Category Archives: Agriculture

Strathmore Promotes Agri Export Business Opportunities

On Thursday at Strathmore Business School, there was a session to highlight some of the opportunities and challenges for Kenyan companies that wanted to get into the farm export business.

Kenya is known for flower exports, but not so much for fruits and vegetables which can be quite lucrative and are better suited to the climate here. An example was cited that a kilo of dhania (coriander) that sells for Kshs 50 per kilo in Nairobi, can fetch €3-4 euros in Europe.

Some excerpts

Export fruits and vegetables

  • Know the markets. Buyers have no obligation to buying from Kenyans. Companies have to know how to sell at expos where everyone is selling the same fruits and vegetables.
  • Kenyans are known for sending good samples, but the problem that buyers in other countries have with many Kenya companies is that they are later not consistent in quality and quantity of food exports. 
  • How to identify opportunities and threats in the news; Things like Brexit, earthquakes and climate changes and others like Muslim migration across Europe.
  • One can’t venture into exports unless they interact with the government – HCDA, Export Promotion Council, KEPHIS and others like the FPEAK, and the Kenya National Chamber of Commerce & Industry. Also, potential exporters must update themselves on changing regulations.
  • How to manage finance when upfront payments are rare, and there are international frauds who take deliveries but don’t pay. Also how to avoid the many fake consultants.  
  • The biggest challenge in this country is labour, not capital! One solution is shared labour for exporters and farms who can’t employ full-time skilled workers.
  • If one is not in charge of their own logistics, they are not in business. 

The Strathmore Business School exploring international markets program class takes place early next year and involves two modules: The first will take the class to the Fruit Logistica in Berlin, in February 2018 which is the world’s leading trade fair for the international fresh produce business where they will learn about the packaging, presentation, logistics, marketing. and other business aspects at the fair that had had 3,000 exhibitors from 84 countries and 76,000 visitors this year. Then at module two in Nairobi, they will learn about local production, logistics, local bank and financial options, obtaining global certification, branding, and other aspects of the food value chain. The deadline for applications is December 20.

NASA Post-Election Economic Boycott of Brookside, Bidco, Safaricom

Last week, Kenya’s opposition movement, the National Super Alliance (NASA), who boycotted the repeat presidential election held on October 26, announced an “economic liberation programme” and called on their followers to boycott the products of three companies Bidco, Brookside, and Safaricom.

What’s the link?

Brookside Dairies is associated with the family of President Uhuru Kenyatta. The company was started in 1993 and Brookside has grown to control about  44% of the processed milk market in the country, ahead of New KCC and Githunguri Dairies.

Brookside has acquired several dairy companies and still sells milk under their original brands including Tuzo, Molo Milk, Ilara and Delamere.  While the NASA statement mentions that when Jubilee took over milk farmers were getting Kshs 35 per litre while consumers paid Kshs 72 per litre, and that today farmers still get Kshs 35 while consumers pay 120 per litre, the economics of milk prices is a complex one, not attributed to the processor alone. Brookside collects milk from over 160,000 farmers every day.

Safari com: MP’s from the NASA side have  accused Safaricom, arguably Kenya’s most successful company, and some of its employees who they publicly named, of enabling  incorrect election results to be transmitted during the August 8 elections, something which the company has denied and also expressed concern that their employees had been needlessly endangered as they did their jobs and the company merely fulfilled a contract to support the 2017 Kenya general election.

NASA MP’s have gone ahead to public switch from using Safaricom to rival Airtel, even as Safaricom dealers warned of dire effects for their employees and communities.

Safaricom has 6 of its 45 shops in the Western/ Nyanza Region which is the bedrock of NASA support. Whether this is a turning  point for Airtel in Kenya as a company which has branded as Kencel, Celtel, and Zain and which has steadily lost ground and value to Safaricom over the years, remains to be seen.

But members of parliament from ODM (the main party in NASA)  have in the past voiced critical comments about some of their issues with Safaricom from even before the 2017 election –  especially during debate on the gambling and sport betting bills in the last parliament, earlier this year.

Here are some comments by Nicholas Gumbo, the then-Member of Parliament for Rarieda and Chairman of the Public Accounts Committee in the National Assembly.

Then-Member of Parliament for Gem and Deputy Minority Leader, Jakoyo Midiwo threatened on more than one occasion to introduce legislation to break Safaricom.

Bidco: The edible oils company is probably the most vulnerable of the three brands, and was likely targeted because its group chairman Vimal Shah, is the chairman of MKenya Daima an offshoot of the Kenya Private Sector Alliance (KEPSA), of which he’s a past Chairman, and which has throughout the election season been championing for respect of the election outcomes, grievances to be addressed in the constitutional ways (through the courts), for politicians to be careful about their public utterances and for normal business life to resume. KEPSA recently released a statement that read:

This is why we have consistently called Kenyans’ attention to the disastrous economic consequences of the present uncertainty which affects all Kenyans. The Private Sector having reviewed the loss and has estimated it to be about 10 per cent of the GDP equivalent to Kshs 700 Billion

Earlier this year, Bidco announced plans to become a billion dollar turnover (Kshs 103 billion) company by 2021 (their current turnover is Kshs 25 billion) by diversifying into the production of fruit juice, soft drinks, and cereal products.

Kenya Tea Trade Monopoly Pricing Rejected

The Competition Authority of Kenya has rejected an application for exemption by the East African Tea Trade Association (EATTA) to set brokerage commission and warehouse prices. EATTA, which operates the weekly Mombasa Tea Auction, had sought to be exempted from the provisions of section 21 and 22 of the Competition Act No. 12 of 2010 (the Act) on some of its activities for an indefinite period.

