AGRICULTURAL VALUe ChAIn FInAnCInG In KenYA

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40 • AGRICULTURAL VALUE CHAIN FINANCING IN KENYA: ASSESSMENT OF POTENTIAL OPPORTUNITIES FOR GROWTH II Economic relevance 10% a Producers versus population 1% b Contribution to GDP 5% c Value per producer 1% d Price trend 2% e Volume trend 1% III Food security 8% a Production, storage and consumption Weight Explanation Score 6% b Cash sales 2% IV a Financial institutions’ interests Existing credit and risk management 12% 4% b Diversification of services 4% c Access to buyer credit 4% For each value chain, divide the number of producers over Kenya’s population (39,000,000). Allocate percent scores from 1% to 0% on the basis of this ratio with 1% going to the highest value and 0% going to the lowest value. Round to 1% or 0% to produce score. For each value chain, divide the commodity’s annual total market value by Kenya’s GDP ($31.4B). Allocate percent scores from 5% to 0% on the basis of this ratio with 5% going to the highest value and 0% going to the lowest value with results in between rounded to the nearest whole number (1%, 2%, 3%…). For each value chain, divide the commodity’s annual total market value by the total number of producers. Allocate percent scores from 1% to 0% on the basis of this ratio with 1% going to the highest value and 0% going to the lowest value. Round to 1% or 0% to produce score. For each value chain, record the average annual price in international markets for 2006 and 2008. Calculate the percent change. Allocate percent scores from 2% to 0% on the basis of this ratio with 2% going to the highest value and 0% going to the lowest value. Round to nearest whole number (2%, 1% or 0%) to produce score. For each value chain, record the average annual volume in international markets for 2006 and 2008. Calculate the percent change. Allocate percent scores from 1% to 0% on the basis of this ratio with 1% going to the highest value and 0% going to the lowest value. Round to one or zero to produce score. (domestic consumption and import exceed export) 1. 2. 3. 1. 2. 3. 1. 2. 3. 4. 1. 2. 1. 2. Evidence that the commodity is a food staple which is produced, stored and consumed domestically = 6% Evidence that the commodity is a food staple which is only produced and consumed domestically = 3% Evidence that the commodity is not a food staple = 0% Strong evidence of a cash market for the commodity = 2% Evidence of a cash market for the commodity = 1% Evidence of high household consumption (above 50% of volume produced) = 0% Evidence of both creditworthy borrowers and third party risk management (insurance for assets, price insurance, weather insurance, etc.) = 4% Evidence of creditworthy borrowers only = 2% Evidence of third party risk management only = 2% Evidence of neither = 0% Evidence of multiple saving and credit products being offered to value actors = 4% Otherwise = 0% Evidence of finance provided from one value chain actor to another to facilitate supply = 4% Otherwise = 0% 1% 4% 0% 2% 0% 6% 2% 4% 4% 0%
V National agenda 10% a GoK priority 4% b GoK intervention 6% VI Complementary Ta and BDS AGRICULTURAL VALUE CHAIN FINANCING IN KENYA: ASSESSMENT OF POTENTIAL OPPORTUNITIES FOR GROWTH • 41 Weight Explanation Score 6% a Access to services 2% b Value chain service provision 4% VII Geographical spread 20% a Concentration of clients 10% b Access to minimum infrastructure 10% 9.2 FUNCTIONING SUPPLY aND DEMaND RELaTIONSHIPS With respect to inputs, the maize value chain was difficult to assess on the basis of the documents provided for review and beyond. While input supply was certainly not considered a constraint and the literature reviewed noted that inputs were widely available, there was no evidence that input supply was competitive. In fact the price and the quality of inputs were listed as constraints to use, availability was not. The maize value chain received one percent of the two percent available for this rater. Commercialised production as evidenced by commercial yields did not feature significantly in the literature provided for review. Maize yields in Kenya have declined since the maize sector was liberalised and even more so over the past two years due to, among others, post election violence, drought and rising costs of inputs. According to the literature reviewed, high value inputs are neither demanded nor purchased by farmers. Nonetheless, there still remains 1. 2. 1. 2. 1. 2. 3. 1. 2. 1. 2. 3. 4. 1. 2. Evidence that development of the value chain considered a priority by GoK policymakers = 4% Otherwise = 0% Evidence that the GoK has interfered in the value chain resulting in domestic market distortions = 0% Otherwise = 6% Strong evidence of complementary service provision, including BDS support, TA, etc.= 2% No evidence of complementary service provision = 1% Strong evidence of a complementary services gap = 0% Evidence of service provision between value actors to facilitate supply = 4% Otherwise = 0% Strong evidence of production and processing concentration in over five tightly defined geographical areas = 10% Strong evidence of production and processing concentration in two to five tightly defined geographical areas = 5% Strong evidence of production and processing concentration in one tightly defined geographical areas = 2% No evidence of production and processing concentration in a tightly defined geographical area = 0% Strong evidence of existing infrastructure (roads, buildings, telecommunications, power, etc.) in the regions where production and processing are concentrated = 10% Otherwise = 0% 4% 0% 2% 0% 10% 10% a commercialised maize sector though smallholder production is clearly declining. According to the literature reviewed, contract farming is a critical need but is as yet unusual in the maize sector. Tea, sugarcane and french-bean producers benefit from the provision of embedded services such as credit for agricultural inputs. For these value chains, the producer cooperatives/ SACCOs remain a significant supplier of agricultural credit and especially in the Central Highlands and Western Transitional zones. Therefore, based on the limited evidence of commercial production (while accepting that commercial production is generally in decline), the authors awarded five percent of the ten percent available for this rater to the maize value chain. Based on the documents reviewed, marketing competitiveness for the maize value chain is fairly stiff as evidenced by the observation that farmers retained 80% of the market price of the maize they produced in 2008. This is probably due to insecurity, drought and Governmental intervention in the market driving up the farmers’ seller’s market position. Nonetheless, when compared
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Page 3 and 4: Table of Contents AGRICULTURAL VALU
Page 5 and 6: Table of Contents AGRICULTURAL VALU
Page 7 and 8: Chapter 1 INTRODUCTION AGRICULTURAL
Page 9 and 10: Categories and raters Discussion Ca
Page 11 and 12: AGRICULTURAL VALUE CHAIN FINANCING
Page 13 and 14: Contribution to GDP 5% c Value per
Page 17 and 18: DOCUMENTS REVIEWED AGRICULTURAL VAL
Page 29 and 30: DOCUMENTS REVIEWED “Leg Up for th
Page 33 and 34: Chapter 7 FISH VALUE CHAIN 7.1 BaCK
Page 35 and 36: VI Complementary Ta and BDS AGRICUL
Page 39 and 40: 8.1 BaCKGROUND AGRICULTURAL VALUE C
Page 41 and 42: V National agenda 10% a GoK priorit
Page 43 and 44: 8.6 NaTIONaL aGENDa AGRICULTURAL VA
Page 45: Chapter 9 MAIZE VALUE CHAIN 9.1 BaC
Page 51 and 52: 10.1 BaCKGROUND AGRICULTURAL VALUE
Page 53 and 54: Value chain service provision 4% AG
Page 57 and 58: c Value per producer 1% d Price tre
Page 79 and 80: BIBLIOGRAPHY MaIZE AGRICULTURAL VAL
Page 87 and 88: Irungu, J. Kenya National Rice Deve
Page 89 and 90: NOTES AGRICULTURAL VALUE CHAIN FINA
Page 92: info@fsdkenya.org • www.fsdkenya.

AGRICULTURAL VALUe ChAIn FInAnCInG In KenYA

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