MT. KENYA STAR

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25/02/2019

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04/06/2018

Avocado to swap coffee,
tea dollars in Mt. Kenya

MT. KENYA STAR

Esau Kioni from Nyeri is the former security adviser of President Mwai Kibaki. Edwin Muriithi is a primary school cm farmer in Kirinyaga. Elias Matiba from Murang’a is still a student at the University of Nairobi. James Mutuota is a small-scale farmer in Meru. They may not know each other but they are part of the avocado farming brigade that could grow avocado earnings Mt. Kenya region more than coffee and tea which combined brought in Sh149 billion last year.
Kenya, courtesy of Mt. Kenya region is set to become a major producer of avocado in the world in the next ten years, from its current seventh position because of millions of new avocado trees planted in the last three years.
Forecast by industry players and research conducted by MT. KENYA STAR, confirm that Kenya is on the verge of rivalling top avocado producers like Mexico, Peru and Chile.
Millions of new avocado trees have been planted in Mt. Kenya region in the last three years, and more are to being planted following growing awareness of the fruit’s market potential, a situation which has resulted in companies from as far as New Zealand and Israel setting up avocado growing and processing operations in the country.
Locally, agriculture companies like Kakuzi have announced that they have abandoned growing of pineapple in favour of avocado, as the world market fights for a share of locally grown fruit which is sweeter and has more oil content. The company has expanded into buying the fruit from farmers.
“Kakuzi has taken a decision to discontinue the fresh pineapple operation in favour of planting the area to Pinkerton avocado. Sales of pineapple will eventually be phased out in 2018,” said Paul Mbugua, Kakuzi’s head of horticultural department. He attributed the company’s improved profits for 2017 to higher demand for avocado and macadamia in the international market.
Although national earnings from avocado were dwarfed by those of coffee and tea in 2016, the situation is likely to change in the next ten years if the growing of the fruit is sustained and organized, industry players say
Statistics from the Kenya National Bureau of Statistics show that avocado earned the country Sh6.5 billion compared to coffee’s Sh18.8 billion and tea’s Sh129 billion in 2017.
So far, hundreds of farmers in Mt. Kenya region and parts of the Rift Valley have planted avocado fruits thanks to concerted efforts of private sector organiations, county government and national government agencies.
For instance, most county governments in Mt. Kenya region have given millions of free avocado seedlings for free in partnership with Kenya Plant Health Inspectorate Service (Kephis).
County Government of Murang’a has invested in more than three million free seedlings to farmers while Nyeri is to give two million seedlings to farmers. Companies like Amiran Kenya have brought in improved seedlings from Israel for the local market. Market for seedlings improved at farm level is also booming according to online interactions of farmers on platforms like to Digital Farmers Kenya, based on monitoring by this newspaper.
Huge Market Potential
It is not by fluke that all these companies, county governments and individuals are investing in avocado. The reality of the international market is to be found in statistics which offer Kenya unrivalled opportunities to become world’s top producer of the crop.
According to Roan Yariv, the Business Development Manager of Amiran Kenya, the biggest advantage with Kenya is that its climate is suitable for avocado growing as the crop requires areas with at least 1000mm of rainfall.
“Where rainfall is not adequate, we advise Kenya farmers to use irrigation solutions which are widely available in the local market. We have many buyers in Europe whom we can connect the Kenyan farmers to,” he said.
Kenya is the 7th biggest producer of avocados in the world with average annual production of avocados with 191,000 tonnes per year compared to Mexico, the first in the world with 1.5 million tonnes per year, according to Food and Agriculture Organisation (FAO).
“Kenya can be the leading producer and export if it can address the challenge of increasing irrigation to ensure better yield and uniformity of avocado fruits, increase avocado acreage under production, and improve the quality of avocado fruits by planting the right variety,” said Yariv.
Evidence of the market potential was released in March this year by a global research company known as Persistence Market Research. According to the findings, Kenya only accounts for 0.05 percent of income earned from avocado across the world.
The research reveals that in 2017, global market for avocado was valued at Sh13 trillion. This value is expected to more than double to Sh23 trillion by the year 2027 - in the next nine years -, the research notes.
It means that if Kenya fights to earn only 3 percent of this value, avocado will generate Sh690 billion for Kenyan farmers by 2027, a feat not even tea or coffee may reach by then unless there is a drastic increase in prices paid to farmers.
Fueling Demand
