An acquaintance recently told me how, out of passion and desire to do good, he took up small-scale farming project in Migori County, Southern Nyanza region.
As happens with initiatives driven by sentiment rather than profit, he neither thought through it nor wrote a business plan before the plunge. What he did was to engage local labour to clear about one acre of his land, all the time visualising in his mind this tantalising, beautiful crop of maize and beans.
He invested in tillage and harrowing before engaging a couple of women from the neighbouring homes in planting, weeding, and later harvesting. He was careful to use only certified seeds and fertiliser.
Things are not always as they seem. After the harvest, which was modest, thanks to rotting and bird infestation, a close relative sat him down with a calculator.
She added all the expenses, including his frequent travel to the farm, and subtracted the same from the expected revenue based on the existing sale price in the market.
He could not believe himself when his eyes interacted with the result. His folly unravelled right before his eyes. The return on investment was a net loss.
That is when it dawned on him that this kind of venture was not sustainable. He needed to go back to the drawing board, assuming there was one in the first place if he wanted to keep pursuing his passion.
The illustration above underscores the challenges small-scale farmers across Kenya face.
The challenges include a clash between farming as a cultural practice and farming as a business, the absence of economies of scale as most farmers have very small holdings, poor farming practices including wrong choice of seeds and fertiliser, post-harvest losses, failure to add value, and poor market penetration.
Whether farming is done for subsistence or commercial reasons it should make business sense if it is to be sustainable, else it becomes a drain that further impoverishes already struggling farmers.
The first thing, which for many farmers remains a theory that is rarely put into practice, is the business plan. A business plan is primarily about counting the costs.
What are we going to produce, how much are we going to spend to produce it, who is going to buy what we produce, and for how much is it going to be bought? It might help greatly to start with the latter two – the market and the prevailing price.
If there is no demand or market or if the market is inadequate, then it makes no business sense to start at all unless the production is for some other reason such as subsistence, internal usage, or research.
If the market exists, then the next question to ask is whether the prevailing price is enough to cover the total expenditure and still leave enough as surplus or profit.
This is the classic starting from the end, then working backward. With market and market price confirmed, we can then move to the preliminaries of land preparation, which is followed by planting, weeding, harvesting, packaging, and on to market.
Sometimes, a farmer may opt to value add before going to market. Value addition can increase both the market value and the shelf life of agricultural produce, enabling farmers to grow their return on investment.
The battle for farmers, whether subsistence or commercial, lies between the business plan development and the market, and they are not small battles.
It is the battle to keep costs as low as possible throughout the value chain. It is also the battle to find a market, negotiate prices that work for the farmer, and not be taken advantage of by brokers who profit by exploiting the desperation of farmers.
Many farmers, especially those in the subsistence category, often employ family labour which means money does not leave the family to pay hired labour.
This may provide a veneer of profitability/surplus, but the reality is that family labour is not free. It should be costed at market price and the amount deducted from anticipated sales.
The truth is that a family member who is indisposed won’t have the capacity to provide labour for the period they are ill. He/she will need resources for medical care for them to return to full health and back to work.
The use of technology and recent innovations by small holder farmers can help lower their costs, reduce post-harvest losses, increase yields, and consequently improve the return on investment.
Some of these innovations include soil testing to guide crop and seed selection, the use of certified seed, the selection of seeds suited for the ecological zone, and the use of fertilizer to balance soil nutrients.
Others are the use of chemicals to control weeds and pests and modified atmospheric packaging bags to keep the harvest fresh and reduce post-harvest loss.
There is also a growing movement for organic farming which emphasizes the use of locally available materials and innovations to deliver the same result – improved harvest at lower cost.
Some of the local innovations include minimum tillage to preserve soil moisture and nutrients, mulching, use of manure in place of chemical fertilizers as well as crop rotation, and mixed cropping.
Let us end where we started. Farming, whether for subsistence or commercial, is a business venture and should be treated as such.
The reasons farming is not profitable for small holder farmers is due to a range of factors, some within and others outside the control of farmers.
Since agriculture remains the backbone of the economy and employs most of the rural workforce, we must be deliberate about empowering farmers and creating policies that make it easier for farmers to organize, value add and penetrate the market.
The writer is a communications specialist, specialises in agribusiness and climate change communications
