Taking the Market to the Farm-gate
Poor smallholder farmers lack access to remunerative markets. They lack information about where to purchase inputs or sell produce at favorable prices. As a result, they earn low incomes.They can not afford to invest in improved inputs to raise their productivity. They remain trapped in a vicious cycle of poverty and food insecurity. The Kenya Agricultural commodity Exchange Limited has developed several platforms based upon information and communication technologies to provide smallholder farmers with reliable and timely market information, and to link them to remunerative markets. This will enable the farmers to increase their farm incomes, afford to invest in improved inputs, raise productivity, increase their incomes further, and move out of the cycle of poverty and food insecurity.
About You
About You
First Name
Adrian
Last Name
Mukhebi
Facebook Profile
About Your Organization
Organization Name
Kenya Agricultural Commodity Exchange Limited (KACE)
Organization Website
Organization Phone
+254 20 4441829
Organization Address
Brick Court, Upper Second Floor, Mpaka Road, Westlands, P.O. Box 59142-00200, Nairobi
Organization Country
Kenya
Country where this project is creating social impact
Kenya
Is your organization a
For‐profit
How long has your organization been operating?
More than 5 years
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Innovation
Entry Form title
Taking the Market to the Farm-gate
What change do you want to bring to the world?
Poor smallholder farmers lack access to remunerative markets. They lack information about where to purchase inputs or sell produce at favorable prices. As a result, they earn low incomes.They can not afford to invest in improved inputs to raise their productivity. They remain trapped in a vicious cycle of poverty and food insecurity. The Kenya Agricultural commodity Exchange Limited has developed several platforms based upon information and communication technologies to provide smallholder farmers with reliable and timely market information, and to link them to remunerative markets. This will enable the farmers to increase their farm incomes, afford to invest in improved inputs, raise productivity, increase their incomes further, and move out of the cycle of poverty and food insecurity.
What are the primary activities of your project?
Integrating and applying information and communication technologies (ICTs) and using them to collect and provide reliable and timely market information, such as agricultural commodity market prices, offers to sell and bids to buy commodities, and to match the offers and bids in trade. KACE staff visit the main wholesale agricultural markets in Kenya early each morning and collect wholesale buying prices. Using mobile phone technology, they submit the price information to the KACE ICT Department in Nairobi, which summarises the information and disseminates it by 9.A.M. each morning, through several low cost ICT based platforms we have developed. The platforms are: Market Resource Centres (MRCs) which are information kiosks equipped with computers and mobile phones in rural markets where farmers go to sell produce or buy inputs; mobile phone SMS; Interactive voice response (IVR); Internet email messages; Radio and the Market Call Centre (MCC). Farmers and commodity traders call the MCC number 0900881900 on a 24/7 basis, or send mobile phone SMS messages to provide or receive information on offers and bids, and KACE Agents at the MCC match the offers and bids, by phone and/or SMS. Once a week selected offers and bids are broadcasted on the national radio program branded Soko Hewani (in Kiswahili language) or the Supermarket On-Air, where the MCC service is also promoted.
What is innovative about your initiative? How is it a new contribution to the field?
Integrating and applying various ICTs for collecting, processing and providing reliable and timely market information targeting poor smallholder farmers often in remote rural areas, and for linking the farmers to markets efficiently and profitably in trade. The use of radio as a platform or virtual market and the Market Call Centre model for matching offers and bids in trading agricultural commodities is novel.
What stage is your project in?
Operating for more than 5 years
Tell us about the community that you engage? eg. economic conditions, political structures, norms and values, demographic trends, history, and experience with engagement efforts.
Our target clientele are smallholder farmers who dominate agriculture in Kenya, EAC region and indeed throughout Africa as the main producers. They are poor: they own small sizes of land, often less than 1 hectare in Kenya; have little or no capital to invest in increasing production; depend almost entirely on family labour; and have little or no formal education. Smallholder farmers face high transaction costs in marketing their produce, receive low prices, and hence earn low incomes. Therefore they remain trapped in a vicious cycle of poverty and food insecurity. An estimated 80% of Kenya’s population derives its livelihood from agriculture, which is dominated by an estimated 3 million smallholder farmers. And an estimated 60% of Kenya’s population leaves below the poverty line (less than US$ 1 per day). Agricultural production in the country has continued to decline over the past several decades, with increasing food insecurity in the country. This year alone, over 5 million Kenyans are threatened with food insecurity. If nothing is done, smallholder farmers and their households will remain trapped in the vicious cycle of poverty and food insecurity. In turn, agricultural growth, and hence national economic development, which is dependent upon the agricultural sector, will not be achieved. Poverty and food insecurity will get worse for the whole nation. And this is true of Kenya as it is in the EAC region and throughout Africa.
