and Technologies (PROFIT).
PROFIT aims to reform the financial sector policy in Kenya by supporting the development of a range of innovative financial products. These products include savings and remittance services, community infrastructure loans, value-chain financing, medium-term financing for the agriculture sector, and index-based insurance and health insurance.
Agribusiness Today Magazine No. 22
PROFIT essentially helps improve access of poor rural households to these services. It also helps programme participants manage their assets, market their produce and increase their employment opportunities. PROFIT works throughout Kenya's rural areas, especially in arid and semi-arid zones and areas with both agricultural potential and a high incidence of poverty. It reaches out to smallholder farmers, pastoralists, artisanal fishers, women, landless labourers and young people. The programme's goal is to increase the incomes of the target group by improving the productivity of rural smallholder farm and off-farm sectors.
Agri Manufacturing
Through innovation and decisive initiatives, Nzoia Sugar is changing the lives of farmers and preparing to take the battle to Comesa By Philip Malaki
I
A sugarcane plantation. Kenya’s sugar sector is faced with a myriad of challenges and might not be saved by planned privatization of sugar companies.
n 2002, tension gripped Kenya’s sugar industry after the Common Market for Eastern and Southern Africa (COMESA) Council of Ministers mooted an idea that would give market access at zero-rate tariff to goods, including sugar, from member states.
This meant that the five State-owned sugar millers in Kenya -Nzoia, South Nyanza (Sony), Chemelil, Muhoroni and the moribund Miwani – had to speed up reforms that would make the sector internationally competitive to pave the way for the importation of duty-free sugar from the 19 COMESA member states.
Unfortunately, most of the companies were at a sorry state, reeling from huge loans from farmers, banks and Kenya Sugar Board (KSB), milling at low capacity due to faulty machines and ailing from relatively high production costs. Due to the stark reality that was staring the sector, Kenya applied for protection under Article 61 of the COMESA Treaty to safeguard the sector from 2003 till 2008, through levying duties on sugar imports from COMESA. The final deadline for the takeover is now slated to expire in February 2017.
Agribusiness Today Magazine No. 23
Agri Manufacturing
I
Sweetening Kenya’s Future
Continued from page 23
The COMESA Competition Authority has already warned that it would not grant Kenya another extension as this would frustrate competition within the bloc. Strangely, interim Managing Director of Nzoia Sugar Company Godfrey Wanyonyi is unperturbed. He laughs off pessimistic stakeholders in the industry. “I have always wondered why most people view the COMESA takeover as some kind of monster to the local industry. When the time is ripe, it will come with its share of positive gains,” he says. COMESA sugar, he says, will be regulated and subjected to fair market competition. “The trading bloc will sell its sugar through a regulatory process. This will not hamper local producers as there will be free trade policies to guide stakeholders.” Furthermore, he says the Kenyan sugar industry will benefit by trading its product to millions of people within the trading bloc. “There’s opportunity to increase sugar production through expansion of factories and diversification to related products like ethanol,” he says. Wanyonyi is among the few leaders who do not rush to tell tales of success despite their remarkable achievements.
Instead, he opts to introduce himself with a few words during the mid-morning interview, taking slight pauses to reflect on the leaps and bounds the millerAgribusiness Today Magazine No. 24
whose mandate is to develop cane, harvest, process and market sugar- has made over the years.
motivated by improving infrastructure, maintaining supplier-company relations and dedicated staff.
Doing business differently
To speed up transport of fresh cane for milling sugar, the company, whose annual revenue is Sh5billion ($49.2million), has been rehabilitating an average 200kilometre of the road network in the sugar planting zones every year.
