Farm Produce Marketing Initiative Kenya

9th June 2015

Volume 1, Issue 1

The Farmers Marketer

Consumer Survey Data Set
To Shock Farmers
Inside this issue:
Poultry Oversupply
Looms

Juice Bars Take Hold

Farmers feed the Existence of Brokers

Consumer Survey Set to

Shock Farmers

Government Moves to
Become Biggest Broker

Social Media Helps

Farmers

Urban domestic consumers, commercial kitchens and farm produce manufacturers all indicate
that the three principal factors in
making farm produce purchasing
decisions are convenience, quality
and payment terms.
A three month survey conducted
between March and May targeted
234 middle class domestic consumers, 112 commercial kitchens
and 60 manufacturers who use
farmer produce has revealed valuable insight for farmers about how
to approach farm produce marketing.
91% of those surveyed say that if
they can avoid going to public
markets to purchase their farm
produce needs they would do so. A
major complaint is that getting to
and from the markets is inconvenient as the ability to move around
the city is greatly diminished due
to traffic. Manufacturers state that

they only go to the market if their

suppliers fail to supply and they
have a shortfall further complaining that market prices are 70
80% higher than if you take direct
supplies.
Domestic consumers in Parklands
and Westlands continue to frequent the City Park Market but
87% state that whereas they used
to buy all their produce from the
market one year ago now they
state that they alternate between
the market and the supermarkets
around them.
15% of commercial kitchens state
that they continue to go to the
market for their fresh produce
supplies whereas 85% of commercial kitchens take supplies directly
at their business premise and only
go to the market when there is
supply failure.
98% of middle class domestic

consumers indicate that they

prefer the supermarket because it
provides a one stop shop and are

Survey data reveals that consumer trends may

mean the end of fresh produce exclusive
markets and the rise of delivery services.

willing to pay marginally more for

fresh produce in the supermarket
to avoid going to the green grocer
or the market. Asked whether they
would shop for supermarket goods
and then go to the green grocer
for fresh produce only 4% indicated that they would do so for
fruits and vegetables but 89% that
they do so in respect of meats and
poultry.

The Farm Produce

Marketing Initiative
Kenya

New Farm Produce Marketing Rules Part of

A Long-Term Strategy to Make Government the Biggest Broker
The new farm produce marketing
rules for urban areas could very
easily have been written by the
colonial government in 1950. In
fact a lose examination of the new
regulations and the new authority
tasked with the management and
implementation of these regulations looks very similar to an initiative that came into effect in 1948
whose sole purpose was to protect

the urban areas from indigenous

farm produce so as to ensure the
dominance of the European farmers in the then growing urban
markets. The effect of this legislation was to kill the then bourgeoning indigenous African farm economy and to prop up the European
farmer. The effect of this will be no
different.

By placing the local authorities in

charge of the management of this
process the central government
seeks to increase the tax revenues
of the counties and widen the tax
base to eventually include farmers.
It will in the long-run, but the net
effect will be that the local authorities will hand a lot of this authority
to the brokers and cartels that are
already in place.

Page 2

The Farmers Marketer

Volume 1, Issue 1

Poultry Oversupply Looms Large Over the Kenyan

Market
The beauty of the market is that it
corrects itself.

Investment in chicken production has

reached an al time high.

Two years ago chicken and eggs

were in short supply making Kenya
a net importer of the same. Today
chicken rearing is all the rage. It is
estimated that for every Kshs 100
in new investment in agriculture
in Kenya today, Kshs 23 is invested in chicken whether it is for
their meat or for eggs million very
month is being poured into what
continues to be a lucrative business. Yet the future may not be so
rosy.
Already in urban areas the price
per kilogram of chick is starting to

fall because of stiff competition.

Credit on chicken sales from
chicken vendors has risen from
seven days a year ago to the industry average of 30 days for large
establishments. For many restaurants in the CBD of Nairobi and
Mombasa Island supplier loyalty is
being thrown out of the window in
favour of first-come-fist-serve. This
for keen watchers is how the tide
starts to turn.
Add to this the fact that large
restaurant chains seeing the
popularity of chicken based dishes
on their menus are in the process
of starting their own rearing facilities to push down their per hen

cost and increases their profits

and this is not limited to just hens.
Hatcheries are also on their list
considering the amount of eggs
that they use in their processes.
Bakeries have not been left out on
this.
Those establishments that are not
getting in on the game themselves
are contracting the work out but
unfortunately not to established
farms but to brand new establishments meaning that when their
facilitates do start producing their
currently supply will have nowhere
to go.