Share the story of the founder and what inspired the founder to start this project
I am an Agricultural Economist. While on graduate training at Kansas State University, Manhattan, in the U.S.A. (1972 – 1976), I learned about agricultural commodity trading through the Chicago Board of Trade. I learned that through CBOT farmers were able to get better markets and prices for their commodities. When I returned to Kenya after my studies, I wanted to start a commodity exchange similar to CBOT to assist poor smallholder farmers in Kenya to get better prices for their produce. But at that time the government in Kenya controlled all marketing activities, including fixing and controlling market prices. I realised that a commodity exchange would not work under such government controlled conditions. An exchanged requires free market conditions to function without any government interference in the market place, and where the forces of supply and demand establish fair market prices to both sellers and buyers.
After the government implemented market liberalization reforms in the early 1990s, I realized that the time had come for the establishment of a commodity exchange. Poor smallholder farmers were complaining about being exploited by middlemen in the liberalized market place: that middlemen were offering too low prices, often below the farmers’ production costs. I figured then that something needed to be done to save the poor farmers from such exploitation, to establish a fair playing ground, so that they can earn some decent return from their labor, otherwise they would remain trapped in a vicious cycle of poverty and food insecurity.
Social Impact
This Entry is about (Issues)
Please describe how your project has been successful and how that success is measured
Before the project, there were no low cost ICT-based systems providing smallholder farmers in Kenya with market information and market linkage services. The only sources of market information were traders and middlemen, who have the interest of exploiting farmers’ ignorance of the information through collusion and offering of low prices to farmers.
Through the project, a market information and linkage system (MILS) has been developed and is functional. It is composed of several low cost ICT-based platforms described above, namely: MRCs, mobile phone SMS, IVR, Internet email messages, Radio and MCC.
Through the MILS, smallholder farmers are provided with reliable and timely market information on a daily basis, and are assisted to sell their produce and purchase inputs at favourable prices.
The KACE MIS enhances the bargaining power of smallholder farmers in the market place for better prices, resulting in higher farm-gate prices and farm incomes.
An M.Sc. thesis research survey conducted in 2007 on the impact of the KACE MILS revealed that the proportion of farmers who reported that their bargaining power had improved and consequently lead to increased farm incomes was 75%. Furthermore, the thesis concluded that it was clear that during the years in which the KACE MILS has been operational, market integration improved for two staple food commodities studied, namely maize and beans.
The KACE MILS model has been adopted or adapted through consultancies by KACE or visits and learning from KACE in other countries in Africa. This has led to the establishment of the Uganda Commodity Exchange (UCE) (www.uce.co.ug), the Ethiopia Commodity Exchange (ECX) (www.ecx.com.et), the Malawi Agricultural Commodity Exchange (MACE) (www.ideaasmis.com), the Abuja Securities and Commodity Exchange (ASCE) (www.abujacomex.com) in Nigeria, and the Network of Market Information Systems for West African States (MISTOWA) (www.mistowa.org) based in Ghana.
The social entrepreneurship work of KACE in addressing the plight of poor smallholder farmers for better market access has been recognized globally and continentally by the awards of the Ashoka (www.ashoka.org) Fellowship in 2005 and the African Association of Agricultural Economists’ Fellowship in 2007 to KACE’s Founder and Chairman, Dr. Adrian Mukhebi (amukhebi@kacekenya.com).
How many people have been impacted by your project?
More than 10,000
How many people could be impacted by your project in the next three years?
More than 10,000
How will your project evolve over the next three years?
KACE feels that the MILS platforms have been fully developed and tested. A major activity going forward in the next one year is to promote the platforms for widespread use in Kenya, through farmer training workshops and media promotions. In two to three years, KACE plans to replicate the MILS model in other countries in the EAC region, namely Tanzania, Rwanda, Burundi and Uganda with a population of at least 10 million smallholder farmers.
Sustainability
What barriers might hinder the success of your project and how do you plan to overcome them?
The main barrier is the insufficiency of financial resources for training of users of KACE MILS (especially farmers) and for media promotion, to achieve widespread use of the developed platforms in Kenya, and for replicating the KACE MILS model in the other countries in the EAC region. The strategy for overcoming this financial constraint involves the following:
a) Implementing revenue-sharing agreements with mobile phone service providers to generate revenue and ploughing back the revenue into the farmer training and media promotions. KACE has already revenue sharing agreements with the Safaricom Limited and Airtel Limited services, but more favourable revenue share proportions will be negotiated as the volume of services grows.
b) Developing and providing additional complementary commission-earning marketing services to generate further revenue for ploughing back. KACE already generates commission revenue from brokerage services in matching offers and bids in trade. Additional revenue generating services such brokerage for transportation, warehousing/storage and finance will be developed.
c) Franchising Market Resource Centres (MRCs) to private entrepreneurs in rural areas to provide commercial ICT-based services in their rural areas.
d) KACE receives some grants from AGRA and ACDI/VOCA to support its activities. Extensions of these grants for another year are being sought.
e) New partnerships and grant support from development agencies such as the USAID, AGRA, GTZ and DFID will be sought for scaling out the KACE MILS model into the other countries in the EAC region.
