What’s keeping Kenya from reaching its agricultural potential?

The country is currently facing its third consecutive drought since 2020. Estimates say the combination of poor crop and livestock production, conflict over dwindling resources, livestock death and disease, along with hits from Covid-19 will see the number of food-insecure people increase from 3.1 million to 3.5 million – 23% of the population in arid and semi-arid regions, a 48% increase since last August.

When it comes to pinpointing the breakdown of Kenya’s agricultural practices, many point to a lack of national agricultural investment as a root cause. The plight of under-resourced farmers translates into lags in the supply chain, ultimately impacting the capital and other big cities dependent on smallholder farmers, who produce at least 75% of the nation’s food.

• Although ‘extension officers,’ travel across the country to distribute information on good agricultural practices on an individual basis, it’s not seen as a cohesive national strategy.
• The lack of financing, technological training, and investments to stimulate access to innovation are also barriers to youth access to agri-tech innovations.

Another is Kenya’s challenges with post-colonial subdivision that resulted in unequal land distribution. Research has found that rent-seeking (when individuals or entities seek to increase their own wealth without adding value to society) by European large-farm lobbies reduced the profitability of African small farm cultivation in the push to make large-scale operations more economically feasible.

Kenya’s other existing investments in agricultural land generally come from NGOs, such as the World Food Programme and World Vision, which respectively purchase food from smallholder farmers and invest in cultivation projects in Kenya’s northern regions.

Weakened smallholder farmers

A continuous string of policy failures has weakened the capacity of smallholder farmers to reliably supply Kenya’s growing cities.

An estimated half of the population lives in informal settlements in Nairobi, exacerbating the need for accessible food distribution systems. Informal markets run by cartels are sometimes the only option for many residing within such urban food deserts.

An uncoordinated attempt at market liberalisation in 1994 reduced the number of incentives that farmers had been enjoying resulting in various challenges:

• difficulty in enforcing quality control of seed production;
• a pressing need for an efficient agri-business network for fertilisers and other agrochemicals;
• farmers’ limited access to both knowledge and working capital.

Other perennial challenges include the fragility of delicate produce, cramped storage space when crops ripen simultaneously, and the burgeoning need for solid infrastructure across remote regions.

The ‘broker’ tradition

As more people began to migrate to Nairobi in the 1970s, its need for large-scale produce sourcing began to take root to be able to provide for the growing population. The solution was middle-men – or ‘brokers’ – who buy directly from small-scale farmers. These are ruthless, shrewd businessmen who are known to take large cuts, leaving the toiling farmers with next to nothing.

Catherine Wajuhi lives in Baricho, a true vision of arcadia with its lush landscapes and countless streams. A mother of three, she has been a farmer for more than 13 years. Her small plot of land is peaceful, lined by tall trees along the eastern slope.

Brokers have a reputation for taking indecently large cuts that can drive farmers to bankruptcy.

“I really don’t like brokers,” she tells The Africa Report, shaking her head as she stands amongst her banana trees, some nearly 10 metres tall.

“They always try to buy for cheap,” Wajuhi says while strolling by the fences where she also keeps chickens, goats, and rabbits for her family. “There’s only one in these parts who I trust enough to do business with.”

Wajuhi’s sentiment resonates across agrarian Kenya: brokers have a reputation for taking indecently large cuts that can drive farmers to bankruptcy.

Agri-tech as a solution

Given Nairobi’s reputation as a start-up haven in the digital era, agri-tech startups, such as Twiga, Farmworks, and Apollo Agriculture, are addressing this untapped sector and working to link farmers directly to wholesalers.

This is where Twiga came in with the idea to replace unscrupulous brokers by “leveraging the ubiquity of mobile phones”, spurring efficiency and providing higher profits for small-scale farmers. Twiga attracted global attention and has raised $151m over multiple rounds of funding.

At a certain point, superior farmers could absorb the profit lost from lesser-performing farms within the Twiga ecosystem, but as the company scaled, it became tough to justify keeping on sub-quality sources.

Twiga has since pivoted to a new subsidiary – Twiga Fresh – to develop the largest single horticultural farms in Kenya, geared specifically towards scaling the domestic market. This $10m investment is part of its product diversification strategy to further bolster its customer base by offering ‘quality produce at a discount’ particularly in the face of current global inflation spikes.

We are launching Twiga Fresh through a $10m investment in a modern farm, supplementing our small farmer supply, with a capacity of 150,000 tons annually. We are sampling 1M kgs of fresh produce to our customers. Prices are about to start coming down!https://t.co/gOKT33i58a

— Peter Njonjo (@njonjo2012) May 16, 2022

Anderson Riungu, who works in Kenya’s tech startup space, hails from Meru County. He says raising funds will not improve capability or the product itself. “In the context of smallholder farmers, the margins are so low, it would never work; there would be no profit. People raise all this money and realise they can’t actually solve the problem.”

He points to his village as an example. “The lorries that used to bring cement back to Meru are the same ones that bring bananas to markets in Nairobi and it works just fine. Why are you saying there’s a problem with distribution? Obviously, you can’t go to an investor and say that. You have to say, ‘I want to change Africa,’ and create this whole narrative,” he says.

48-year-old Joel Mukungi in Baricho was on contract with Twiga for a couple of years before the company stopped buying from him in 2019. He has struggled throughout his life to scrape a decent living from less than five acres of beans, tomatoes, and pumpkins.

Riungu acknowledges that most agri-tech startups are well-meaning, but given the realities of their implementation environment, in this case, one wholly lacking in national agricultural support, the odds are generally stacked against long-term success.

The value of agricultural investment

In the northern corner of the continent, Egypt has begun to invest in major national agricultural projects (agriculture reclamation and cultivation projects) in an attempt to bolster its agricultural GDP contribution, pivoting from small to large-scale farming to better feed its people.