towards a commercial model: the kenya maize farmer's perspective
TRANSCRIPT
Towards a Commercial Model: The Kenya Maize Farmer’s Perspective
Andrea Woolverton, Ph.D. Food and Agriculture Organization of the UN
Regional workshops Towards an Integrated Policy Approach to Smallholder Coordination
Nairobi, Kenya June 6, 2012
Presentation Objectives
• Project Background: Agricultural Transformation and Commercialization
• Discuss our preliminary research findings.
The question of the day: How can these findings be used to create policy options that can be put
into action incorporating linked issues?
“Agricultural Transformation”
Simple, yet so complicated.
The focus has largely been on production
Less on….
Fluctuations are found in maize availability and price during the year--- a “boom and bust” cycle.
The Project: Smallholders’ Perspective in Smallholder Transition
• Small producers (<3 acres) produce the majority of Kenya’s maize.
• If transitioning small maize producers into commercial production is the objective, then need to better understand farmers’ decision-making.
• We know that small maize farmers in Kenya have different levels of wealth and productivity (Kirimi et al, 2011).
We don’t understand the differences across smallholder
attitudes toward farming and commercialization.
Using savings and
loans, I invest in
crop production
because I think the return will
be greater than the cost.
I make planting decisions by estimating expected
returns and costs.
I incorporate effective
production practices into
my crop management.
I manage for the highest
output.
I reduce price-risk
through risk
management strategies
I plan for selling
by separating my food
stocks from selling stocks.
I manage
my harvested
maize quality
according to market
specifications.
I sell to the buyer who
offers the best arrangement
for me.
I capture seasonal
value through storage.
I calculate my
returns at the end of
the season.
A Commercial Farming Model for Tomorrow: The Farmer’s Perspective of Maize as a Business
Producer objective: As an agribusiness, my objective is to maximize my household income relative to my costs.
Source: Woolverton, 2012.
Surrounding agri-industry environment
Accessible price information Enabling, enforceable laws Responsive credit industry
Quality and trading standards Agribusiness service providers Risk management instruments
The cycle continues from season to season.
Using savings and
loans, I invest in
crop production
because I think the return will
be greater than the cost.
I make planting decisions by estimating expected
returns and costs.
I incorporate effective
production practices into
my crop management.
I manage for the highest
output.
I reduce price-risk
through risk
management strategies
I plan for selling
by separating my food
stocks from selling stocks.
I manage
my harvested
maize quality
according to market
specifications.
I sell to the buyer who
offers the best arrangement
for me.
I capture seasonal
value through storage.
I calculate my
returns at the end of
the season.
A Commercial Farming Model for Tomorrow: The Farmer’s Perspective of Maize as a Business
Producer objective: As an agribusiness, my objective is to maximize my household income relative to my costs.
Source: Woolverton, 2012.
Surrounding agri-industry environment
Accessible price information Enabling, enforceable laws Responsive credit industry
Quality and trading standards Agribusiness service providers Risk management instruments
The cycle continues from season to season.
Using savings and
loans, I invest in
crop production
because I think the return will
be greater than the cost.
I make planting decisions by estimating expected
returns and costs.
I incorporate effective
production practices into
my crop management.
I manage for the highest
output.
I reduce price-risk
through risk
management strategies
I plan for selling
by separating my food
stocks from selling stocks.
I manage
my harvested
maize quality
according to market
specifications.
I sell to the buyer who
offers the best arrangement
for me.
I capture seasonal
value through storage.
I calculate my
returns at the end of
the season.
A Commercial Farming Model
Producer objective: As an agribusiness, my objective is to maximize my household income relative to my costs.
Source: Woolverton, 2012.
Surrounding agri-industry environment Accessible price information Enabling, enforceable laws Responsive credit industry
Quality and trading standards Agribusiness service providers Risk management instruments
The cycle continues from season to season.
Maize Producers in Transition Who is the maize farmer? Does producers WANT to stay in agriculture?
