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Africa in Full Bloom

January 9, 2013
By: Jeanne Bernick, Top Producer Editor
Africa
Kenya’s growing flower sector reflects the growth of African agriculture. These operations support millions of people and make a major contribution to the economy— Kenyan horticulture alone provides 33% to the GDP.  

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Kenya’s fragile farming system pushes to keep up with population

All roses are not created equal, and you should use the right criteria when choosing one, says Hamish Ker, production manager for Oserian, a flower company in Naivasha, Kenya. Ker should know—he has spent his life smelling the roses. He grew up on a Kenyan flower farm and is now a key decision maker for rose hybrids on more than 500 acres at Oserian, which means "place of peace" in the tribal Masai language. The farm is one of the world’s largest flower operations and includes a 20,000-acre wildlife sanctuary.

"Flowers serve emotions," says Ker, as he plucks his favorite rose, the A1, which is white with a tinge of green. "When making a flower purchase for a dear one, whether in love or death, you don’t compromise."

Ker can wax poetic about roses, but he is serious about the potential of agriculture to improve the economy of his native Kenya. Flower production, the country’s fastest growing industry, has overtaken coffee exports and provides 33% of gross domestic product (GDP). Growers have developed a vertically integrated business that delivers wrapped bunches to European markets within a day of cutting.

"When I hold a rose in my hand, I hold food," Ker says, noting that flower operations support more than half a million people in Kenya. Oserian employs 4,800 and provides housing, medical care and a school. This is significant in a country where the population is increasing at an annual rate of 2.6%, which translates to about 1 million children born each year.

Farming on the Edge. Yet the overall agricultural system here is fragile. Production can’t keep up with population growth, leaving 25% of Kenyans, about 10 million people, without three decent meals a day. It is an open secret in Africa that the biggest challenge in farming is market access, but the government doesn’t want to step in.

The problem of land availability is rising due to sprawling urban areas, and highly uneven distribution of productive land means the majority of farmers are small-scale operators. This limits the scope of food production. Increasingly unpredictable weather patterns create havoc, with frequent cases of drought and flooding.

Ker refuses to focus on the negative, instead noting that Africa has made more progress in the last decade than it has in the last century. He credits a new constitution, which provides democratic processes, improves land rights for farmers and encourages entrepreneurism. "As a Kenyan, I feel proud we are moving forward," he says.

Huge Potential, Challenges. Farmers across Africa are responding to global food prices and local
demand from growing cities. Kenya’s economy is largely dependent on agriculture, with the ag sector directly contributing 26% of GDP and another 25% indirectly. Agriculture employs more than 40% of the total population.

Agricultural growth rates in Africa are exceeding the rest of the world, according to United Nations reports. At a governmental level, there has been a remarkable shift in prioritization of ag development. Under the Maputo Declaration on Agriculture and Food Security, African countries have committed to allocating at least 10% of their national budgets to agriculture.

Kenya has seen tremendous improvement in ag research, Extension, and crop and animal husbandry, notes Rien Geuze, agribusiness adviser for Agriterra, an agency that offers farmer-to-farmer advice and financial support in developing countries. However, a constant problem for both the government and the private sector has been agricultural marketing.

"The problems facing many farmers in Kenya are not in the field, they are postharvest," Geuze says. Hardworking farmers have their hopes dashed by exploitative pricing mechanisms and a lack of market access and market information that seems to favor the middleman.

John Mutunga, CEO of the Kenya National Federation of Agricultural Producers, says the nation’s agricultural potential and ability to feed itself is not being realized. There are 1.3 million acres in Kenya, yet only 284,000 acres are producing food, Mutunga says. He believes this could be changed with more value added processing, a clear and organized market system and reduction in cost of inputs.

The way forward for Africa is to empower low-income earners through training and capacity development in areas such as entrepreneurship, better farming practices, production, value addition and market linkage, says Lydia Wathobio, marketing manager of the Wananchi SACCO (Savings and Credit Coop-erative). Most farmers in Kenya borrow money through such local SACCOs.