The rejection was premised on:

  • The setting of broker fees and commissions under the auspices of the EATTA was a hardcore contravention under Section 22 (1) (b) of the Act as it is a form of price fixing;
  • The setting of brokerage fees was beneficial to the brokers with no express benefits to consumers and tea producers;
  • The Kenyan brokerage fees were higher compared to those in Sri Lanka and India and have remained unchanged for a long period of time;
  • Warehousing is an important element in the tea value chain and that fixing of warehouse fees would undermine innovation and improvement of value preposition to customers given that warehousemen will be assured of the minimum fees set by EATTA. This the Authority concluded that it will encourage inefficiencies in warehousing thus impacting on the trade negatively.

However, the Authority allowed, for a period of three (3) years), the trading to be permitted amongst membership.

Extract from the Kenya Gazette

Other

  • Kenya’s largest foreign exchange earner isn’t tea or tourism but diaspora remittances – @coldtusker
  • During tea processing, 4 kilos of green leaf are required to make one kilo of tea – @dailynation
  • Kenya has the largest tea auction in the world with plans for a tea futures market to get predictability for farmers – Stuart – @INTLFCStone

Food Imports to Kenya

While there have been several discussions about maize and other food imports to Kenya  such as where the maize came from, who is selling it, and at what price, more is on the way to deal a national disaster situation, partly attributed to delayed rains and prolonged drought.

Writing in a recent opinion piece in the Standard, James Nyoro, government advisor (who was previously the Rockefeller Foundation’s Managing Director, Africa, and probably the next Deputy Governor of Kiambu), wrote that food imports are normal for Kenya… in normal years, Kenya imports 30% of maize, 75% of wheat, 45% of sugar and 80% of its rice needs.

This comes at a time when all of Africa is talking about embracing agri-business and getting more people and more value out of agriculture. Kenya is probably in a very good place, as it  produces lots of foods, does a lot of local consumption and international exports, and has good networks and communications tools for farmers and government, but still, there is little finance to agriculture, and a lot of prime agricultural lands is being converted to real estate or commercial uses.

The Cabinet Secretary for Treasury recently gazetted and listed companies that were allowed to import duty free, non-GMO, yellow maize to be used for animal feed including Unga Farmcare 36,000 metric tonnes, Pembe Feeds 20,000, Isinya Feeds 50,000, Sigma Feeds 50,000, Milele Feeds 20,000, Mombasa Maize Millers 36,000, Chania Feeds 4,000, Farmers Choice 30,000, Naku Modern Feeds 2,000, Pioneer Feeds 3,000, Empire Feeds 10,000, Tosha Feeds 90,000, Turbo Feeds 1,000, Treasure Feeds 3,000, Economy Farm Feeds 1,000, Prosper Properties 2,000, Legorn Feeds 3,000 , Huduma Feeds 6,000, Eden Millers 5,000, Ohami Feeds 1,000, Tarime Feeds 1,000, and Thika Farmers Group 36,000 metric tonnes

He also set published temporary rules for white maize, sugar, milk, and dates: The ones for white maize included Any person may import white maize if it meets the following conditions—

• The white maize shall not be genetically modified in accordance with the standards applicable in the European Union; i.e it shall not be genetically modified (GMO) maize.
• It shall have a moisture content not exceeding 14.5%;
• It’s aflatoxin levels shall not exceed 10 parts per million;
• It shall be accompanied by a certificate of conformity issued by a company appointed by the Kenya Bureau of Standards; and
• It shall have been imported on or before the 31st July, 2017.
• Any person may import dates during the month of Ramadhan.

In a separate notice, he authorized there be no duty on sugar imported between May 11 and 31 July 2017 and as well as on 9,000 tonnes of milk powder imported by milk processors authorized by the Kenya Dairy Board.

Kenya Markets & Agriculture Pricing of Maize, Potatoes, and Milk

What drives the agriculture pricing of maize, potatoes, and milk in Kenya? Part I of a post by  @kwambokalinda of M-Farm

In commercial agriculture, as in any business venture, the aim is to make a profit on an investment, within the environmental and policy framework available for the sector. It is, however, not in question that there exist unsavoury practices practically the world over. Recent potato, maize and milk shortages in the weeks between March 2017 and the present day illustrate as much.

That said, it is pertinent that fault is placed where it lies, and speaking to traders in the Kenyan potato, milk and maize value chains, it was gathered that low rainfall in November 2016, as well as with the rains in April, led to price fluctuations in the weeks after February 2017. Mitigating circumstances lowered prices during the same period, when traders sourced their produce in areas that had rainfall in November 2016, such as;

  • In the case of potatoes, this included Narok and Mau Narok, which are blessed with forest rains and fertile lands in Tanzania.
  • With milk, rains in April meant that costs to access to main roads went up – and with farmers unable or unwilling to ease traders’ burden, the costs are being transferred on to consumers.
  • As for maize, a 90-kilo bag which a farmer sold at Kshs 2,200 in December, had doubled by March 2017: Meanwhile, millers have been consistently buying the maize at Kshs 4,700 per bag

We have to remember to factor such matters into our plans and budgets as Kenyans. Also, we have learned that it takes the government a lengthy period to act or even plan for such occurrences. It would help to have neutral sources of data alongside that of the government to help shape the response to food security challenges in Kenya.

See also, Secrets of a Farm Middle Man 

$1 = Khs 103