October 18, 2013. Over 200,000 smallholder farmers across Western and Nyanza regions are selling their produce at triple the market price thanks to a value addition oriented firm that buys directly from them, assuring them of a stable market price at a time when market vagaries have discouraged agribusiness take off in the region. Concentrated in the purchase of vegetables, horticulture and livestock, the idea is part of a wider initiative to bring sanity in the farming sector where farmers are sure of where the market for their produce is and at what prices.
The idea is being championed by Pandi Fresh, a value addition exporting company, explained Dennis Mbira the Head of Sales at Pandi Fresh. “Many people would wish to engage in farming but the biggest hurdle to them is always where to sell the produce. As a result, when a farmer realizes that the markets are overwhelmed with similar products, the fear of losing yields which in most cases are perishable sees them selling them at the mercies of brokers at paltry prices.”
The company enters into a contract with a farmer to sell their produce to the company at a particular price and in most cases the price is either twice or three times higher compared to the prevailing market prices. “Our farmers have the confidence that they are engaged in a particular farming venture and will sell the produce at a given price irrespective of whether there will be a glut in the market and the company is in a position to absorb all the produce so the more a farmer produces the more he earns,” said Mbira.
Farmers willing to partner with the company approach the agronomist officers in the field who are the main representatives of the company. The farmer’s details are noted down and they are later invited to visit the company to sign a contract which is commitment from the two parties that they will have a mutual relationship in their agribusiness partnership. Mbira explained, “The main point in the contract is that the farmers will sell the particular produce at the set prices of the company.
The company however does not want to become a monopoly to the farmers and for that matter, we do not compel them to be the sole buyers of their produce and we leave the option of selling to any other party open to the farmer.” The prices at the company although almost triple compared to the market prices, are mostly driven by quality as well as quantity of the produce. The products delivered to the company are graded into three categories depending on quality. For instance, a 75 kilogram crate of grade one tomatoes that fetches Sh1, 000 in the market is bought at Sh3750 by Pandi Fresh.
Prices of other farm produce like poultry, cattle, pigs, sheep among others are mainly determined by the weight and quality of the animal. The company has partnered with feed producers whom farmers are advised to buy feeds from in order to lower the cost of production. Mbari noted, “We advise our farmers that if they would like to make business sense out of the venture, they should source their feeds from affordable feed companies one of such companies which is reputable for their affordable and quality feeds is Kitengela animal feeds company.”
He added that most of the common feeds companies have prohibitive prices and the cost per unit for a broiler for instance is about Sh300 which will make a farmer want to overprice the bird and eventually lack even where to sell it. Pandi fresh company buys a broiler bird that weighs about 1.3 kilograms -1.4 kilograms at Sh390.
Farmers are also given expertise knowledge on how to always employ the best husbandry methods in order for one to not only get higher yields but also of very high quality by a team of agronomist officers from the company. Mbari also added that since their products are mainly for the export markets, they invest most of their resources in helping farmers produce best from their farms. “Our team of agronomists and crop officers visit the farmers frequently to ensure not only does a farmer use best husbandry but also employ the best post-harvest handling methods as most produce lose their quality due to poor post-harvest handling which is largely due to ignorance from the farmers.
By doing this, we ensure that both parties have benefited from the venture; the farmer gets high quality and higher yields which translates into the more lucrative grade one payment while the company also easily finds market for the high quality produce,” explained Mbari.
Pandi Fresh which has been in existence for over three years have two factories situated next to Kisumu airport to facilitate their export of the produce which in most cases are perishables and range from fruits, vegetables, animal products among others. The two factories have a capacity of over 500 tonnes and this can be satisfied by over 500,000 smallholder farmers a point that Mbari noted they still welcome more farmers on board.
The company makes fruit juices, syrup, Cannes vegetables and the meat products. Mbari noted that most of the products that are completely processed are mostly the grade three produce and that grade one is exported while grade two is partly exported and partly supplied to local entities like hospitals and hotels.
The company has established markets in Juba south Sudan, Goma in the Democratic republic of Congo, Luanda Angola among other countries in Africa. They also have emerging markets in Europe and Asia. According to Mbira, the initiative of contract farming with smallholder farmers is bent towards bringing more people on board in agriculture as it is the backbone of Kenya’s economy.
He added, “The more farmers efforts are appreciated by better stable market prices, the more value addition companies will sprout and this will lead into increased employment opportunities for the youths, stabilize the market prices for processed farm products like flour and enable our economy to take off.”
By Julius Omondi for Farmbizafrica