"This will boost production and income, which in turn boosts farmers’ capability to save money," Wathobio says. "Hence, we will have more net savers than borrowers."

In Kenya, there are 30,000 SACCOs that work with commercial banks to offer low-interest-rate loans to farmers. The SACCO movement in Kenya is billed as the largest in Africa and among the top 10 globally. SACCOs provide farmers with loans for land, inputs and expenses, including school expenses. Today, SACCOs hold 20% of the nation’s savings.

"Cultivating the culture of savings is the greatest challenge that we have," Wathobio says. "In Africa, and in Kenya specifically, the majority of the low-income earners don’t even have enough to eat, let alone to save." Wathobio says her SACCO encourages people to put away at least $1 monthly, but that is still a challenge.

Mobile is the Future

Mobile is fast becoming the PC of Africa. Masai warriors who carry spears and wear red blankets

25% Number of Kenyans
who are food insecure, lacking three meals a day

40% Percentage of the
Kenyan population
employed in the
agriculture industry


for clothing have cell phones, and cell towers are plentiful across rural Africa. Safaricom is the major cell service in Kenya, and the majority of Kenyans do their banking by phone now. M-PESA (which stands for mobile pesa, or money) is a mobile money transfer service launched by Safaricom in 2007 that now services 15 million Kenyans, more than a third of the population.

Mobile phones have made a huge difference for farmers by serving as platforms for sharing information on weather, market prices and micro-insurance plans. Farmers are able to send a text message to find out crop prices in places thousands of kilometers away. New mobile services are coming online that allow dairy farmers to track their cows’ gestation, acting in effect as a veterinary midwife. Farmers are also given tips on animal nutrition.

An urgent need is for SACCOs to forge partnerships with international financiers who are willing to lend at favorable interest rates compared with national commercial banks.

"We borrow at 19%, and for our loans we have to add a markup, so we charge around 24%," Wathobio says. Recently, the Central Bank of Kenya revised this lending rate to 11%, meaning commercial banks will come down to about 15%—still incredibly high for a small farmer.

Farming for Jobs. The world is urging Africa to invest in agriculture not only for food security, but for its potential to reduce unemployment. It is estimated that 78% of Kenyans are below 34 years old and those between 18 and 34 constitute 35% of the population. Kenya’s urban slums are expanding at a rapid rate and face challenges in food security, health services, water and sanitation. Slums in the capitol of Nairobi are desperately crowded; they occupy less than 6% of Nairobi’s residential land, yet are home to 60% of the city’s population.

The typical Kenyan farm is a one-acre, smallholder operation, and in time the smaller farmers will likely merge and form bigger farms. However, with life expectancy for a man hovering around 45 years, farms are often split between children, which hinders farm growth and economies of scale.

Tabitha Kiambi owns 17,000 tea bushes on five acres on the slopes of Mount Kenya. She started the farm in 1962 and some of her bushes have been producing for four decades. Her farm  produces 26 tons of tea a year for a local tea factory; she also harvests fruits and vegetables.

Kiambi considers her tea operation to be more profitable than other cash crops. "Tea is more economical, especially when you want to make lots of money," she says.

Kiambi says her biggest challenge is finding skilled labor; she needs eight pickers to harvest her contracted amount of tea. One picker fills a 20-lb. basket roughly four times daily. Pickers earn less than $4 a day, and Kiambi makes about $6 for 90 lb. of tea delivered to the factory. Because tea prices fluctuate, Kiambi cannot offer consistent wages, making it hard to keep workers.

If structural changes can be made to farm systems and markets, agriculture offers a real opportunity not only to feed Africa, but to create employment in rural areas for young people. That means fewer people moving to the city and fewer lives relegated to the slums.

