Crop Seed

 Agriculture Overview

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  • Average grain and legume yields in Kenya have been static or falling for over 3 decades. For example, Kenya’s maize yield of 1.6 MT/ha is far below the global average of 6 MT/ha, and increasingly falling behind neighbouring countries

The Sector

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  • Crop seed consists of seed for grains, legumes, and vegetatively propagated crops such as cassava and potatoes
  • Of more than 110 seed companies registered by KEPHIS (Kenya Plant Health Inspectorate Service), less than 20 private sector companies are actively producing and selling grain and legume seed
  • The sector is highly regulated

The Market

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  • Less than half of Kenya’s cropland is cultivated using certified seed (certified seed is seed officially approved for sale)
  • Fake and low quality seed are challenges in Kenya.

The Farmer

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  • Farmers are not empowered to speak up if they receive fake or low quality seed
  • Farmers are hungry for crop seed information, but often cannot get it

Supply Trends

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  • 88% of all certified crop seed is maize seed; seed for Kenya’s second most important crop, beans, is less than 2% of total seed
  • There are more than 75 high potential crop varieties that have been officially released, but are not effectively reaching farmers
  • Agrodealers are a vital part of the supply chain but are fragmented, lack good information about crop varieties, and are unable to advocate for themselves at both county and national levels

Demand Trends

  • Demand for improved crop seed other than maize outstrips supply; demand for some varieties of maize seed outstrips supply of those varieties
  • Many farmers are looking to the crop seed sector for climate change solutions

Key Challenges

  • Lack of evidence for policy making and poor understanding of sector challenges has led to sub-optimal policy environment
  • Parastatal dominance has deterred development of an efficient, innovative and competitive sector
  • Low supply of parent seed for government-owned varieties has led to low commercialization levels, especially for non-maize seed
  • High regulatory burden on industry drives an estimated 15-20% of operating costs
  • Weak advocacy by seed companies inhibits effective public private partnership
  • Low agrodealer and farmer awareness – of both new varieties and proper seed positioning – leads to low yields
  • Poorly networked agrodealer industry deters professionalism, innovation, competition
  • Lack of farmer empowerment/voice creates entry point for fake and low quality seed

KMT and its implementing partner, Agri Experience, are focusing on interventions in three areas:

  1. Catalyze evidence-based, participatory policy development to create a competitive and inclusive seed industry

  • Support gathering, structuring, and open sharing of accurate information for all levels of the crop seed sector through partners
  • Facilitate policy and regulatory reform by bringing together public and private sector to review and update existing frameworks
  • Support development of regional benchmarking tools for industry effectiveness and competitiveness
  1. Strengthen the foundation for more and better crop seed commercialisation

  • Work with partners to remove regulatory bottlenecks which hinder more efficient private sector commercialization of new crop seed varieties, especially for non-maize crops that are important to women farmers
  • Promote greater private sector seed company investment and facilitate stronger production and marketing performance, with emphasis on climate change needs
  • Strengthen private sector voice to improve lobbying and advocacy
  • Promote the use of ICT to improve customers’ access to information about crop seed varieties and use, especially climate smart varieties
  1. Support development of a more farmer-centred crop seed distribution system

  • Empower agrodealers to become more active and knowledgeable partners in crop seed distribution to increase farmers’ yields
  • Enhance agrodealer linkages with seed companies, each other, and other market actors
  • Encourage agrodealers to plant customer-focused, climate smart crop seed demoes using new varieties
  • Facilitate and strengthen sustainable advocacy platforms for agrodealers
  • Through partners, develop mechanisms for farmers to voice complaints about seed quality, paying particular attention to women farmers and their needs

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The volume of improved crop seed certified annually exceeds 55,000 MT, increasing from a base of 40.7 MT in 2013. The level of competition among Kenya’s crop seed suppliers moves into the Fair Range, a score of 2,500 or less as measured by the Herfindahl-Hirschman index, from a base of 6,300 in 2014

Agricultural Inputs

The Sector

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  • Key agricultural inputs categories are fertilizers, seeds, farm equipment and agrochemicals

The Market

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  • All agricultural inputs are distributed through a system of importers, wholesalers and retailers

The Farmer

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Supply Trends

  • Agricultural inputs supply is mostly driven by private sector, though in fertilizer, Government imports and distributes at subsidized prices.
  • Agricultural inputs are only available in high agricultural potential areas and to large scale commercial farmers
  • Inadequate flow of information on products’ use and benefits through the trade chain.
  • Weak enforcement of inputs quality standards has led to proliferation of substandard products and counterfeits.
  • Lack of adequate financial capacity of traders to sufficiently stock for the peak periods.

Demand Trends

  • Low farm productivity is calling for adoption of new technologies and innovations
  • Growing urban population is increasing the demand for agricultural produce
  • Increasing farmer education and discernment leading to demand for quality inputs.
  • Climate change impact and land fragmentation is driving the need for more effective agricultural inputs

Key Sector Challenges

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  1. Improve agricultural inputs market information

  • Adoption of innovative ways to pass on appropriate information across the supply chain
  • Adoption of ICT, improved marketing and customer service practices across agricultural inputs’ trade
  1. Improve access and demand of quality agricultural inputs

  • Adoption of innovative trade inventory management systems
  • Enable commercialization of climate smart products and climate resilient agricultural inputs
  • Promote availability of affordable financial products for smallholder farmers and rural agro-dealers
  1. Enhance application of quality standards

  • Advocate change of agricultural inputs packaging material taxation legislation to lower inputs prices
  • Promote enforcement of agricultural inputs quality control to reduce substandard products and counterfeits

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Livestock

The Sector

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  • Livestock Sector employs 50% of agricultural labour force.