Commercialization Benchmarking
• Attitudes and Objectives • Planning: Estimating Costs and Returns • Planning: Selling vs. Keeping • Maize Quality Management • Marketing: Choosing a Buyer • Marketing: Temporal Arbitrage (seasonal) Method: 500 producer survey in Bungoma and Meru (June-August 2011)---
supplemented by producer focus groups
Sample Bungoma (n=273) Meru (n=227)
Age 46 45
Education 9 years 7 years
Gender 48%F/52%M 38%F/62%M
Married 86% 71%
Land size 3.4 acres (2.2 maize) 2.1 acres (1.8 maize)
Dist to mkt/ext office 7 km mkt/6.5 km ext 20 km mkt/13 km ext
Household members 7.6 members 5.4 members
Diversification 5.5 crops 4 crops
Wealth Index 1.18 0.66
Own cell phone 77 % yes/ 23% no 60% yes/40% no
MARKETING
Maize Harvested 1264 KG (14 bags) 1127 KG (12 bags)
Sales/Purchases Sold 36%/Purchased 11% Sold 51%/Purchased 15%
Avg Prices/KG Sold 28 Ksh/Purchased 46 Ksh Sold 26 Ksh/Purchased 27 Ksh
I t l i t ll ll hi h i
Who is the maize farmer?
Who makes these decisions? Female Decision-makers Male Decision-makers
Crop mix for the season 90% self/10% otherwise 90% self/10% otherwise
When to plant and harvest 95% self/5% otherwise 88% self/10% otherwise
When to use fertilizer and qty 80 % self/20% otherwise 92% self/8% otherwise
To sell or store harvest 72 % self/28% otherwise 83% self/17% otherwise
Who to sell to and price 52% self/48% otherwise 80% self/20% otherwise
The farmer is a partnership---communication is key for commercialization.
Part 1: Outlook for Agriculture Bungoma Meru
5 year plan? 88% across sample would like to be more engaged in agriculture.
Crop to provide opportunity for youth?
Hybrid maize (30%), beans, kale, tomatoes
Grant of 50K 82% Agriculture 86% Agriculture
What would you invest in? Rent land for maize (42%), rent land for other crops (14%), Purchase tools (9%), Hire labor (8%), Buy seed/fert (7%), Invest in agriculture training (2%), other (18%)
Aside from agriculture? Business
Objectives and Attitudes
Bungoma (n=273) Meru (n=227)
Mean
Why do you grow maize? Food (90%), Immediately for cash and school fees (10%)
Do you prefer to grow or buy maize for your household consumption?
Yes 96%/ NO 4%
Is the maize available for purchase higher, lower or same quality?
Lower (93%), Same 6%, Higher (1%)
Most small maize farmers do not see maize as an income generator--- the food incentive appears to outweigh the income incentive at this stage.
Objectives and Attitudes
Bungoma (n=273) Meru (n=227)
Mean (Strongly agree/agree)
Farming is a real business.* 97% 95%
I view myself as a commercial maize farmer.*
21% 22%
If I sell all my maize at harvest, there will be enough to purchase later.
17.2% 16.8%
Storing my maize for 2 months after harvest would allow me to sell my maize at a higher price.
91% 95%
The security of working for someone else outweighs running my own business.
3.7% 7%
*The more farmers agree, the more likely they are to have higher wealth and income.
Planning: Costs and Returns/Selling vs. Keeping
• At harvest, I plan for how much to sell and how much to keep to eat: 57% • Of those that are planning,
– 50% “keep some” – 22% “no surplus” – 26% “keep what is left after cash requirements”’ – 2% “keeps per household member”
• Did the amount of food kept for food last from long rains until short rains? – 34% NO/ 66% Yes----(Why not? Consumed more than expected; had to sell for cash)
Bungoma Meru
At planting, I expect to receive a certain price upon selling.
51% Yes/ 49% NO 50 % Yes/50% NO
I check prices in town before selling at farm gate.
91% Yes/9% NO 89% Yes/11% NO
I know the current price in the Chwele/Meru Town market?
34% Yes/66% NO 46% Yes/54% NO
Planning: Costs and Returns/Selling vs. Keeping
• “Maize as a business” (namely: planning) is a new concept – “We don’t think about next season…”
– Plant and fertilize what they can afford
– Often sell at farm-gate without checking prices
– Some trying to plan for family’s maize needs
Maize Quality Management
We asked farmers if they believe maize quality management could impact price received: color, broken kernels, foreign material, moisture.
Most farmers say yes regarding price impact, but managing moisture was the most common activity actually engaged in.
