Our value chain needs better management

Farmers want stable prices and a ready market for their produce.

Consumers want high quality products that suit their ever emerging and often fickle tastes. Retailers want to display attractive packaging of known brands, offer competitive pricing and maintain steady inventories to meet the needs of their regular customer base.

How can producers, retailers and consumers connect to everyone’s advantage and improve market efficiencies at the same time?  

The answer lies in implementing value chain enhancements throughout the producer-consumer continuum. Central to developing effective value chains is understanding what a value chain is and what it is not.

Regina Maingi, Makueni Agricultural Sector Development Support Programme (ASDSP) coordinator, sums up it up: “Value chains bring additional value to the products as they move through the stages of development into consumer goods; these stages include sorting, grading, packaging, branding, and processing.

Value chain does not only mean the change of form as in the case of processing. No, a value chain brings return on investment to all actors from input suppliers such as agrovets, extension agents, and organic manure and irrigation systems providers; producers; wholesalers and retailers; transporters; processors and consumers themselves.”

KEY ACTOR

Emmah Nzyoka, the secretary of the Makueni ASDSP, believes the key actor in the value chain enhancement is the producer, the farmer herself. “It starts with the farmer,” she notes, “who needs to build capacity to cultivate a better quality product. The farmer needs proper irrigation, quality seeds, to engage in crop protection and rotation, to use organic fertilisers, and be able to reach the next stage of product development relatively easily and inexpensively.”

The challenges to value chain enhancements are many and the solutions do not necessarily come from political or governmental action. Value chain enhancements come from a deliberate focus by all stakeholders in the chain to express their role in continuous dialogue to reach a solution that benefits everyone.

We must imagine the system holistically – if we need to educate consumers about new, heretofore untried products that improve their health, their diet, their vigour, and their longevity, then we must do it and that is where government plays a key role.

Marketing “healthy” products to consumers is the best way to stimulate demand; demand drives the producer at the farm level. As Ely Kamuyu, Curriculum Education Developer, notes, “Twenty years ago, no Kenyan ate watermelon or drunk yoghurt. Now, with the focus on a healthy diet and a lot of government education, everyone is eating watermelon and yogurt.”

He goes on, “With the lack of value chain efficiency, the cost to the marketplace is very high. There is too much waste that is not only economically unsound but environmentally unsound such as with mangoes and oranges.”

The solution takes a conscious effort to bring all stakeholders together on one platform on a countywide level where they formulate a sustainable action plan so that everyone knows and accepts their role.

Bringing small plot farmers together through producer cooperatives is a strong start but too many cooperatives are formed from the top down and initially financed by local governments.

The most sustainable cooperatives are those that are formed democratically with strong articles of governance and accountability systems in place to guide and control good behaviour especially around resource management.

GET RID OF THE BROKER

For example, if a milk cooperative has a strong system in place to collect all the milk without any left to the farmer, you can get rid of the broker. But if a strong system is not in place, the broker remains a strategic actor and his pricing controls the market.

The effect of value chain enhancement on the marketplace is palpable. If the chain starts with the small plot farmer, how can farmers engage to bring value not only to their products but to their own reputations so that they are viewed as serious actors not to be trifled with or trampled on?

One solution is to form producer cooperatives as distinct entities from distribution or marketing cooperatives. In Kenya, cooperatives tend to try to cover the whole gamut from farm to end sale.

Why do cooperatives fail? In my opinion, they fail for only three reasons, all of which can easily be rectified. First, most are not registered and coop owners continue to engage in the informal market.

As long as farmers engage in the marketplace on an informal basis, they will never be able to achieve their two greatest goals: to stabilise prices and maintain a ready and accessible market for their products. So, the first step is registration of formal organisations.

Second, coop owners are not well-educated on how to support and manage cooperatives. Again, this is easily rectified through county and sub-county incubators that train and develop professional coop owners.

Third, most coops are formed around one product which limits their capacity to diversify. Diversification is the key to long-term market sustainability. Coops need to be flexible and respond to ever-changing consumer preferences.

Indeed, an educated consumer is the best friend to an educated farmer. All other actors are there only to support, nurture, and cultivate this relationship.

Next week: How to turn small-scale local farmers into large-scale regional businesspersons.

Ms Feller is an international development specialist from Portland, Maine, USA; she serves as President and CEO of Living With Peace-Kenya, a charitable organization initiating grass roots social entrepreneurship with a focus on agriculture, health care, humanitarian assistance, and cross-border peace-building. She lives half-time in Nairobi and can be reached at [email protected].