The Market

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  • Kenya’s export has never exceeded 7,500 heads of cattle.
  • Kenya’s export markets are Middle East, West, Central and North Africa.

The Livestock

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The Pastoralist

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General Supply Trends

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  • Due to poor risk management and informal systems, Kenya’s pastoralists are highly vulnerable to external shocks that limit scalable export potential or near-term pricing or supply stability.
  • Costs of livestock production have increased heavily over time and are expected to further increase with added taxes applied between counties.
  • Increasing costs may reduce attractiveness of the sector for producers.
  • Increasing efforts to formalize the sector, combined with possible entrance of new higher-end players, will result in moderate increase in production and improved efficiencies to meet growing demand.
  • Current domestic supply of cattle and sheep cannot meet domestic demand, and imports are required to fill this gap.

General Demand Trends

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  • Rapid urbanization and increasing wealth in Kenya will be key drivers of growing per capita and total meat demand.
  • Urban areas are expected to grow twice as fast as rural areas in Kenya with urban consumers demanding higher meat per capita.
  • GDP per capita is expected to increase to $1,030 in 2016 and will thus rise from a low-income country to a middle-income country.
  • Estimated average annual consumption of beef, goat & sheep is 63 kg per capita. While meat consumption per capita is much greater among wealthier segments (up to 36 kg for Expats/Tourists), the Low Income segment represents 42% of total beef demand, by volume, in Kenya with an average per capita consumption of ~9.90 kg per year.
  • Approximately 68% of all meat sales are made through butcheries, making butcheries the highest potential sales channel to target for specialty label or additional value creation through an alternative business model.

Key Sector Challenges

  • Inconsistency and unreliable supply of quality livestock.
  • Degrading rangeland that is getting unfavourable to support livestock production.
  • Poor food safety standards.
  • Poor market, data and information access
  • Unfavourable livestock sector policies and or lack of policies.
  • Poor/ inadequate dissemination of research findings to guide meat export.
  • To inspire end market consumer awareness on diversified livestock products, food safety and retail skills for enhanced markets.
  • To facilitate livestock product processing business services to increase value capture at the end of the value chain.
  • To catalyze business linkages to improve live animal trade for reliable quality and quantity supply to the end markets
  • To facilitate the adoption of sustainable rangeland management practices and land governance.
  • To facilitate private sector led livestock industry voice to promote and actively participate in contributing towards review, formulation and implementation of market friendly favorable policies both at National and County levels.
  • To catalyse access to quality and affordable animal health service delivery to livestock producers.To facilitate insurance companies and pastoralists to embrace commercial index based livestock insurance for risk mitigation.

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Dairy

The Sector

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  • Kenya has the second largest market in the dairy industry in Africa.

The Market

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  • Per capita milk consumption is estimated to be at 110 litres and projected to grow to 220 litres by 2030.
  • Of the marketed milk, an estimated 20% is processed and packaged through formal channels while 80% is traded through the informal milk market – 5% of which is processed and marketed through milk dispensers located at strategic outlets.
  • Kenya is a mainly liquid milk market with growing yoghurt, cheese and butter demand.
  • Milk and milk products are largely locally consumed, with some processors exporting minimal quantities to 9 African counties.
  • Only 10% of the estimated 300 concentrate feed millers are producing quality feed.

The Cattle

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The Farmers

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  • The sector is attracting medium scale commercial farmers.

Supply Trends

  • Increased demand for milk is encouraging farmers to seek ways to improve milk productivity
  • Dairy farmers are getting organized outside the traditional Co-operatives
  • Informal milk traders becoming organized and seeking recognition
  • Investment by County Governments in dairy has increased accessibility to cooling facilities
  • Dairy farmers are seeking access to insurance and financial support

Demand Trends

  • Urbanization and population growth leading to increase in milk consumption
  • Consumer demand for full cream milk is driving the growth of milk dispensing
  • Increased accessibility to milk through milk dispensers
  • Increase demand of dairy value added products leading to demand of quality milk
  • Increased milk demand due to increased powder milk processing capacities

Key Sector Challenges

  • Seasonal production due to poor planning on fodder production and conservation.
  • Feed availability and quality is a key issue in the industry.
  • New regulations have banned trade of raw milk through the informal markets due to safety concerns relating to alleged adulteration and contamination.
  • The cooperative movement, a key platform for milk marketing, has been facing management challenges and most cooperatives have been rendered defunct.

Current Average Farmer Gross Profit Earnings

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Raw Milk Market Segmentation

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  • Facilitating farmers’ access to quality and affordable concentrate feed and fodder by addressing key production and marketing constraints.
  • Supporting and facilitating the development of alternative milk marketing channels that meet set safety standards at affordable prices.
  • Supporting dairy hubs to engage professional management services for profitable business.

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2,500 score (according to Herfindah-Hirschman Index) of competitiveness of Kenya’s dairy processing companies.

Water

The Sector

 

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The Market

 

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General Supply Trends

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General Demand Trends:

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Key Sector Challenges

  • Water provision at utility level is shrouded by numerous inefficiencies which hamper effective services delivery.
  • There is chronic lack of data from rural areas to measure performance output and set the sector on the right growth trajectory.
  • Limited management skills and non-adoption of contemporary management tools and knowledge contribute to continued inefficiencies in the sector.
  • Reliance on voluntary water users associations in rural areas has resulted in high unreliability of services. During service breakdown, poor people buy water either from expensive water vendors or travel long distances to collect water from rivers, wells, and ponds.

 

  • To inspire emergence and adoption of service delivery models for water utilities.
  • To facilitate B2B linkage for climate smart, ICT, green financing and technological innovation.
  • To catalyze market-led approach for “base-of-pyramid” services expansion.
  • To facilitate the management of non-revenue water in water utilities.

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