At inception in 1978, NSC’s milling capacity was at a low of 2,000 tonnes of cane per day (TCD). Management’s worry then was how it would turnaround the milling streams to competitive market levels. To rival its competitors and improve production, management invested heavily in new machines and adopted programmes that were geared at reviving the company in phases. “The milling capacity has since expanded enormously, from 2,000 at inception to 3,000 tonnes per day. This has also translated into an annual production capacity of 78,000 metric tonnes of brown sugar,” Wanyonyi says. According to industry reports, Kenya is a net importer of sugar, with an annual deficit of between 250,000 tonnes to 300,000 tonnes. And, the country produces about 600,000 tonnes annually, lower than market demand of 800,000 tonnes. Data from the company notes that between 2012/13, 2013/14 and 2014/15,NSC’s milling rate improved tremendously- milling 680,364 tonnes of cane to 55,164 tonnes of sugar, 596,186 tonnes of cane to 49,699 tonnes of sugar and 924,721 tonnes of cane to 86,804 tonnes of sugar respectively over the years. The gradual improvement in milling capacity, Wanyonyi explains, has been
The miller also procured a cane haulage fleet to stabilise operations and built bridges to shorten cane haulage distances to the factory. Further, NSC has established two cane buying centres at strategic locations to save suppliers transport costs. “Here, business is transacted with the farmer, cane is weighed, bought and the data is routed to the company’s integrated information system,” says the MD, adding that the firm has also piloted an irrigation project in the nucleus estates to improve yields during dry seasons. Additionally, aiming at clearing farmers’ debts and erasing major loans in its books, the company has paid about Sh6billion ($59.04million) to farmers between 2012 and early 2016. “We’ve cleared outstanding third party payments and paid farmers’ arrears accrued to December 2015. The privatisation commission will handle the long outstanding debts.” Following a thorough machine maintenance overseen by Wanyonyi last year, NSC installed and commissioned a rotary juice screening system, a 4 Megawatt turbo alternator and a third packaging machine for branded sugar.
Agri Manufacturing
I
Sweetening Kenya’s Future
Continued from page 24
“Quality of sugar and performance of juice heaters has notably improved. The alternator has also reduced power consumption from Kenya Power by 30 percent, saving the miller Sh8million ($78,720) to Sh2million ($19,680). Also, the packaging machine’s efficiency is set to increase branded sugar capacity from 20 and 25 per cent to 25 and 40 per cent.
Innovation a key driver Since the interim MD was promoted from his finance management position in June last year, he has rewarded innovation, advocated for team work and re-energised his desire to achieve prominent goals. Probably, it is for this reason that the company has been honoured with, among several local awards, a global award for innovation from the Institute of Chemical Engineers (IChemE). NSC was the only company in Africa, and in Kenya, to be bestowed the prestigious award in 2015. In the innovation, dubbed, “gravitational milk of lime dosing system”, a group of engineers from the company re-engineered the system used in the early stages of sugar processing to reduce
lime usage, energy and maintenance costs. The innovation, which boosts liming,introduced a switch that changed the method from the former pumped system to gravitational. “The innovation subsequently led to at least 20 percent drop in lime usage and an equal drop in energy and maintenance costs, saving the company Sh2.5million ($24,600),” says the company in a statement. Furthermore, in 2015, the company became the second sugar miller in Kenya to be accorded Super Brand 2015 status for its quality product, entitling it to use the Superbrands Award seal on its packaging. “We uphold motivation as we understand the role it plays in driving performance among staff. Apart from cash rewards, we will sponsor the IChemE award winners for a week’s tour of the Maasai Mara with their families,” chuckles the Certified Public Accountant.
Challenges and prospects High cost of production and illegal importation of unregulated sugar remain key challenges to NSC and the sugar industry. Kenya Sugar Board data estimates local production costs at $870 per tonne, one of the most expensive in the region Wanyonyi says counterfeit, smuggled and rebranded cheaper sugar are the major problems but that with proper law enforcement and surveillance, the government will save the industry from cartels. He also says the company sources cheap fertiliser from government agencies, acquires efficient machinery, and, optimises and mechanises labour to reduce the cost of production. Meanwhile, Nzoia Sugar has started testing grading equipment procured by the government to effect the change in payment for farmers from the current tonnage system to sucrose content. “With inspired teamwork, we aim at expanding our milling capacity from 3,000 to 7,000 tonnes per day,” projects Wanyonyi.
