Enterprise

Plan to link potato farmers to global hotels gathers steam

potatoes

A farmer harvesting potatoes in the farmland. FILE PHOTO | NMG

Small-holder Irish potato farmers will in “foreseeable future” get State support to engage in contract farming for multinational restaurant chains in a plan aimed at fetching better prices and cutting costly post-harvest losses.

The developments of the first week of January that saw Kentucky Fried Chicken (KFC) restaurants in Kenya run out of pre-sliced potato imports from Egypt have laid bare the plight of small-scale farmers in getting deals from large corporates, especially multinationals.

Farmers usually battle significantly low prices during the peak production season due to lack of storage facilities which results in wastages amid weak forward linkages to enable them reach end-consumers.

The government in 2020 allocated Sh100 million each for potato cold storage facilities in Nyandarua and Meru in a bid to ease stubbornly high post-harvest losses conservatively estimated at a third of annual output.

Micro and Small Enterprises Authority (MSEA) — the state-run agency tasked with putting up the two potato cold stores and another one for bananas in Kisii — says the facilities will be ready for use mid this year.

The cold storage facilities form the first phase of the project aimed at cutting post-harvest losses for potato farmers and stabilising supply as part of efforts to help farmers fetch better prices even during peak seasons when there is glut.

The second phase will focus on building infrastructure for “basic value addition” and linking farmers through co-operatives to markets in coming years, according to MSEA chief executive Henry Rithaa.

“The assurance we want to give farmers is that as an authority in the cold storage facilities, and working with key stakeholders like the Ministry of Agriculture, the facilities should be running within four to five months,” Mr Rithaa said in an interview.

“Subject to availability of resources (budget allocation), we will then start thinking about the second phase of the project which is basic value addition. We will build support infrastructure …that’s required at the first stage of value addition like peeling, freezing, cutting them to the specifications you want and packaging.”

The MSEA chief estimates the authority will need in the upwards of Sh1 billion to build value addition infrastructure.

This comes at a time the American-owned KFC, whose franchise in East Africa is held by Kuku Foods, has said it is open to local supplies if they meet standards.

KFC, which has been operating in Kenya since 2011, maintains they have been on a journey to identifying a local supplier that has the processing, tracking and cold chain management capability to supply its chain with pre-sliced potatoes.

“Although we currently import our French fries, there is an opportunity to source the potatoes from a local supplier that meets the global KFC quality and safety specifications in the near future," Jacques Theunissen, who runs KFC in East Africa, told the Business Daily in January.

"Unfortunately, the quality and safety specifications for new supplies are proprietary to KFC."

The management of the restaurant chain has since engaged government officials from the Ministry of Trade and Enterprise Development, led by principal secretary Johnson Weru, as well as those from Nyandarua, the leading county in Irish potatoes production.

MSEA, however, says its plan is broad and not targeted at a specific restaurant chain. The plan is to create a supply chain from farmers’ co-operatives, facilitated by the counties, to storage facilities where basic value addition will be done and onto local and international markets.

The authority’s chief maintains state facilitation will be helping farmer co-operatives meet specifications of the multinationals up to the first stage of value addition.

“You know the story of the franchises and the controls that they put on the product designs, tastes and the likes. There’s an extent to which they cannot allow us to penetrate, but they should allow us to produce the potatoes and maybe do the first stage of what they require,” Mr Rithaa said.

“If we can get X Ltd to commit to be the buyer, we will be able to increase potatoes production ten-fold and revenue equally because we are sure that as we do this, these co-operatives that will be bringing them (to the cold storage facilities) know they are tailor-made for specific market. That’s a workable models.”

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