Small farmers optimistic about increasing earnings from outgrowers’ contracts

An emerging agribusiness model where companies are contracting small holder farmers to supply food and beverage processing raw materials is promising to stop the poverty cycle driven by the middle men who take up to a third of farmers’ sales.

Coca Cola and East Africa Breweries have started applying this concept that could result into higher income for small scale farmers, whose motivation for commercial farming is always dimmed by lack of market or rock bottom prices for produce especially when there is oversupply.

While this arrangement has existed between the farmers and mostly small food processing companies, the entry of the two companies with higher product output and trans-national presence is significant because they are able to take in a big number of farmers.

The concept small holder farmers being contracted outgrowers has worked successfully in the tea sector, but has fared poorly in coffee, sugar and pyrethrum sectors because of mismanagement.

Though in aforementioned arrangements, farmers usually own the processing units through cooperative societies.

Small scale farming remains the largest employment opportunity in Kenya and is central to the empowerment of women, who form the bulk of the workforce, estimated at 82 per cent, according to the World Bank. The income generated here pays for food, education and medicine.

But for many years, income from small scale farming has been inadequate because of myriad of factors but principally market access that restricts generation of revenue that can be used to purchase inputs like seeds and fertilizer for the next planting season or for crop management.

The brokers networks, that distorts the market to benefit from rock bottom farm gate prices has been a major problem.

Increasing direct market access for small holder farmers and on the farm processing of produce to add value; like turning fruits harvested into pulp, are two key factors identified by agro economists as important in improving farmers’ income.

Kenya’s Vision 2030 also targets to “raise incomes in agriculture, livestock and fisheries by processing and adding value to produce before it reaches the market.”

These measures, according to the Vision 2030 are expected to generate additional Sh80-Sh90 billion increase in gross domestic product and result in cultivation of additional 1.2 million hectares of new land.

The Coca Cola project is expected to be rolled out soon and will run for four years.

The project will benefit 50,000 farmers in Kenya and Uganda.

It is being implemented through a development group, TechnoServe with funding from the Bill and Melinda Gates Foundation.

While it was not possible to know when the programme will be launched, farmers interviewed by Business Daily in Thika were optimistic of increased earnings and possible increase in acreage under the passion fruits.