Effective Market Facilitation Drives Horticulture System Resilience in Kenya
The Kenyan mango market for export has been a strategic entry point for driving economic growth and improving the well-being of vulnerable producers in regions hit by climate change. However, in 2014, a fruit fly infestation led the Kenya Plant Health Inspectorate Service (KEPHIS) to impose a ban on exports to the European Union, costing the country an estimated $500 million each year. The Feed the Future Kenya Crops and Dairy Market Systems (KCDMS) Activity intervened to catalyze and grow the sector’s resilience to these and other shocks. The results of the activity’s facilitation approach led KEPHIS to lift the ban in 2021. Evidence from Kenya Crops and Dairy sheds light on adapting and applying successful interventions to other crops, such as avocados, to increase resilience to climate and market shocks.
Challenges in the mango market
For smallholder mango producers, export market demand helped maintain prices at a level that covered costs and generated greater returns than the domestic market. Without opportunities to export, domestic markets were unable to absorb the excess supply, and farmers’ investments of time, money and inputs went to waste. Thousands of farmers would be required to make additional investments in new technologies, which would only succeed in mitigating the fruit fly infestation if their peers did the same. Discouraged, producers started uprooting their trees to grow other crops, undermining the sector’s potential for future growth.
Kenya Crops and Dairy took an ecosystem approach to resolving the fruit fly infestation, thereby addressing supply and demand sides simultaneously. The activity engaged the private sector to ensure producers had access to integrated pest management (IPM) technologies and training in IPM practices, as well as linking producers to reliable sources of finance with contingencies to avoid indebtedness if crops should fail. In addition, the activity improved the governance and management capacity of mango cooperatives and buyer-to-farmer relationships to reliably move quality mangoes to market at prices that adequately compensate producers. Here, we take a deeper dive into some key interventions that bolstered resilience by strengthening cooperation, competitiveness and diversification, while reflecting on their relevance for the avocado market, due to its similar structure, vulnerabilities and export orientation.
Cooperation between market segments
Buyer-to-farmer relationships and a willingness to invest in producers are critical for market resilience. To address the problem of smallholder farmers selling through informal channels, which offer them little additional value, Kenya Crops and Dairy strengthened the base of business formalization by advising on policy reforms and the development of business strategies and formalized agreements. Following the activity’s support to create areas of low pest prevalence and certified export trade zones, several companies started investing in their farmers by providing trainings in IPM in partnership with IPM service providers, and offering flexible contract arrangements to encourage the adoption of IPM practices.
Challenges in the avocado sector relating to quality control can be addressed through similar strategies. Ensuring only quality avocados get exported will increase incomes for producers and boost Kenya’s reputation in destination markets. Interventions should support major buyers to introduce transparent and consistent harvesting practices, as well as sorting avocados destined for fresh consumption and those to be processed for value-added products, such as oil.
Healthy competition improves quality
To address expectations for keeping horticulture exports pest free, while adhering to minimum agrochemical residue standards, Kenya Crops and Dairy facilitated the redesign and redevelopment of the National Horticulture Traceability System (NHTS). The system now includes an array of functions, ranging from land preparation to sorting and spraying, as well as harvest, packing and shipment. Twenty exporters who piloted the system reported that it was easy to use and that the mobile application enabled them to trace produce to farms. The system will be integrated with other stakeholder platforms for registering and licensing actors along the value chain, creating an incentive for producers to adopt IPM. The NHTS facilitates the uniform and transparent enforcement of grades and standards to level the playing field and fosters an environment that promotes trust and rewards continual improvement.
The NHTS can be leveraged for avocados to prevent the export of immature fruit and address issues around inaccurate information about seedling varietals. Trade associations can support private sector distribution of seedlings, starting with mobilizing avocado nurseries to introduce a code of practice. In addition, associations are well-placed to advocate for regulations to enforce responsible sourcing and transparency of export buying arrangements.
Diverse agro-input models reduce costs and expand reach
Successful producer adoption of IPM technologies depends on agribusinesses providing affordable services to remote locations. To support input supply firms to diversify their markets and invest in digital marketing solutions, Kenya Crops and Dairy co-invested with five partnering IPM technology suppliers to increase distribution to agro-dealers in the region of the fruit fly infestation. The activity also co-invested with 11 agro-dealers to establish and expand an agent network and franchise models to reach more farmers. As a result of these innovative models, IPM technology and other input sales through agent and franchise outlets increased from $2.9 million in 2021 to $23 million the following year. The ability of the market to support innovations is an indication of learning and risk taking that is crucial for ongoing adaptation to shocks and stresses and is needed in the avocado sector as well. For instance, processing of value-added products will help ensure producers are not only reliant on exporting fresh avocados.
A blueprint for the future
Achieving results in the mango system took time, as there were few quick wins while business incentives and market opportunities were put into place. However, once producers adopted IPM practices in sufficient numbers, the percentage of fruit rejected for fruit fly damage reduced significantly. By late 2021, KEPHIS lifted the self-ban on exports, and businesses supported by Kenya Crops and Dairy made $12 million in sales that year. In 2022, 6,914 farmers contracted by the activity’s partner firms received export compliance certification. These results are attributable to a market system better equipped to manage a range of shocks, including recurrent droughts and uncertainties in the global market. Similar results could be replicated in the avocado sector through the strategic application of these proven approaches. Building on success with an ecosystem approach, future interventions should balance support to production with ensuring a vigorous export market and strong links to multiple buyers.
This post was written for the KCDMS Activity by Joanna Springer, Irene Mue and Judy Odongo. For more information about USAID’s work, visit: www.usaid.gov/kenya/fact-sheet/kenya-crops-and-dairy-market-system.
This article is made possible by the generous support of the American people through USAID. The contents are the responsibility of RTI International and do not necessarily reflect the views of USAID or the U.S. government.