Effective produce marketing key in county wealth creation

Last week, India’s Prime Minister Narendra Modi said: “If Pepsi and Coke put five per cent natural juice in their drinks, our farmers will make a lot of money, because they will not have to throw away their fruit.”

He added that “India throws away fresh produce worth millions of dollars every year because the country lacks adequate cold storage facilities and refrigerated transport”.

Modi is now seeking foreign investments and technological upgrades to reduce food wastage and expand the processing network in India.

In the same week, Murang’a County announced what looks like a breakthrough in local milk marketing systems and infrastructure. According to media reports, the county has already installed milk marketing infrastructure — collection, cooling, pasteurisation etc — in each ward.

The county has now advertised to sell the milk in bulk to the highest bidder among processing or marketing firms. This way the county has achieved a critical mass and economies of scale for its milk, and this automatically augments its price bargaining power.

The Murang’a milk business model looks quite solid and is just in time for the prospective foreign and local investors seeking to participate in Kenya’s vast dairy potential. Nigerians recently indicated plans to invest in Kenya’s dairy industry to supply the milk-deficient West African markets.

Recently in Nyeri, we heard of Germans who indicated readiness to directly import coffee from the county. Earlier, Danish merchants had expressed the same commitments.

This is direct export marketing of Nyeri coffee by pushing aside traditional “value reducing” middle players. Coffee exports from Nyeri would be expected to go directly to designated overseas markets offering the best prices.

With higher unit prices, the county branded coffee will deliver increased cash inflows for the devolved unit and farmers.

Further, with guaranteed high value markets the farmers will be motivated to enhance coffee quality to protect the county cash crop’s brand. Yes, it has not been easy for Nyeri to come this far as pushback from vested interests was strenuous, frustrating, and sometimes ugly. It has become a good case study of how a hitherto tightly controlled export market was unbundled.

The two examples from Murang’a and Nyeri can be replicated by many other agriculture-based counties.

The common denominator here is establishing effective marketing systems and infrastructure supported by modern produce quality management.

This of course calls for effective county leadership and prioritisation of agriculture in the development agenda. We can visualise a time when counties will be competing among themselves for produce markets. The end total result would be excellence for Kenya as an agricultural nation, and also improved cash generation and circulation in the counties.

There are a number of counties which face similar unexploited opportunities in respect of produce marketing. Nyandarua County is a good example.

The county is considered the “kitchen store” for the wider metropolis of Nairobi and it supplies potatoes and various vegetables. It stands to benefit if it institutes effective produce marketing systems. The county farmers are said to earn very low income due to seasonal harvest shifts and exploitation by middlemen.

The same story, I am sure, can be repeated in respect of seasonal bumper produce of fruits (mangoes, among others) in Machakos and Embu.

The counties which harvest perishable produce will help farmers by establishing cold storage and refrigerated transport to reduce spoilage. This way they can access the markets across the entire country throughout the year. They can also decide to influence market prices. The same can be said about the fish industry, either from the lakes or rural ponds.

Obvious stage

Prioritising increased productivity and marketing in agriculture has the highest potential for per capita wealth creation in counties. It may not necessarily cost a lot of cash to implement because it mostly requires organisational inputs. It involves human economic activities that have always existed for many years, albeit at sub-optimal levels.

After improved marketing, local processing and packaging of produce will be the next obvious stage of agricultural commercial sophistication.

We have recently seen county governors preoccupy themselves with push for more cash allocations. They should first exploit many other potential sources of development cash which can fund various projects including agriculture. We have seen much willingness by multilateral donors to fund specific county projects. Local and foreign investors are also queuing to invest in counties.

Foreign donors and NGOs are seeking counties which can partner with them in various projects. How effectively the governors galvanise these other potential sources of development funding is what will differentiate the enterprising and creative governors.

Each county has its own unique opportunities and challenges. Modernisation of agriculture is an option with definite multiplier impacts in a county.
Mr Wachira is the director, Petroleum Focus Consultants. Email: [email protected]