Juice Bars Take Hold As Solution For Out Of Season

Fruit Juice Supplies.

Top end restaurants and

hotels have taken to
supplying out of season
juices at a premium price

Passion, mangoes, pineapple,

apple and tangerine are fruits of
season that sell for very low prices
when in season and rise towards
of the end of the harvest season
and then go through the roof when
out of season. Though imports are
starting to bridge the seasonal gap
a huge shortfall exists in respect
of juice.
Commercial kitchens particularly
of top end restaurants and hotels
have taken to supplying out of

season juices at a premium price

to be able to do this juice bars are
taking hold particularly in the
coastal region but Nairobi also
seems to have caught on the
craze.
Refrigeration facilities rent space
to juice bar operators who buy
fruits when in season make the
juice and then store the juice in
these refrigeration centers in 5
litre, 10 litre and 20 litre bags.
When the fruits are out of season

they then supply these frozen juice

bags to the hotels and restaurants
that demand them.
Pineapple, tangerine and passion
are favorites of Chinese restaurants, beach resorts and game
lodges.
Domestic consumption of these
juice bars which is already high in
up market neighborhoods are now
also showing strong demand for
these out of season fruits.

Farmers Feed the Existence of Brokers

When a farmer sell his produce
from his gate he knows full well
that he is not selling to the end
consumer.
Farmers have created the need for
brokers

When a farmer goes with his produce to the local market and sells
to the gentleman filling his lorry
with produce he knows full well
that he is not selling to the end
consumer.
The reality of the matters is that

Kenyan farmers are fully aware

that certain sectors are controlled
y brokers and cartels and are
willingly selling to them out of
convenience even though they
know that they are getting robbed
on price.
The Kenya farmer may complain
about the broker. The Kenya
farmer may complain about the
cartel but both the cartel and the

broker exist because of the Kenyan farmer, If the Kenyan farmer

seriously wanted to get rid of the
broker or the cartel to which the
broker belongs then they would
organize quietly around the crops
they produce and invest 3.5% per
crop of the production cost of their
current crop in and organized
sales , marketing and advertising
effort as is the norm elsewhere .

The Farmers Marketer

Volume 1, Issue 1

Page 3

Consumer Survey Data Set To Shock Farmers

78% of domestic consumers indicate that if quality can be predictable they would prefer not to have
to shop for fresh produce at all
and would rather have it delivered
to their doorsteps. 16% of domestic consumers indicate that they
are involved in some sort of fresh
produce cooperative purchasing
arrangements to reduce the cost
and eliminate the inconvenience
of having to go to the market or
supermarket.
Butcheries seem immune to inconvenience considerations with all
domestic consumers indicating
that they have no problem being
inconvenienced when buying

meat, poultry and fish because

those are sensitive items but
also 97% of those surveyed state
clearly that they would also like to
have these items delivered directly
to their doorsteps.
90% of commercial kitchens say
that they have standing arrangements for the supply of fresh produce while 98% of manufacturers
indicate that they have the same.
97% of commercial kitchens and
100% of manufacturers indicate
that part of their supply arrangements include credit for 730
days. Franchise commercial kitchens indicate that they have credit

arrangements of upto 90 days as

do supermarkets.
47% of commercial kitchens and
82% of manufactures indicate that
they utilize growers contracts to
guarantee quality and price stability.
For fresh produce supply, the
larger commercial kitchens state
that they have at least 5 suppliers
for every supply category and
generally get produce at 2030%
below the market prevailing rate.

Mama Mboga in the cross-hairs of legislation

62% of commercial kitchens indicate that for fresh juices they use
juice bars to avoid shortages.

New Farm Produce Marketing Rules Part of

A Long-Term Strategy to Make Government the Biggest Broker
(continued)
since they do not have the capacity to manage so complex a regime. The cartels in turn will simply tighten their grip over the markets and further weaken the farmers position. The government will
in effect, as was the case in the
early 60s, become a broker without actually declaring that it had
become a broker.
On the back of this, supermarkets
will expand greatly the amount of
fresh produce that they deal in.