Unlike other forms of get-rich-quick schemes that Kenyans have endured and lost billions of shillings, avocado farming enthusiasm appears to be driven by genuine consumer market demand and most importantly, this demand is global.
It is unlike the quail birds farming which was driven by hearsay. Avocado farming is not a new business as many in Kenya have been on it for tens of years but on a small scale.
One of the key drivers of avocado demand is the rise of healthy lifestyle living especially in Europe, United States, Middle East, Australia, Japan and New Zealand, countries which already have high levels of income hence guaranteeing higher purchasing power.
According to various studies, avocado has high nutritional value that helps people live healthy and avoid diseases like cancers of the stomach, hearth diseases, helps remove waste in the body, and protection from diseases like stroke among many others.
There is a growing wave of healthy living across the world driven by emergence of diseases associated with modern living where most of the foods are processed and therefore contain chemicals harmful to the human bodies. Avocados that are grown organically -without use of harmful chemicals – like those of Kenya are therefore gaining popular acceptance in the world to supplement processed foods.
Demand is also driven by industries that process the fruit into oils. Avocado oil is used in the manufacture of medicine, beauty products and consumer goods like cooking oil.
For instance, at the online supermarket known as Jumia, 120ml of avocado oil costs Sh420. A litre would therefore cost Sh3,500. The international price wholesale price for a litre of avocado oil is about Sh8,000.
The third key driver of demand is the Chinese market. Research indicates that avocado fruit is becoming a status symbol among the 100 million Chinese middle class.
“It has been established that Chinese middle class is willing to pay more for the product. This demand can be explained by the increase in export to China by various countries such as Chile,” said British-based University of Huddersfield lecturer David Harvey.
"So avocado demand in China is being doubly driven, not only by their promised health benefits, but equally by their newness, exclusivity and symbolic, aspirational value to the burgeoning middle class." Because of its protein and oil content - more than any other fruit - it has been adopted by fitness gurus and health-conscious social media users as a core part of nutrition.
Bernard Kimutai, an agronomist with Fair Trade Enterprises Limited told agriculture content publisher FarmBiz Africa that the company is seeking 10,000 farmers to grow hass variety of avocados to meet its demand of over 690 tonnes of avocados that it exports to European Union markets every month.
“We have big markets in EU given it is only Spain which produces avocadoes for export in the whole of Europe. We are also near to winning a market in the U.S which will see our export demand rise soon,” he said during the avocado conference in Meru earlier this month.
“Given most farmers involved in avocado production are small-scale farmers, we, in our contract farming system urge farmers to be in groups to enable them meet the production demand,” he said.
Asif Amin, the Managing Director Keitt Exporters in Kenya said in an earlier interview that the demand for Kenyan avocados has been on an upward trend for the last three years. “We are looking into a very good future as the demand can only get better,” he said.
Like Kimutai, he encouraged farmers to form umbrella groups to enhance efficiency, enable them meet demand with quality fruits and make it easier in terms of training and trading.
Steve Barnard, President of Oxnard, U.S-based Mission Produce, the world's largest distributor of avocados said avocado market is doubling every year.
“It appears to just double every year, from what we've seen. It maybe more than double this year (2018).”
Where it Started
In March 2014, a year after he was first elected governor for Murang’a, Mwangi Wa Iria launched an initiative to streamline the marketing of avocado fruit. Murang’a is one of the top producers of avocado by small holder farmers, providing sizeable chunk of household income.
Then, one avocado was being bought at an average one shilling by brokers. Some would buy it at fifty cents. The brokers would either sell to local processors or export directly. Yet, in the export market, the fruit fetched much more money.
Among the first steps the Governor Wa Iria first took was to negotiate with processors and bulk exporters to create direct linkages with farmers in Murang’a. Long story short, the cost of one avocado immediately increased to Sh8. Today, farmers sell one avocado as much as Sh25.
The county has also formed the Murang’a County Avocado Farmers Sacco. Last year, farmers in Murang’a were paid Sh20 million as their annual bonus following direct contact with a processors and exporters prominent being Kakuzi, whose farming activities are based in the county.
That initiative by Governor Wa Iria set the pace for the current growing awareness of opportunities of avocado fruit and improved prices, setting the stage for it to become one of the top income earners for farmers in Mt. Kenya region.

