A Path to Prosperity New Directions for African Livestock

Box 7 Contract Farming – Case Studies
Farmer’s Choice Ltd – East Africa
Farmer’s Choice was founded in 1980 and primarily produces pork products with a keen interest
in expanding its beef sales. It has offices in Uganda and Tanzania, with headquarters in Nairobi.
The company initially targeted the domestic market, but by the late 1980s had invested in a pig
slaughter and processing plant licensed for export by the Kenyan Government. It now supplies a
range of domestic, regional and international outlets. Within Kenya, about 50% of its products go to
the mass market, 30% goes to retail establishments and about 20% to tourist hotels. In addition,
the company supplies external markets, notably in Dubai and Bahrain, where it ships two tons of
products by air weekly and 10.5 tons by sea weekly. The company slaughters some 1500 pigs weekly
in its own slaughterhouse. It uses a third party to slaughter cattle, but plans to build its own
export-licensed, halal-certified slaughterhouse with the cooperation of Nortura, a Norwegian meat
processor and increase its exports of beef.
The company has imported high quality pig breeding stock from Denmark and breeds both for its
own farms and to supply out-growers (approximately 700), in an attempt to ensure a consistent supply
of well-proportioned, lean pigs. Currently it rears half of the pigs it processes; the remainder, some
40,000 pigs per year, come from third-party growers. Farmer’s Choice produces its own feeds for
pigs, which it also supplies to its out-growers at cost. A team of company-employed pig specialists
regularly visit the out growers, offering advice on all aspects of pig health and production. The
company employs over 1,000 staff on its farms, feed mill, and slaughter and production facility.
The company’s main problems are caused by escalating production costs, especially for fuel,
electricity and labour. Lack of supportive agricultural policies in Kenya have also been cited, as well
as significant expenditure to control disease including African swine fever and foot and mouth
disease. The presence of both these diseases in Kenya constrains export of pork products to many
high-value markets, despite the fact that its export products are processed 107 .
The Kalahari Kid Corporation – South Africa
Kalahari Kid is a joint venture between commercial promoters, South Africa’s Northern Cape Provincial
Government and small farmers in the Northern Cape. The company works with 956 small farmers,
contracted into 55 registered co-ops to supply sheep and goats that the company processes into
superior-quality goat and lamb products for both the local and international markets. The company
aims to market the meat, offal, leather, milk and fibre products of one million goats per year.
Kalahari Kid’s "vertical integration," model works with both emerging and commercial goat farmers
across South Africa. Both types of farmer are contracted to breed kids. The company provides an
active training and supervisory service, especially among new goat farmers, by employing a team of
dedicated Regional Agricultural Officers, who work closely with extension officers of the Provincial
Departments of Agriculture. These Regional Officers are responsible for contracting goat farmers to
deliver on specific dates, specific quantities and to a certain quality. Training in goat management is
offered, and a mentorship programme is provided to support new farmers to comply with company
standards. The company also supports farmers to form cooperatives and does cite this as a
challenging exercise.
Whilst the company has found export markets, it claims its prices are uncompetitive due to a strong
Rand and therefore concentrates on regional and domestic markets into Africa.
Five neighbouring countries have expressed interest in adopting the Kalahari Kid Corporation Model,
to integrate communities and to “uplift,” farmers. The countries have requested KKC to share the
experiences and carry out training and development on their behalf. However, the company has
elected to concentrate on implementing its work in South Africa.
The company puts a lot of effort into developing its brand and looking at innovative ways of introducing
goat meat products to consumers and studies consumer trends and requirements.
The Impetus Strategy Paper I Page 46