Agribusiness Today Magazine No. 25
Horticulture
Rwanda steps up investment in horticulture
R
By Daniel Mwangi
wanda has identified horticulture as a key component in driving the country’s Vision 2020 and has as such stepped up efforts to speed up realisation of the sector’s potential.
Rwanda is keen to position itself as a key horticulture sector player and has been marketing its Horticulture at trade forums that attract global players in the sector.
“It is one of the key factors in the growth of investment in the agri-export sector,” she added. Some of the biggest horticulture produce importers in Europe like Dutch firms Van Oers United and Del Monte Foods which provide local sector stakeholder an opportunity to establish valuable partnerships, were among the participants.
Gateway for Exports According to Dolar Amarshi Popat, the UK’s trade envoy to Rwanda and Uganda, it was imperative for Rwanda to establish more trade links with the UK as a “gate way for its exports entering into the European markets”. Popat added that the idea of the Summit was to ensure the UK will continue to advocate on behalf of British business interest and also encourage increased trade and investment between the two countries.
One such summit is the Horticulture Connect Summit that Rwanda is counting its horticulture industry to boost its was staged in Kigali earlier this year which aimed to export volumes and earnings create linkages between in the short to medium-term. the United Kingdom, the Recently, the Rwandese Netherlands and local National Agricultural Export horticulture sector Board (NAEB) registered players. horticulture exporters as it The country’s Minister of moves to strengthen Agriculture and Animal collaboration with sector Resources Gerardine players to ensure quality and Mukeshimana described boost competitiveness. the Summit as one that provides a huge Tomato farmers like these ones will benefits from the ongoing summit. The country has in the recent opportunity to introduce past intensified efforts geared at increasing exports over British and Dutch investors and buyers of horticultural the past few years, particularly for the non-traditional produce to Rwandan producers and exporters. products like flowers, vegetables and fruits.
Starting Point
The summit, which attracted investors from the UK, the Netherlands and the East African Community was also seen as a “starting point” in creating firm trade and investment opportunities. According to the minister, the Summit sought to “move beyond the conversations held before and create a business platform” that provides delegates with tangible opportunities to establish relationships and engage with local producers.
Agribusiness Today Magazine No. 26
According to Sarah Metcalf, the head of DFID Rwanda, the horticulture connect summit presents a big opportunity for both local and international companies to engage and devise strategies that will help boost horticulture production in the country and thus promote inclusive economic growth, especially in the rural areas. “We also look forward to showcasing DFID programmes and partners contributing to Rwanda’s growing,” Metcalf added.
Horticulture
A Rosy future for Kenya’s cut flower Industry
The first three months of the year is the most important time of year for the floristry business. By Victoria Kimani
T
he first three months of the year is the most important time of year for the floristry business. Valentine’s Day marks the start of these crucial few months, Mother’s day offers an opportunity on the similar scale closely followed by Easter holiday, with cut flowers ranging from bunches of roses to bouquets bought for partners and spouses as shops gear up for a peak in sales. Between them, these three events represent the busiest dates in the calendar for the cut-flower industry, a business with sales of about Ksh. 54 billion a year in Kenya. The flower trade in Kenya is one of the fastest growing industries in the horticulture sector, which is highly reliant to the country’s GDP. Horticulture, according to the National Bureau of statistics is one of the top foreign exchange earners for Kenya generating approximately USD 1 billion annually. In 2014 for instance, the sector contributed 2.8 per cent to the national GDP out of which 1.52 per cent was from the flower industry. Kenya Flowers Council estimate that over 500,000 people (including over 90,000 flower employees) depend on the floriculture industry impacting on over 2 million livelihoods.
