This report comprises findings of a study conducted by Kenya Markets Trust (KMT) in 2020. The study entitled “Market and Economic Feasibility for Granulated Lime in Kenya” assesses the Kenyan granulated lime market and its economic viability by estimating the supply, demand, costs, and returns/benefits at the critical value chain nodes including at the farm level, distribution level and manufacturing level.
Preliminary Reviews On Agricultural Lime
Agricultural Productivity and Soil Acidity
Farm-level agricultural productivity is affected by various challenges. They include limited access to quality inputs, low extension support, slow adoption of improved technologies, and soil degradation (FAO. 2017; Bekabil, 2014). According to KARLO (2019), yields for common crops such as maize have stagnated at around 1.7 MT/ha for smallholder farmers than some commercial farmers who achieve between 10 to 15 MT/ha while yields for beans range between o.3MT/Ha to 0.5mt/ha. To increase crop productivity, smallholder farmers often tend to increase the use of fertilisers. According to KALRO (2018), the use of fertilisers increased by 25% between 2014 and 2016. According to the Ministry of Agriculture (2018), the most commonly used fertiliser is Di-Ammonium Phosphate (DAP).
Even though the current average fertiliser use of 30kg/ha, falls far below the 50kg/ha recommended by the Abuja Declaration of 2006, nitrogenous fertilisers such as DAP have mostly resulted in acidic soils. Soil acidity also increases with heavy rainfall and leaching, use of ammonium-based fertilisers, acidic parent material, soil erosion and organic matter decay.
An impact assessment of the lime pilot project in Western Kenya conducted by KMT (2019), highlighted various lime use challenges in Kenya. A primary challenge was the limited knowledge or awareness of lime among resource-poor farmers who had limited resources to purchase lime.
Methods and Approaches
KMT’s identified opportunities
Overall, the assignment comprised an analysis of two key components, i.e. market feasibility and economic feasibility analysis.
Component One: Market Feasibility
- Demand Analysis – current and future, factors of influence
- Supply analysis – current and future
- Key market actors
- Gap analysis (demand less supply)
- Product preferences
- Willingness and ability to pay
Component Two: Economic Feasibility
- Possible investment opportunities
- Investment needs – infrastructure, skills, technology
- Cost of investment
- Product prices – Ex-factory, wholesale, retail prices
- Revenues – Total, gross, net
- Returns – ROI, BC ratio
Results and Findings
Current access and demand for agricultural lime
Knowledge of agricultural lime
Overall, 59.5% of respondents were aware of agricultural lime. The level of farmers’ awareness was considerably high especially in Aberdares (95.7%), Mt. Kenya (67.9%), and North rift (62.3%). South rift, Western and Lake Regions registered awareness levels of 49.6%, 47.5% and 48.7% respectively. Awareness levels were lowest in the Coast region at only 13.3%. Higher awareness levels in the Aberdares and Mt. Kenya regions was mainly attributed to the role of coffee cooperatives in educating farmers about lime; especially given that 3 of the 4 sampled Counties are predominantly coffee growing Counties.
Access to lime
Despite the considerably high awareness on lime (59.5%), only 29.3% of the total respondent population had access to lime (meaning 70.7% did not). Of the 29.3% who reported to have access to agricultural lime were: Nyeri (6.1%), Muranga (5.1%), Kirinyaga (3.5%), Siaya (3.3%), Bungoma (2.4%), Uasin Gishu (2%), Kakamega (1.7%) Meru (1.5%), Trans Nzoia (1.2%), Nyamira (1.2%), and Bomet (1.1%), while Kwale did not report any lime usage.
Sources of lime varied from one region to another. In Mt. Kenya, majority of the farmers accessing lime purchased it from agrovets/agro-dealers (52.3%) and Farmer Producer Organizations (FPOs)26 (34.1%). In Aberdares, FPOs (57.4%) were the largest source of lime, followed by agro-dealers (27%) and Ministry of Agriculture (11.3%)27. In South Rift, agro-dealers provided 80% of the lime while Ministry of Agriculture and National Cereals and Produce Board (NCPB) provided the remaining 20%. In Western, cooperatives provided 28.2% of farmers, Ministry of Agriculture 28.2%, and agro-dealers-23.1%. In the Lake Region (Siaya), FPOs (36.7%), agro-dealers (20.0%) and research institutions (20.0%) were the some of the major lime sources. Agro-dealers were the major source of lime in North Rift, followed closely by the Ministry of Agriculture (22.2%).