This new regime will favour not

only them but their business
model.

licensing regime for facilities that

sell fresh produce will quickly fall
under the same cartels

Whereas in the beginning, these

new regulations will hurt the
mama mboga, in the long run the
farmer will be the greatest loser.

Forced to sell to cartels or supermarkets the farmer will require

greater finances since payments
from supermarkets are rarely if
ever cash and with the rules as
they are now the supermarkets
really has no incentive to pay cash
for produce. Farmers should with
haste challenge these regulations
or suffer.

Shortly tax certificates will be

required to sell produce in addition to the inspection levies. Farmers will also have no choice but to
deal with the brokers since the

Farming is an enterprise
just like any other
enterprise and should be
treated as such for farmers
to succeed.

Farmers Feed the Existence of Brokers

(continued)
For illustrative purposes let us
look at tomatoes.
Kenyan farmers producing tomatoes not under contract produce
Kshs 3.6 Billion worth or tomatoes
per annum. If 3.5% of this was
spent on sales and marketing,
Kenyan tomatoes would be selling
in Europe under the aegis of the
Kenyan farmer. Instead because
of a lack of effort on the sales and

marketing front alongside poor

planning we are now a net importer of tomatoes.
If the Kenyan farmers were serious about eliminating the broker
from the equation then they would
invest in a commodity exchange
that allows the broker to use the
exchange but that also allows the
farmer to deal directly with the
end consumer be that a wholesale

buyer or a retail buyer.

If the Kenyan famer were serious
about getting rid of the broker and
the cartels, serious talks would be
proceeding about establishing a
national transportation matrix to
deliver farmers produce (god
knows transporters would love
this) and an urban transportation
matrix so that the markets could
be avoided.

Kenya European Farmers Remain Beyond The Reach

of Brokers in the Domestic Arena But Use Them To
Access The International Market

Farm Produce Marketing

Initiative Kenya

The Farm Produce Marketing Initiative Kenya abbreviates as FPMI-K is the final stage of a six month project
whose writ was to fix the problem of farm produce marketing in Kenya by providing a comprehensive long-term
durable solution that involved the Kenyan farmer in
transforming for the better the farm produce marketing
landscape.

The Farmers Marketer

Telephone: 0701-868 204

FPMI-K hopes to first educate farmers on the nature of

the problem that they face from a technical perspective
then to propose a comprehensive solution to this problem from a purely commercial perspective that the farmers can then take up and control, in effect allowing
farmers and not brokers or middlemen to control the
future of farm produce marketing in Kenya.

FPMI-K

Information Transfer Between Farmers Greatly Improved

By Social Media.
The number of Facebook pages
and groups whose key focus is
agriculture are proliferating as fast
as Facebook is expanding. Every
sector within the agricultural
sphere seems to have a representative page or group.

Facebook

Groups sectors specific or otherwise have become amazing resource centers for information for
farmers all across the country with
farmers with questions able to
obtain answers to their questions
in real time if the question is
asked in the mid-morning, over
lunch time or in the evening. Questions asked at other times may not
be answered immediately but are
answered within 24 hours.
Pages on the other hand are not
that strong on interaction but on
information transfer. They however remain excellent marketing

tools for product and transfer of

information as farmers remain
avid and analytical readers.
Information on what crops are due
for harvest and where is regularly
available on groups, as is seed
and seedling sourcing information,
nursery techniques, planting spacing, irrigation, weeding, disease
management and prevention.
Livestock and poultry groups are
extremely active with most questions arising relating to disease
and feed.
Farm input and equipment suppliers are also in the groups and
continually try to push their product as do agricultural professionals looking for consulting work.
However certain challenges are
noted such as invasion of some
groups by land brokers who pose

as farmers and hawk land to unsuspecting farmers.

There are incidences of the blind
leading the blind with advice
given that is not based on any
technical knowledge.
Of particular note is the overwhelming need for buyers of
farmer produce. The interesting
thing is that the farmers are asking fellow farmers where to sell
their produceusually right around
harvest time.
An opportunity exists to engage
with farmers to map out a visionary way forward to treat produce
marketing as part of the farming
process rather than as an after
thought.kkn