15/04/2018

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a copy of the latest Issue 39 on:

Monthly newspaper for Mt. Kenya region.

15/04/2018

Billions milked
from dairy farmers

MT. KENYA STAR
Daily farmers across the country are counting billions of losses in income following drastic drop of farmgate milk prices, threatening to slow the enthusiasm that has characterized increased investments in dairy farming especially among the youth.
The cost of farmgate milk has decreased by 27 percent but prices of farm inputs and feed has increased by at least 10 percent during the same period, increasing the pain of the farmer.
A survey conducted by MT. KENYA STAR through phone interviews with various managers of dairy cooperative societies across Mt. Kenya region revealed that milk processors are now paying an average of Sh35 per litre of raw milk compared to last year when the price was Sh42.
But the farmer gets less because the cooperative societies must make deductions to pay for the cost of operating and maintaining the milk coolers from where the processors collect it. Currently, a farmer is getting an average of Sh27 per litre, a price they say is the cost of producing the same litre.
Dominant milk buyers in the region are Brookside Dairies and New KCC. They set the price they will buy raw milk and the farmer has no power to negotiate the pricing, a factor which points to a major need for the government to intervene in regulating the pricing.
Cooperative managers say their hands are tied because they have to apply soft diplomacy in balancing the expectations of farmers who are complaining about the low milk prices while still being careful not to jeopardize the contracts with the processors, in whose absence they would have nowhere to sell highly perishable milk.
“We, the primary processors, are voiceless,” said a dairy cooperative manager in Kirinyaga who declined his name published because of antagonizing the partnering processor. “When a farmer speaks, no one listens. If a farmer revolts, the processor will simply refuse to buy the milk. Where will the farmer take the milk? Farmers are highly disadvantaged in the milk value chain and the government is doing nothing about it.”
Farmers equally say they have been left alone even by bodies like Kenya Dairy Board whose mandate is to regulate, develop and promote the dairy sector. Among its functions is to “secure reasonable and stable prices” to the producers of milk.
Kenya Dairy Board senior management failed to answer general industry questions relating to pricing despite the questions being sent a week before publication of this story. MT. KENYA STAR had sought to know what measures the board is taking to ensure stability and certainty of milk prices among other issues. The board is the custodian of the dairy sector data in Kenya which if shared can help the public understand the industry and make better investment decisions.
Farmers plead for action
Farmers say it is unfair that while processors are always assured of their pricing margins, the farmer is not and blames the national government for failure to act on these issues fast enough.
“If the margins of the processor are threatened, they either reduce what they pay the farmer or increase the cost of the packaged milk. But what alternative do farmers have? None. This is unfair business practice that squeezes the farmer yet is the primary producer,” said Martin Ndirangu, a farmer from Gathuthi in Tetu, Nyeri County, who delivers his milk to Ihithe Dairy Cooperative Society.
Farmers also say they fail to understand why processed milk prices continue to be increased while milk prices at the farmgate remain the same even during drought when the commodity is scarce.
It is even worse for farmers because the just ended drought means there is no enough fodder for the cows.
"There is no fodder, and this is the biggest problem. Animals have exhausted the silage stock. This month, I used all what I earned from milk to buy fodder," said Ndirangu. At times the fodder is available but far from home which increases the cost of transport and labour.”
He laments that at times, milk payment slips read negative figures when farmers take inputs on credit from societies compelling them to dig deeper into their pockets to cater for some costs of production.
According to Ndirangu, a farmer can only be comfortable in the venture if a liter of milk is to be paid at least Sh45.
"With a cow producing an average of 14 liters in a day, then a farmer is capable of earning at least Sh10,000 per month after deducting all his expenses including hired labour," he explains.
Ndirangu says prices have stagnated at Sh27 to Sh42 for a period of four to five years though prices of feed and salt have more than doubled during the same period.
"For instance, five kilos pack of salt that cost Sh550 three years ago today goes for Sh1,050. A bag of dairy meal which retailed at about Sh1,000 then, today goes for about Sh2,400," he explains.
Evans Mwangi from Mukurwe-ini who delivers his milk at Gakindu Dairy Cooperative Society shares most of Ndirangu's sentiments.
He says the dairy is currently buying milk from farmers at Sh31. But he laments that the money is very little to cater for production costs and still earn the farmer profit from the dairy venture.
For him as well, the prices of milk at the dairy have remained constant for the last five years but prices of animal inputs continue to increase. He proposes that it is time his dairy society emulates other dairies and embarks on value addition so that it can pay more to its members.
"The cooperative societies should also look for market for its milk elsewhere where better prices are offered, and payments made promptly," he says.
He suggests that a farmer should be paid at least Sh50 for every liter delivered which he says is enough to cater for expenses and earn a farmer profit.
But asked why cooperatives pay farmers peanuts, Gakindu Dairy Manager Samson Mukundi says it is the processors, Brookside Dairies and New KCC which determine or rather dictate the prices they will pay for the raw milk.
"Brookside Dairy is currently buying milk at Sh30 per liter while New KCC is paying at Sh32. After deduction of operation costs, what gets to the farmer is around Sh27,” he said.
Many societies are paying between Sh27 and Sh28. Gakindu Dairy pays Sh31 per liter in what he attributes to competition from a neighboring dairy which have ventured into value addition.
Mukundi says it is difficult to set a standard price for milk as payment to farmers depends on production cost of each cooperative.
"There is also the government policy that requires that cooperative societies pay farmers 80 per cent of the total milk sale,” he adds.
However, dairy cooperatives like Mukurwe-ini Wakulima which embraced value addition pay relatively better prices to farmers. Wakulima is paying Sh35 per litre.
Farmers who are not members of any cooperative society also earn better from the sale of their fresh milk than those selling through cooperatives and directly to processors.
While Othaya Dairy Cooperative Society pays farmers Sh27 per litre, John Kagombe, who left the society a couple of years ago and decided to sell his milk direct to consumers earns Sh50 per liter which is much better compared to those affiliated to societies.
He says selling milk directly to consumers in Othaya town eliminated brokers who ate into his profits.
"I was among the five top producers of milk when I was a member of the society. I used to deliver over 100 kilos in a day but opted out due to poor management of the society," he says.
While opening a cooling plant at Ihururu Dairy Cooperative Society recently, Nyeri Governor Mutahi Kahiga urged the management to think of value addition to get better prices of milk in the market.
The governor told the management to look for ways of cutting production cost singling out the use of solar energy to cut on electricity bills.