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Maize Value Chain Partnership Launched

Maize Value Chain Partnership Launched

Maize Value Chain Partnership Launched

Maize Value Chain Partnership Launched:

The Grow Africa Secretariat has initiated a new value chain project aimed at increasing growth in sales volume and revenue in maize value chains in Africa. The project will initially focus on Kenya, in partnership with the Kenya Ministry of Agriculture and the East African Grain Council (EAGC), with the aim of expanding to other maize-producing countries in East Africa.

Maize farmers in Kenya lose up to 53% of potential net profit from their harvest through a range of factors including lack of suitable inputs and mechanisation: post-harvest losses due to excessive moisture content resulting in disease, and lack of secure storage facilities, which contributes to losses due to theft, pests and rodents and also puts farmers in a position where they are forced to sell their produce directly at harvest, rather than being able to wait for a time when prices are more favourable.

Although value chain stakeholders have long been aware of these issues, they have not, as yet, had the means to decide which of the potential interventions and investments in mitigation - from increased mechanisation, to fumigation, to storage facilities - will result in the highest returns.

Over the last 15 months the Grow Africa Secretariat, with the support of AT Kearney,  has developed the Grow Africa Gap Analysis tool for Agriculture (GATA)  -  a data analysis and decision support tool to enable value chain stakeholders - from farmers, to agri-business owners to government officials -  to understand which investments in pre- and post-harvest improvements will yield the highest returns and hence which public-sector interventions will have most impact on improving farmer productivity and profitability.

Few of the potential solutions to improving profits in the maize value chain can be realized by one stakeholder alone. Warehouse receipts systems that give farmers access to credit when their crop is brought for storage rather than cash only on sale, as one example, typically require the collaboration of input providers, financial service providers, and both public and private sector buyers to be viable. Grow Africa, as a platform for bringing together these stakeholders, is in a unique position to drive forward collaboration and concrete joint projects between them.

On 11th February, 2015, the Grow Africa secretariat hosted a workshop for maize value chain stakeholders in Nairobi, Kenya, in collaboration with the Eastern Africa Grain Council (EAGC) and the Ministry of Agriculture. The workshop brought together a diverse range of public and private sector actors with a stake in the agricultural sector in Kenya including AGRA, Chase Bank, Transnational Bank, Green Arava Group, Safaricom, Export Trading Group, East African Farmers Federation (EAFF) and Equity Foundation, to validate a pilot study applying the GATA to the maize value chain. The study was conducted in partnership with the Ministry of Agriculture and the Kenya National Farmers Federation (KENAFF) between August and December 2014 in Narok, Uasin Gishu, Trans Nzoia and Bungoma Counties, which together produce 45% of maize in Kenya. The pilot primarily targeted small and medium scale farmers, who are responsible for majority of the maize production in the country and yet have the biggest productivity and profitability gaps to address. The GATA study assessed the financial viability of a range of agricultural investments that can effectively advance farming practices and in the process identified cost-effective investments that could yield immediate returns to farmers without necessarily relying on significant external support. Such cost-effective and viable investments were found to relate to post-harvest management, storage and improved access to markets. The study found that interventions in post-harvest management could reduce production losses by up to 95%, while streamlining farmers’ access to local markets and millers increased farmer incomes by 11% and 25% respectively.

"This study makes a clear business case for a set of investments that will result in increased revenues for stakeholders. It also provides a blueprint for the steps that need to be taken to improve the enabling environment such that the private sector will put money on the table," says Irungu Waithaka, Director of Agriculture, Crop Resources, Agribusiness and Market Development Directorate in the Kenya Ministry of Agriculture, Livestock and Fisheries.

Some of the challenges identified by stakeholders at the workshop included creating demand-driven partnerships across the maize value chain; creation of suitable financial products and investments in the infrastructure - particularly information and communications technologies - that will allow farmers to take advantage of these products. The Grow Africa Secretariat has identified a matrix of business solutions along six leverage points in the value chain (small farmer production; agro-inputs and commodity purchasing business models; finance; value chain competitiveness; grain infrastructure and; market systems) and, as a next step, will identify and bring together interested stakeholders to map out investment blueprints in each area.

The workshop also saw the signing of a collaborative agreement between EAGC and Grow Africa to create a framework for increased cooperation between the two institutions in addressing challenges in the domestic and regional grain sector value chains.  The EAGC is a regional membership organisation operating in 10 countries in Eastern and Southern Africa comprising key stakeholders in the grain value chain including input suppliers, producers, traders and processors as well as support functions such as financial institutions and development partners.

"With its strong private-sector links and focus on supporting strategic value chain projects that have the potential to deliver value to agri-business owners and smallholder farmers, Grow Africa is a strong partner for EAGC in delivering on our mandate of improving the policy and trading environment in the Eastern Africa regional grain trade, strengthen market linkages and reduce the constraints along the grain value chain," says EAGC Executive Director, Gerald Masila.