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
Female
Male
Male
Female
13.7
8.9
5.6
6.1
16.2
21.1
19.9
19.0
16.2
24.0
24.8
24.0
9.1
7.7
8.7
10.3
26.9
20.7
29.2
29.3
10.2
6.5
6.8
6.1
2.0
5.3
2.5
3.4
2.0
1.2
1.9
1.5
3.6
3.7
0.6
0.4
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?
Thank you.
Feel free to contact at
andrea.woolverton@fao.org