KMT Agri-Inputs Case Study
Transforming Kenya's Agricultural Inputs Sector
Despite the importance of agriculture to the Kenyan economy, it has not been performing to its potential. There is limited diversification away from staple crops, such as maize, and average yields remaining below those of comparable countries. Kenyan farmers use relatively low levels of inputs. This lowers productivity and therefore farmers’ returns and their ability to reinvest in their crops.
What could we see?
- Low and inappropriate consumption of inputs (fertilisers, chemicals and seeds) per hectare of arable land, resulting in low productivity
- Less diversification of crop production (60% of total crops produced in MT was maize
- Low incomes of farmers
What was the market suffering from?
- Lack of product-specific knowledge transfer from manufacturers/suppliers to the downstream actors
- Uncompetitive market system characterised by dominance of parastatal companies in distribution of fertilisers and maize seeds
- Increased sales of counterfeit seeds and fertilisers
Why did those symptoms exist?
- Transaction oriented supply chain focused on maximising short-term gains rather than a long-term customer-driven business practice.
- Seed sector governance and regulation not fit-for-purpose, with public bodies lacking capacity and private sector lacking representation.
While several factors have affected productivity, the structure of the agricultural inputs market has been a major cause of poor performance. This stems from two main issues;
Taken together, these have had severe impacts on smallholder farmers and created several intersecting negative cycles.
Tackling Underperformance – KMT’s Vision For Transforming The Agri-Inputs Sector
KMT believes that through the right support and facilitation, transformational change is possible within the agri-inputs sector, delivering higher agricultural productivity, long-term growth, and better value to farmers.
KMT has developed two main strategies focused on the two key challenges
Strategy 1: Fostering long-term customer-oriented business strategies along the chain.
Strategy 2: Improving seed industry governance and regulation.
Signs of Sector Transformation
Change in suppliers’ behaviour
KMT’s partnership with Toyota Tshusho has not only allowed them to rapidly expand sales of crop-specific blends but has also encouraged other fertiliser companies to adopt innovative marketing strategies to increase sales.
Change in distributors’ behaviour
Distributors that received KMT support have significantly improved financial performance and grown customer networks. They have also implemented better distribution practices and maintained continuous engagements with agro-dealers and farmers.
Change in agro-dealers’ behaviour
Agro-dealers that have maintained close ties with distributors through the preferred stockist model have seen significant improvements in their sales.
Change in farmers’ behaviour
Farmers who attended demonstrations, field days or expos organised by KMT-supported distributors or suppliers have begun to adopt good agricultural practices and diversify crop production based on KMT reporting data.
Impact of increased use of crop-specific fertiliser
While there is much work to be done, the future looks promising for KMT’s vision of a vibrant agricultural inputs sector
Impact of increased use of lime and soil testing services
About This Study
Organization Of The Study
Agriculture in Kenya why change is needed
- 1.1 The importance of agriculture in Kenya
- 1.2 Kenyan agricultural performance – low productivity and dominance of maize
- 1.3 The drivers of underperformance in Kenyan agriculture
Tackling underperformance – KMT’s vision for transforming the agri-inputs sector
- 2.1 KMT’s vision for a reformed agricultural inputs sector
- 2.2 Strategies to achieve this vision
The evolution of KMT’s Last Mile Distribution Strategy
- 3.1 Two approaches to last mile distribution
- 3.2 Lessons and challenges
- 3.3 Signs of sector transformation
Seeds self-certification and scratch-off labels
- 4.1 KMT’s seeds work to date
- 4.2 Lessons and challenges
- 4.3 Signs of sector transformation
Agriculture In Kenya - Why Change Is Needed
The importance of agriculture in Kenya
Agriculture is the backbone of the Kenyan economy.
Kenyan agricultural performance – low productivity and dominance of maize
Despite the importance of agriculture for Kenya, it has not been performing to its full potential.
Average yields for major crops remain below those of other comparable nations. For example, in 2003, Kenya had similar average maize yields to Uganda and Zambia. But by 2012, average maize yields in Zambia and Uganda were 1.4 to 1.5 times those in Kenya. Over the period, Kenyan maize yields increased 6%, compared to Uganda’s 39% and Zambia’s 58%.
Maize productivity is particularly important, as it remains the dominant crop in Kenyan agriculture, comprising more than 60% of production (with an increasing share from 2003 to 2012).
Commercial crops such as tea and coffee account for less than 10%. Maize’s dominance has discouraged smallholder farmers from exploring alternatives, such as other cereals and vegetables, as they fear these may not attract buyers.
The drivers of underperformance in Kenyan agriculture
Yield gaps are driven by factors including;
The Way Forward
Building on successes to date, over the next 3-5 years KMT plans to engage up to 70 companies in the scale up of its last mile distribution work.
As a result, it is expected that three million smallholder farmers will have improved access to key agricultural inputs, adopt good agricultural practices and ultimately increase farm yields and income.
KMT plans to increase agricultural lime availability from the current 10,000 MT to 26,000 MT by 2022 and 33,800 MT by 2027
This will be achieved by engaging with the Kenya Association of Manufacturers (KAM), KEPSA, and the Ministry of Agriculture to convene thematic industry learning workshops and identify ways to promote the replication of commercial models for agricultural lime.
Additionally, KMT envisions that a total of 2,720,000 smallholder farmers will access quality crop seeds by 2022 and 3,060,000 smallholder farmers by 2027.