According to the Chief Executive of the Kenya Flowers Council, Ms. Jane Ngige, the floriculture industry has gained reputation as a high quality product as most exporters make about 30 per cent of their annual sales. “Kenya is leading in the export of flowers globally. We believe for every 10 stems sold in Europe three stems are from Kenya, and we pride ourselves in that. Our flower industry has gained a lot of reputation as a high quality product, and to maintain the same we ensure growers are being endorsed with knowledge in growing as well as expertise of marketing the products.” Ngige says She points out that market space of the industry has been in a rapid growth between the year 2000 and 2010 when the flower exports rose from 40 to 120,000 tonnes, equivalent to an annualized growth of almost 12 per cent. Exports have however dropped to a growth of less than 2 per cent in the subsequent years. “It is only in 2014 when we started seeing momentum returning. In that year we earned the country Ksh. 54.6 Billion with export volumes totalling 136, 601 metric tonnes. We are happy that returns have been rising ever since” she says.
Agribusiness Today Magazine No. 27
500,000
Kenyans depend on the floriculture industry and
90,000
of whom are flower farm emploees
Source: Kenya Flower Council / Kenya National Bureau Of Statistics
She attributes the growth to massive investments by both local and overseas investors in high tech projects with emphasis on flower varieties and quality.
Market Kenya leads in the export of cut flowers to the European Union (EU) with a market share of 38 per cent with the main markets being Holland, United Kingdom, Germany, France, and Switzerland where supermarkets are the main retail outlets. A good number of the flowers are also sold through the Dutch Auctions.
Variety With a range of cut flowers that are grown in Kenya, the main ones being roses, carnations and alstromeria are exported to over 60 destinations
Agribusiness Today Magazine No. 28
worldwide with the ones with big market share include Japan, Russia and USA. Other flowers cultivated and exported in the country include, gypsophilla, Lilies eryngiums, arrabicum, hyperricum, statice and a range of summer flowers.
Projections Globally, a growth of 5 per cent in the flower industry is anticipated every year over the next five years. So how is Kenya going to position herself to attain this? “On a global front, we are going to continue investing and expanding our market, we understand the crisis of the Eurozone economy, which calls for a thorough and improved productivity so as to counter the increased costs of production and lowering returns on investments.“ Ngige explains. The CEO further said the country has been benchmarking itself against other
producer countries that are more successful, sharing information which is useful in formulating strategies that can help expand Kenya’s production and market share particularly among emerging markets. Currently, the Council’s membership stands at 94 farms who represents over 70 per cent of the national total exports of flowers and ornamentals. Ngige predicts a rosy future for the flower industry following increased global consumption and prevailing favorable climatic condition and sees venturing into newer markets as one of the ways the country can boost its flower export revenue. These newer markets include Korea, Japan, China and the Middle East, as well as other EU countries like Norway and France who are huge cut flower consumers.
National News
East Africa’s food Security facing new threat A new epidemic now threatens to tear apart East Africa’s grain basket, quickly rising past drought and common crop and animal diseases generally known to affect the region’s agricultural sector. This follows a new research announced by scientists at CABI, a research website, which confirmed that ‘a recently introduced crop-destroying armyworm caterpillar is rapidly spreading across Mainland Africa and could spread to tropical Asia and the Mediterranean in the next few years.’ CABI says the caterpillar, known as fall armyworm (FAW)-Spodoptera frugiperda- is native to North and South America and can devastate maize production, the staple food crop essential for food security in most parts of Africa. The worm destroys young plants, attacking their growing points and burrowing into the cobs. The caterpillar, the researchers say, has been an indigenous pest in the Americas and had not previously been established outside the region. It was named fall armyworm because it migrates into temperate North America in autumn (fall) to damage vital crops, mainly maize (corn) and more than 100 different plant species.
