Save the Kenyan farmer, lower cost of production

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Posted by Joseph Macharia 3 months ago

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All over the world, farming provides a source of nutrition, income, and other products that make human life comfortable. On one hand, the farmer who wants to make the most of mud and sweat, tills the land to produce and supply to the market place. The other side of the chain has the consumer who desires good quality and quantity of products at the lowest possible price. The assumption, a common decency, is that farmers get benefit for the value they bring to the market place. They feed the growing population and get rewarded for it. And, while farmers are getting rewarded, the consumer is not strained; a sort of equilibrium where supply and demand are not just competing forces, rather, complementing each other in the wider context of development – a healthy nation is a wealthy nation.

However, listening to Kenyan farmers in the last few months gives the impression that all is not well. Adams Smith’s invisible hand is not working for them. There seem to be other forces at play designed to skew the activities of agricultural producers; for them to give up the practice of agriculture altogether and make Kenya an importer of staple agricultural products.

Kenya’s staple foods are maize, beans, sugar, milk, eggs, rice, wheat flour, onions, tomatoes, vegetables (mboga), cooking oil; products consumed every day by majority of households. The growing urban population represents a major economic opportunity. The scramble to access and control this market segment is on with imports from neighbouring countries (Uganda, Tanzania), South African, Israel, China among others competing with local produce.

The big question is, why are these imports cheaper than what is produced locally? A tray of eggs from Uganda can sell for as low as KSh 250 crowding out eggs from local poultry keepers. Farmers must focus on lowering their production costs to remain competitive. For example, poultry farmers engage in conversations to find ways of bringing down the cost of production of an egg to below KSh 6. If it is about importing cheap maize, then they must form cooperatives to take advantage of economies of scale and tax exemptions on agriculture inputs. Dairy farmers engage in similar discussions to bring down the cost of producing a kg of milk to below KSh 25. For maize farmers, the target is to keep the production cost of 90-kg bag of maize at below KSh 700.

Bulk buying of livestock feed is one way to go; though this works best when farmers pool their resources and source from far but cheaper markets without compromising their margins. Formulating own feeds on the farm also makes sense with large number of animals to be fed. Doing it just because it is fashionable takes away the business aspect of a farming venture. Planting some of the ingredients of the livestock feed on the farm could cut down on the cost of commercial feed to be bought, though, some farmers see this as time consuming, and the farm could be put on other high value crops as part of diversification.

Price based on production cost alone is not enough; other factors give goods and services an edge in the market place. These include timely delivery, trust in the quality of what has been delivered, efficacy of payment platform, access through improved transport and communication infrastructure, and meeting customer taste and preferences are determinants of what sells and what gets rejected. Take care of this, and you have one foot ahead.

For example, the quality of eggs in the market is a big issue that customers have to contend with because farmers keep the eggs for a long time as they look for market. When they finally sell, the proportion of bad eggs to the good one is high; may be 5 eggs have already gone bad in one crate. Such a customer will definitely look for another supplier. The same with adulterated milk, maize and other produce. When customers are spoilt for choice, then quality is preferred.

It is a free economy and the consumer will always go for a lower price so long the quality is assured. Mind you a lower price is not synonymous with low quality and vice versa. And, nothing is scarce in the market indefinitely, someone else will discover and farm it. So, giving up on your farming enterprise is not really an option. Learn and find ways to cut production costs, increase output, create market linkages. Truth is, other farmers are selling, if not, then the brokers and middlemen are selling, why not you! Always strive to offer a better product and service than the next farmer. 

Farmers’ organizations

It is now time for farmers to deliberately organize; at village, sub-county, county and national levels. The purpose of such organization is to make farming meaningful; economics, business and policy. There is too much talk of policy, with no tangible effect on the day-to-day activities at the farm level. Policy does not translate into benefit for the farmer because it hijacked and taken ransom. Prioritizing government intervention to bring down the cost of inputs would include tax exemptions, targeted subsidies on key inputs that cut across key value chains, improving grassroots infrastructure and rooting out corruption. Investment in subsidies for farmers cannot work when the same inputs are stolen and sold to farmers at the same high prices the subsidy is supposed to avoid.

In the short termfarmers must form or strengthen value chain specific cooperatives to boost the comparative advantage of their products in the market place. It is a long shot for a fractured farming community, but, the gains and benefit to be made are enormous. If policy to support such farmer organizations is an obstacle, then engage at that level with qualified representatives (of your own). Farmers must understand what policies are in place, what is lacking, and what needs to be changed to resonate with the current farming needs.

A strong farmer organization grounded in solid mobilization and advocacy is missing in action. It is time for a strong one that will beat corruption and cartels at their own game and deliver the promise of lowering the cost of production of the hardworking Kenyan farmer.