Minor International Entrepreneurship & Development 2017
Agriculture is the backbone of the Kenyan economy. It is the leading economic sector, accounting for 25% of the Gross Domestic Product. It also provides more than 18% of formal employment in Kenya. The agriculture sector is also a sector that faces a lot of challenges. We are Sven Klinkhamer, Gijs Alberts & Joost Reniers. Our goal is to contribute to setting up an economically viable food chain in and around Nairobi, Kenya. We will promote innovative technologies in vegetable production including greenhouse technology.
The project involves upscaling the existing HortIMPACT project of SNV (Dutch Development Organization). We link SME and farmer groups to innovative and proven technologies to increase farm productivity, quality and efficiency so they can compete better in markets. The project brokers connections between all stakeholders in the chain. This includes farmers, businesses and other actors in the value chain to build networks. Highly experienced Dutch companies are involved as to share their networks and knowledge.
Our tasks are to write a business case for the project, as well as a short- and long-term project plan. To achieve this a lot of market research is required. We will interview different stakeholders and find out their exact interests. In the end the business case must be profitable for everybody.
Next to that every person in our group specializes in one sub-project to add more value to various parts of the whole project. The subjects are hardware, health & safety and administration. We will do desk and field research in those subjects to write a clear proposal about how to improve the situation regarding those subjects.
Hardware includes the greenhouse and farming tools like shovels, clothing etc. We will visit the farmers to check which technologies are already in use and what the farmers’ views are on adopting modern technologies. It is also important to find out their views on investing relatively large sums of money. It is necessary to find out how a bank or the greenhouse company can support them in that, but also what their requirements are on making capital available.
The Health & Safety sub-project is subdivided into crop protection means, pollination and MRL (Maximum Residue Level) measurements to produce better and healthier crops. In the first phase extensive desk research is required to get a fair understanding of the technologies which are in use and possible. After that we will ask what the farmers’ direct customers’ requirements are. This will be linked to the ways of production which are in use or possible. To break the vicious circle of customers who can’t check the safety of their supply and farmers who don’t know how nor mind changing to healthier methods, we will try to propose a cheap and fast MRL checking method/facility.
To get out of the poverty trap it is crucial for the farmers to make investments for which they need loans. Every farmer’s financial situation must be mapped during visits. We need to investigate the financial institutions that offer loans and what their requirements are for granting such a loan. Then we will explore how the farmers can meet these requirements. Setting up administration and planning will be a big part of meeting requirements. We will look for existing or develop our own mobile applications that make it easier to administrate and plan.
Results and continuation
We are looking back to a successful and very interesting internship. During our time in Kenya, we focused on bringing all stakeholders together. This turned sometimes out to be harder than expected. Besides this general task, we spent our time on two other major subjects. That is building a business case and drafting a solution for the food safety issue in Kenya.
We talked with all stakeholders to gather information on which the business case could be based. In the end we created an interactive financial simulation model (IFSM) which can be used to calculate revenue, investments, possible yield scenarios and so on. It can be used in many phases of the project, for example to explain farmers why they should plant certain crops, or to attract funding at financial institutions. It's also usable in different context scenarios, and SNV has already indicated that they will use the model for other projects as well.
We can conclude that the business plan is viable and profitable. After 5 years, farmers can keep an annual profit of KSh 390k. If the harvest turns out to be worse than predicted, the investment plan will have to be adjusted. But even in the worst-case scenario, farmers can earn an annual profit of KHs 205k after 5 years. If the own capital that the farmers have to invest is too much, either the investment plan must be adjusted, or the possibility of borrowing more must be considered. But, these results are only valid if the assumption that all the groups have year-round water access is realistic. Two of the three farmer groups don't have permanent access to water. This means that, if we want to stick to the original targets and ambitions of the business plan, we cannot continue with (most of) these farmers, so other farmers need to be selected.
Besides that, we raised concerns about the synchronization necessary to maintain the constant production. Farmers can be resistant to the production schedule, because it means that they also have to use their land to plant less profitable crops. Besides the motivation to keep to the production schedule, there is another problem. Even if the farmers are trying to stick to the schedule, this can be really difficult. Farming is a dynamic process, it is hard to completely control the production cycle. Especially when you are not using a greenhouse. So, it is possible that some farmers are ready to harvest to early, and some too late. This will confuse the schedule and will endanger the constant delivery.
We also focused on food safety, especially on the fact that nobody is sure which pesticides are in use and in which quantities. We found an easy and fast testing method in Taiwan, which is able to detect two of the most dangerous groups of pesticides and is about 98% cheaper than conventional methods. We did extensive research on the RBPR method, including talking with many stakeholders and doing literature research to get a good indication of its suitability. During the last weeks of our internship we ordered testing materials and started a collaboration with the Department of Biochemistry of the University of Nairobi. Biochemistry students will use the material to test the method. If the results are positive, our stakeholders can choose to invest in the method. This could be one of the first implementations of the RBPR method on domestic African markets.