Agribusiness Today Magazine No. 29
National News
I
East Africa’s food Security facing new threat
Continued from page 40
But in the past year, it was found in parts of West Africa for the first time, with Ghana and Nigeria confirming presence. “We are now able to confirm that the fall armyworm is spreading very rapidly outside the Americas, and it can be expected to spread to the limits of suitable African habitat within just a few years,” Dr Mathew Cock, CABI Chief Scientist, revealed, adding: “It likely travelled to Africa as adults or egg masses on direct commercial flights and has since been spread within Africa by its own strong flight ability and carried as a contaminant on crop produce.” It’s apparent the worm’s invasion found Africa pants down. Government’s, communities and farmers had no past experience dealing with the pest. According to UN’s Food and Agricultural Organisation (FAO), it took only eight weeks for the pest to spread to the six Southern African countries where there are suspected infestations. From the West African countries of Ghana and Nigeria where various research groups confirmed infestations, the pest has been reported in South Africa, Zimbabwe, Malawi, Zambia, Namibia, Mozambique and Sao Tome and Principe. However, as of January this year Zimbabwe remained the most affected country. FAO reported the presence of the worms- both the native African armyworm (Spodoptera exempta) and fall armyworm- in seven of the country’s eight provinces, with estimates of 70 per cent crop destruction in some areas. Agribusiness Today Magazine No. 30
To combat the threat, Zimbabwean government started circulating information and pesticides in a desperate move to salvage crops from the rigorously spreading worm. Neighboring Zambia, whose over 100,000 hectares of farmland had been infested, according to BBC, dispatched army planes to spray the affected areas with pesticides.
East Africa’s response And now East Africa is battling a similar threat. In response to the worm’s invasion in 10 counties within Kenya’s Western, North and South Rift regions, the Ministry of Agriculture, Livestock and Fisheries issued a national alert and disseminated necessary technical information immediately it learnt of the pest. It also engaged key stakeholders and development partners for concerted efforts towards containing the outbreaks, and constituted a multi-institutional team of about six bodies to offer technical guidance in the fight against the worm. Despite the concerted efforts, farmers from the country’s food basket regions of western and Rift Valley have complained of invasions, worsening situation at the agricultural sector which is the lifeblood of Kenya’s economy. In Rwanda, government opted for a joint effort involving the community, soldiers and government officials to eradicate the threat. Early April, the country’s Minister for Agriculture and Animal Resources, Gerardine Mukeshimana, said the outbreak had so far been reported in 108 sectors (among 416 of the country) in 23
of 30 districts where they had infected 15,699 hectare of maize and sorghum crops. To contain the deadly pest from spreading rapidly, Rwanda Agricultural Board (RAB) Director General Mark Cyubahiro Bagabe told a local daily that they had rallied different partners including Rwanda Defence Forces (RDF), the National Police, among others. Bagabe said they had included integrated management methods, physical and chemical measures, provided field equipment such as manual and motorized sprayer pumps and protective gear, as well as pesticides to eradicate the threat. The government, on its part, commissioned RDF soldiers to work with farmers in spraying chemicals on the affected regions. “The pest has spread across the country. Using a car to deliver pesticide from Musanze, to say, Eastern Province, then to Western Province, was taking longer, yet the assistance was needed as soon as possible to salvage what we can which led us to use the RDF aircraft,” Acting RDF Spokesperson, Lt Col Rene Ngendahimana told The New Times. Other East African countries Uganda and Tanzania have also reported invasion.
It’s difficult eradicating the worm Fall armyworms attack time is unpredictable. According to UN’s Food and Agricultural Organisation (FAO), the pest can cause extensive crop losses of up to 73 per cent depending on existing conditions.
National News Continued from page 42
East Africa’s food Security facing new threat In Southern Africa, for instance, FAO says the pests attacked at the height of the effects of two consecutive years of El Nino-induced drought that affected over 40 million people, reduced food availability by 15 per cent and caused cereal deficit of 9 million tones. Controlling the pest is also expensive since it can’t be eradicated with a single type of pesticide, especially when it has reached an advanced larval development stage. Also, it spreads fast once it attacks and the invasion is diverse. Sources say the invasive species can lay six generations of around 50 eggs in a single location, leading to rapid colonization and destruction of territory. To make matters worse, unlike the African armyworm that is visible on the plant, fall armyworm escapes detection by burrowing on plant stems making it hard for farmers spraying external parts of the plant to reach it. Other than maize, fall armyworm attacks cotton, soybean, potato and tobacco crops easing its chances of survival, and when it invades, up to three-quarters of the crop can be destroyed. However, as the search for a cure to the menace continues, FAO Sub-regional Coordinator for Southern Africa, Dr David Phiri, advises countries to develop capacities for rapid response.