Economic Evaluation And Business Model
Farm level economics of lime use
This study found out that lime is applied on maize across all the study regions. In Mt. Kenya and Aberdares regions, lime was applied mainly in coffee. Lime was typically applied in two main methods i.e. micro-dosing (promoted by One- Acre Fund) and lime spreading/broadcasting. The average quantities currently used were 118kgs per acre but differ widely based on the application method. In micro-dosing the average usage was 0.5MT/ha (200kgs/acre) while in broadcasting, farmers used between 2 to 4 bags (100-200kgs per acre. The recommended dosage while broadcasting was 4 tonnes per ha (1.6 tonnes per acre).
Policy Issues On Agricultural Lime
Owing to the fact that lime use in Kenya is still low, there is a lack of policies and regulations on the agricultural lime production for the Kenyan Market. This is as opposed to the other related sectors such as fertilizers where regulation is managed by multiple agencies through the Fertilizers and Animal Foodstuffs Act, Cap 345, under the Ministry of Agriculture, Livestock and Fisheries (MOALF). The said act was passed to, “regulate the importation, manufacture and sale of agricultural fertilizers and animal foodstuffs and substances of animal origin intended for the manufacture of such fertilizers and foodstuffs, and to provide for matters incidental to and connected with their use…”.
Key policy challenges
The key policy challenge in the lime industry is the lack of clear quality guidelines and standards for lime. There are disparities in the terminology and application among players in the industry. Some call pelletized lime granulated with some importers calling such products substandard lime which has not gone through a standard granulation process. Owing to different blending methods and mixes, there are no companies that have similar or related products. The competition
in market share is stiff and undercutting in pricing is prevalent. The presence of many lime products/blends have created weaknesses in availability of standard products to both small scale and large scale farmers. It is also not clear as to what percent of lime should be present in blended products. The farmers are more aligned to the respective manufacturer brand who offers technical and advisory services not withstanding quality of the products.
Related to quality of lime is the dosage of application. While a number of recommendations on lime use application dosage exist following various field trials, grey areas still exist as to the quantities to be applied per unit area of land under different soil types, different crops and different acidity levels. There are also grey areas with regard to how long reapplication of lime should take. The best timing and approach to lime application is not clear, leaving farmers confused. Given that no standard exists for granulated lime, KEBS and relevant department should initiate the development of specific standard for granulated lime
On lime awareness and demand acceleration, there lacks national wide awareness creation platforms and funding opportunities. For example, and as compared to fertilizers, the government (National or County), does not have set guidelines for lime subsidies.
What is needed
Kenya Bureau of standards needs to work with industry players to come up with parameters necessary for categorization of the lime products in the market. There is need for standards that spell out the different products in the market, based on active ingredients rather than brand names which confuse customers/farmers. Some lime based products have little lime, but without standards on percentage of lime or other ingredient, it is difficult for farmers to establish if what they are purchasing is quality. Researchers, practitioners, manufactures and development partners can support the government of Kenya to come up with clear policy guidelines and standards for lime use whether the powdered or granulated type of lime.
The government subsidy programme should also be enhanced through inclusion of soil improvement products that can easily be adopted by the farmers. Among the key products to be promoted would be lime products for soil amelioration.
Conclusions And Recommendations
Overall, the assignment comprised an analysis of two key components i.e market feasibility and economic feasibility analysis for granulated lime. Owing to the low awareness, supply and use of granulated lime, the study adopted an analysis of the currently available powdered lime and used current data to project the future potential demands and supply for granulated lime. It also estimates the returns and the value of investments needed both at the farm level and at the manufacturing level.
While awareness of agricultural lime was noted to be relatively high (approximately 60%), agricultural lime use was relatively low as only 20.2% of respondents (farming households) were using lime. The level of farmers’ awareness was considerably high especially in Aberdares (95.7%), Mt. Kenya (67.9%), and North rift (62.3%). In comparison, almost all farmers (97.7%), across all the regions used different types of fertilizers. Coast had the lowest reported fertilizer usage at 83.3% with all the other regions recording more than 90%. This implies that there is still need to create awareness of agricultural lime. Currently, fellow farmer and farmer cooperatives are the major sources of information on agricultural lime for between 18% and 53% of farmers while agricultural officer reach between 2.7% and 25% of farmers in the various regions.
The success of the Kenyan granulated lime hinges on there being effective demand. There is need to create awareness on the benefits of lime application and more so granulated lime whose application is friendly to the small-scale farmers who may not have the sophisticated equipment that large scale farmers have access to.
The fact that lime is required in large quantities (up to 4MT/ha) is discouraging farmers from use of lime. Recommended quantities attract additional production costs of as much as Kshs. 24,000 per ha of land. This combined with limited credit makes prioritization of lime low among many competing financial needs. However, the additional yields and revenues achieved are able to cover the additional costs incurred. There is therefore need to consider subsidization of lime at the farm level at least to kick start farmers for the first time to apply recommended quantities of lime for them to achieve good returns.