There was a wide range in the ‘acceptable levels”. (40%) Between 10-20%, (22%) 3%, (15%) Don’t know.
Marketing: Buyer Choice
Western Eastern Selling outlet Female Male Female Male Farm gate trader 11.5 9.9 4.3 2.8 Local rural assembler/broker 19.7 19.8 32.6 39.8 Large local trader (lorry) 9.8 6.6 15.2 8.3 Large distant trader (100%) 0.0 2.2 2.2 0.0 NCPB (least % preferred) 0.0 1.1 6.5 0.9 Small (posho) miller 3.3 3.3 0.0 0.9 Nearby town market 9.8 13.2 28.3 33.3 Direct consumer 31.1 24.2 6.5 6.5 School 14.8 18.7 0.0 1.9 Cereal bank 0.0 0.0 4.3 3.7 Large miller
0.0
1.9
Agro dealer 1.1 0.0
Do you sell to the buyer you prefer? Anywhere from 30%-80% are selling to buyers they prefer.
Marketing: Buyer Choice
Why do you trust this buyer ?
Price is not the only reason. Accurate measurement and prompt payments are competing issues.
Western Eastern Reason for trusting the outlet Female Male Male Female Can negotiate prices 13.7 8.9 5.6 6.1 Measures my maize accurately 16.2 21.1 19.9 19.0 Offers me a good market price 16.2 24.0 24.8 24.0 I can contact this buyer after harvest 9.1 7.7 8.7 10.3 Pays me promptly 26.9 20.7 29.2 29.3 Does not disappear with money 10.2 6.5 6.8 6.1 Buy in large quantities 2.0 5.3 2.5 3.4 Knows him personally 2.0 1.2 1.9 1.5 Picks at the farm gate 3.6 3.7 0.6 0.4 Offers me credit 0.0 0.8
Marketing: Seasonal Arbitrage
• Storage Options – 76% store at home
• Why?
30% Not enough maize for storage requirements
24% Lack of information about storage
18% Fear of theft
10% No facility
10% Fees are too expensive
3% Too far away
Marketing: Seasonal Arbitrage Constraints
Percents within Length of storage (months) Factor preventing longer storage 1 2 3 4 5 6 7 8 9 10 My storage is susceptible to pest infestation 14.3 8.6 12.4 18.4 31.6 45.8 25 50 0 0 My storage is susceptible to theft 0.0 0.0 0.0 2.6 0.0 0.0 0 0 0 0 My storage is susceptible to mould or aflatoxin 3.6 0.0 11.4 5.3 5.3 4.2 0 0 0 0 I have to pay school fees 17.9 19.0 11.4 15.8 15.8 20.8 0 25 100 50 I have to pay immediate cash needs 53.6 43.1 44.8 42.1 36.8 29.2 25 25 0 50 Did not harvest enough to store 10.7 22.4 14.3 10.5 10.5 0.0 25 0 0 0 Consumed all stored maize 0.0 6.9 5.7 5.3 0.0 0.0 25 0 0 0
Majority believe storing for 3-4 months post-harvest would bring better price, yet we find that few are doing able to do this.
Challenges to commercialization: Farmers Perceived Constraints (vs. ?)
Western Eastern Access to Fertilizer/chemical inputs
1.36 1.18
Access to high quality seeds 1.63 1.31
Access to credit for agricultural inputs
2.07 2.07
Access to credit for school fees 2.15 2.09
Access to land for agricultural production
2.15 1.94
Access to water/irrigation 2.18 1.41
Access to transportation 2.21 1.75
Ability to store maize 2.21 2.09
Access to hired labor 2.24 2.16
Access to production training 2.31 2.33
Access to family labor 2.49 2.38
Access to marketing training 2.49 2.47
Access to child care 2.57 2.63
Scale: 1=Serious Challenge…..3=Not a challenge; Note: 50% had never heard of AFC
Breaking the poverty cycle…
Historically, farmers have not transitioned alone in any part of the
world.
Policy recommendations for…
an Enabling Market Environment Extension
Inputs Training
are not new and they remain critical to build a strong private maize sector, including smallholders. Yet, they are
often general and difficult to implement. In the next few days, how can you design
recommendations that can be implemented?
Which area is the most important focus right now?