Tell us about your partnerships
In the past, KACE has had partnerships with:
a) Smallholder farmers’ groups and associations in developing and testing its platforms.
b) The Ministry of Agriculture extension personnel in training some farmers in the use of the KACE MILS platforms.
c) The Technical Centre for Rural and Agricultural Development (CTA) in the Netherlands. The CTA has supported us with a grant for the initial development the MRC, SMS and IVR platforms.
d) The Rockefeller Foundation supported us with a grant for the development and piloting of market information collection and dissemination in western Kenya.
e) The USAID / KMDP gave us a grant to apply and refine MILS platforms to smallholder maize producers in western Kenya.
f) AGRA gave us a grant to expand the SMS and IVR platforms to handle a large number of commodities.
Current annual budget of project, in US dollars
$250,001‐500,000
Explain your selections
a) Family: The Founder and Chairman, Dr. Adrian Mukhebi, established KACE using family resources. He continues to provide labour and management services to KACE at 30% of his market value.
b) AGRA: They have been supporting us for the past one year for the development of our SMS and IVR services.
c) ACDI/VOCA: They have been supporting us KACE as their partner in the implementation of the USAID supported Kenya Maize Development Program (KMDP) in Kenya.
d) Business: KACE generates some revenues from the services it provides and ploughs back the revenue in support of KACE activities. This is the source that KACE wishes to enhance for the long term financial sustainability of its services.
How do you plan to strengthen your project in the next three years?
KACE feels that all the necessary platforms for efficient and effective provision of its market information and linkage services are now in place. In the next one year, KACE wishes to promote the platforms for widespread use in Kenya, through user training program and media promotions. In the next two to three years, KACE plans to replicate its MILS model in other countries of the EAC region.
Challenges
Which barriers to employment does your innovation address?
Please select up to three in order of relevancy to your project.
PRIMARY
Lack of access to information and networks
SECONDARY
Restricted access to new markets
TERTIARY
Lack of efficiency
Please describe how your innovation specifically tackles the barriers listed above.
a)Lack of access to information and networks: Smallholder farmers have little or no information about agricultural markets. KACE MILS collects and provides them on a daily basis with reliable and timely market information: current market prices, who wants to buy or sell, what commodity, in what quantity and quality, where, when and at what price.
b)Restricted access to new markets: Ignorance about market information restricts farmers from accessing more remunerative markets that are far away from them. Through the KACE MILS platforms, farmers are able to access such markets.
c)Lack of efficiency: Farmers face high transaction costs in accessing input and output markets. The provision of market information through MILS reduces the transaction costs, thus increasing marketing efficiency.
Are you trying to scale your organization or initiative?
If yes, please check up to three potential pathways in order of relevancy to you.
PRIMARY
Leveraged technology
SECONDARY
Enhanced existing impact through addition of complementary services
TERTIARY
Leveraged technology
Please describe which of your growth activities are current or planned for the immediate future.
a) Leverage technology: KACE is currently harnessing modern ICTs (mobile telephony, Internet and Radio) for the delivery of its market information and linkage services in cost-effective and affordable ways to poor smallholder farmers.
b) Enhance existing impact through addition of complementary services: KACE has started to develop and offer additional services to complement and enhance the effectiveness of its market linkage services: e.g. provision of quality testing and transportation. In the immediate future, commodity warehousing/storage, value addition, and financing will be added.
c) Grow Geographic reach: In next one year, KACE will promote its platforms within Kenya. In 2 to 3 years, KACE will scale out its platforms throughout East Africa.
Do you collaborate with any of the following: (Check all that apply)
Technology providers, NGOs/Nonprofits, For profit companies, Academia/universities.
If yes, how have these collaborations helped your innovation to succeed?
a) Government: The Government of Kenya has provided necessary business licenses to enable KACE to operate. Its field agricultural extension staff have collaborated in introducing and promoting KACE’s services to farmers.
b) Technology providers: KACE received collaboration from the Safricom Limited and the Airtel Limited, the 2 main mobile phone service providers in Kenya, for the development of SMS and IVR platforms, and for revenue share agreements with KACE. Other ICT companies have collaborated in the technical aspects (i.e. hardware and software) for developing the KACE platforms.
c) NGOs/nonprofits: ACDI/VOCA has financed KACE in the provision of market information to farmers under the KMDP project.
d) For profit company: ICT companies above.
 | 38 weeks agoRavi Saxena said: Adrian, Have you checked out this entry - similar work and you might have some things in common to discuss on the ... about this Competition Entry. - read more > |
| 46 weeks agoEverlyne Cherobon said: Daktari, glad to read about your work on Changemakers. Good work and keep it up. I hope you have read mine too. about this Competition Entry. - read more > |
| 52 weeks agoAdrian Mukebi updated this Competition Entry. |
| 53 weeks agoAdrian Mukebi updated this Competition Entry. |
| 54 weeks agoAdrian Mukebi updated this Competition Entry. |
| 54 weeks agoAdrian Mukebi submitted this idea. |
