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May 09, 2010

Poor marketing holding back farmers

by Allan Odhiambo

Poor commodity marketing systems in east and central Africa are holding back the fight against hunger by denying food producers appropriate compensation, analysts said.

“Farmers are often victims of their own success and this leaves most of them frustrated,” Dr Seyfu Ketema, the executive director of the Association for Strengthening Agricultural Research in Eastern in Eastern and Central Africa (ASARECA) told delegates attending a food security conference in Kigali.

“A common call in this region is that farmers improve their production but unfortunately when they do so they are often left stranded with the extra produce,” he added.

Analysts said lack of well compensating marketing systems had discouraged growers who are already faced with escalating costs of production as the prices of key input such as fertiliser keep rising after the volatility of global prices of crude.

“Farm gate prices are often low even when prices at other levels are booming. We need to query where the missing link is and have it fixed for the sake of growers,” Dr Michael Waithaka, an agronomist, told the forum.

Growers of key cereals in Kenya as well as their counterparts in the wider eastern and southern Africa region are currently facing a dilemma following bumper harvests of crops that came with the recent good rains. With such huge harvests, farmers often resort to selling their produce at throw away prices rather than let it go to waste.

In Kenya, a national steering group, the Kenya Food Security Steering Group (KFSSG) has already raised the red flag following a trend in which maize farmers in some key growing areas, overwhelmed by huge harvests that came with good rainfall since December, are selling their produce for a song.

Growers in some parts of the country are currently selling maize for as low as Sh1,000 for a 90 kilogramme bag, half the normal price.

Milk producers in Kenya are also facing major challenges after production outstripped the processing capacity following good rains. This has led to the prices of the commodity falling sharply in recent weeks while in some cases farmers even resorted to pouring out their produce.

Dr Lydia Ndirangu, an analyst with the Kenya Institute for Public Policy Research and Analysis (KIPPRA), said maize prices in Kenya are expected to rise towards July when the current marketing window closes.

“What we are seeing in Kenya and other countries in the region would have been avoided with effective marketing systems. The desperation among the farmers is a clear pointer to the rot in the marketing system,” said Adrian Mukhebi, the chairman of the Kenya Agricultural Commodity Exchange.

Several countries, including Kenya, and Ethiopia have made attempts to set up commodity exchanges to cushion producers against price volatility.

“Unfortunately the commodity exchange in Ethiopia is yet to fully become vibrant. Growers are still caught by the swings of the production cycle,” Dr Tadesse Worako, an agronomist from Ethiopia said.

Dr Mukhebi said a commodity exchange based on the warehouse receipt system would be launched in Kenya within a month. “We look forward to having an operation warehouse receipt system because it would provide the much needed buffer for vulnerable groups,” he said.

The official said the KACE had already licensed four depots run by the National Cereals and Produce Board (NCPB) at Moi’s Bridge,Kitale, Bungoma and Eldoret to support the system when it is launched. Under the system, growers would deliver the produce to depots for storage and be issued with receipts.

“These receipts will serve as a guarantee for payment. Farmers who have the receipts would be free to walk to a bank and redeem cash of up to 80 per cent of the value of the commodity they are holding at the warehouse and waiting to sell,” Dr Mukhebi said.

The KACE also plans to have a regional commodity exchange for the East African Community (EAC) whose members are heavily reliant on a cross-border of key staple commodities such as maize.

“With the EAC common market coming into full operation in July we plan to go even further and have a common platform for everyone to trade on. Our markets are reliant on one another and it would only be better if we interlinked them,” the chairman said.

Dr Mukhebi said under the planned regional commodity exchange system, partners would adopt a common standard for the produce traded to help set price rates.

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