Agri Insurance
The role of modern farming practices in small-scale farming
T
By Daniel Mwangi
he effects of global warming are already being felt if the erratic weather patterns in the country in recent years are anything to go by. Severe droughts are increasingly being experienced across the country, including in regions that have traditionally enjoyed moderate weather, while floods are becoming regular a common occurences in more parts of the country whenever it rains. This weather unpredictability makes it increasingly difficult for farmers to plan their season and is responsible for upsetting food production patterns in the country. This calls for concerted efforts to ensure farmers profitably continue to farm while the country’s food security is guaranteed. One of the initiatives aimed at mitigating the natural occurences is the recently launched Kenya National Agricultural Insurance Program which seeks to address the challenges that agricultural producers face when there are large production shocks, such as droughts and floods. The program, which is designed as a partnership between the government and the private sector, was developed with assistance from the World Bank Group and builds on the experience of similar programs in Mexico, India, and China. One program line will focus on livestock insurance, while another will focus on maize and wheat insurance. “The large majority of the poor in Kenya are farmers, so this program has the potential to have a significant impact on Kenya’s economic development. This program aims at improving farmers’ financial resilience to these shocks and will enable them to adopt improved production processes to help break the poverty cycle of low investment and low returns,” says the World Bank Kenya office. Agribusiness Today Magazine No. 31
Agri Insurance
I
The role of modern farming practices in small-scale farming
Continued from page 43
For livestock, drought represents the single greatest cause of livestock mortality in the Northern Arid and Semi-Arid Lands. Through the new Kenya Livestock Insurance Program (KLIP), the government plans to purchase drought insurance from private insurance companies on behalf of vulnerable pastoralists. Satellite data is used to estimate the availability of pasture on the ground and triggers payouts to pastoralists when availability falls. KLIP was introduced in October 2015 for 5,000 pastoralists in Turkana and Wajir and is envisaged to be scaled across the region by 2017. For maize and wheat, production shocks such as droughts and diseases pose similar challenges to producers. These risks also diminish banks’ appetites to lend to farmers to improve their farming technology and productivity. The Kenya Agricultural Insurance and Risk Management Program, introduced today, addresses these challenges through an “area yield” approach: Farming areas are divided up into insurance units – if average production in one of the units falls below a threshold, all insured farmers in the unit receive a payout. The program is starting up in Bungoma, Embu, and Nakuru this month and plans to reach 33 counties by 2020. ”This partnership between government and the private sector for the benefit of vulnerable farmers builds on international good practice and is innovative,” said Olivier Mahul, Program Manager of the
Disaster Risk Financing and Insurance Program at the World Bank during the launch. “The program introduces a state-of-the-art method of collecting crop yield data, using statistical sampling methods, GPS-tracking devices, and mobile phones. This offers the promise of greater accuracy and transparency. This program could pave the way for other large scale agricultural insurance programs in Africa.” This program will also help the Government of Kenya reduce the financial burden of natural disasters. From 2005 to 2011, the government estimates that it spent on average more than Kshs 7 billion per year on disaster relief. By enabling better financial protection for the most vulnerable, the government hopes to reduce its need to provide financial support following natural disasters. The technical assistance provided by the World Bank Group has been led by the Disaster Risk Financing and Insurance Program (DRFIP), with funding from the Netherlands Ministry of Foreign Affairs and the United States Agenc for International Development, and the Global Index Insurance Facility (GIIF), a multi-donor trust fund managed by the World Bank Group with funding from the European Union, Japan and The Netherlands
Also available at additional outlets. For further information on where you can find Agribusiness Today, Mitsumi Business Park, Muthithi Road. Westlands I M: +254 722 606 641 I T:+254 020 440 3180 B: 13904 - 00800, Nairobi, Kenya I Info@thearcrayon.com I W: thearcrayon.com
Agribusiness Today Magazine No. 32
Mitsumi Business Park, Muthithi Road. Westlands M: +254 722 606 641 I T: +254 020 440 3180 B: 13904 - 00800, Nairobi, Kenya. Info@thearcrayon.com I W: thearcrayon.com