Cash crop challenges

Robert Murori

Coffee farmer Robert Murori
joined a co-op for better prices.


Coffee production continues as the top cash crop in Kenya. For the last three years, farmers have enjoyed high coffee prices due to the crop’s impressive performance on the international market. Last year, a farmer with 13,000 coffee bushes could earn more than $18,000 from selling the berries. But this boom appears to be over, if recent low coffee sales and earnings are anything to go by. Prices for Kenyan coffee have declined by almost 30% during the last year.

Kenyan coffee farmer George Mutwoki says it’s difficult to break even with coffee because of the high costs of spraying chemicals, labor and transport. "The problem with the coffee price is the cartels. They set the price and change it when they wish," Mutwoki says. Tired of dealing with middlemen and coffee cartels that distort prices, Mutwoki is one of a group of farmers who pulled together to form the Mukune Farmers Cooperative Society and purchased a coffee mill. The  society aggregates about 2,000 acres of trees; each acre has about 1,000 coffee trees and the average yield per tree is 4 lb. of berries. They hope that by pooling resources, labor and purchasing milling facilities, they can regain some price control.

Women key to progress

African Women in Ag

The World Bank estimates that women are responsible for 80% of Africa’s paid and unpaid labor in food production. For the first time, women in Kenya won rights to own the land they till and farm, under the new Kenyan constitution. "We all work hard in Kenya, but the women are working harder in the fields," says Esther Waithera Chege, chairwoman of a vegetable marketing commission in central Kenya. "We are so happy the government is supporting the woman."

Where women face extreme burdens and challenges are in access to water, energy and financing. Since few women own land, they cannot use it as collateral for loans. Transportation is another challenge; female farmers, by custom, mainly walk or use public transportation when available. Brokers with trucks commonly transport produce to market; but the brokers won’t travel dirt roads that are washed out by rain, and the produce often rots in the fields.

Dairy holds promise

Milk is one of the major products in Kenya that has a direct impact on rural livelihoods because most of the milk is produced by smallholder farmers who contribute 60% of the total milk. Currently, Kenya is largely self-sufficient in milk and milk products are increasing in demand, especially in major urban areas. Kenya’s dairy industry accounts for $2 billion per year, or about  7% of Kenya’s GDP.

Africa Dairy

The road from cow to market is a long, sordid journey. A typical Kenyan dairy farm consists of one or two cows, Holstein Friesian, that are penned up due to land pressure and fed under a "zero grazing" system. The average farm size is about 4 acres. Each day the cows are milked and the  farmer takes his few liters to the nearest collection point, where the milk is weighed and loaded onto trucks to be taken to the cooling center before traveling to the processor. There are two main dairy processors in Kenya that battle for market share: Brookside Dairy Limited, a private processor, and state-owned New Kenya Cooperative Creameries (New KCC). More than 50,000 dairy farmers supply New KCC, and they are all paid on a monthly basis. A farmer with one dairy cow can earn about $105 per month.

Dairy co-ops may be the best solution to growing the Kenyan dairy industry, as they provide the power in numbers to secure good markets for local milk as well as prices for the farmers from the competing processors. Peris Njenga, chairwoman of Kiambaa Dairy Farmers Cooperative, milks 10 cows. She is progressive in that she owns a two-point milking machine imported from Turkey, and she milks her cows twice per day. Njenga hopes to merge her 1,500-farmer cooperative with a  larger cooperative to offset costs of feed and artificial insemination. Larger cooperatives can negotiate better lending rates with area credit unions, as well as better prices with processors. Njenga practices zero grazing but is frustrated by the price of dairy concentrates: $20 for a 150-lb. bag. Still, she is planning for expansion in the future. Despite being restricted by the number of acres she owns, Njenga wants to own 50 cows in the next few years.

To read more about Kenyan agriculture, visit www.agweb.com/FarmingTheKenyanWay

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FEATURED IN: Top Producer - January 2013

 
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