Productive Employment in the Segmented Markets of Fresh Produce

Please note that the project leader has changed to Dr J. Mariara (Partnership for Economic Policy, Kenya)

This research project on ‘Productive employment in segmented markets of fresh produce’ investigates the current segmentation of the horticulture sector in Kenya in two sub-sectors of the avocado sector, one modern and innovatively programmed and the other more traditional and non-programmed. In the former, farmers are directly linked to exporters through contractual relationships and produce according to (certified) Global Good Agricultural Practices (Global GAPs) and products can be traced back to the producer. In the latter, farmers sell their outputs to ‘brokers’ or middlemen using non-certified production methods and products cannot be traced in the production chain. The project studies the labour market conditions in each of these sub-sectors using the avocado sector as a case-study. The aim is to study alternative approaches for modernizing the avocado sector in Kenya and the effects of these approaches on small-scale avocado growers in terms of productive employment. The following are the main interim findings and policy messages from the mid-term report.

Interim findings

  • The avocado sector in Kenya has high growth potential, however, small-scale growers are not benefiting from the sector’s full potential because of low prices, poor quality and under-developed production systems, as well as the traditional marketing and supply chain.
  • Effective structural change is needed in the avocado sector to allow individual small growers to profit from export opportunities. For small growers to participate in global value chains the following impediments must be addressed: lack of proper training, limited production, supply challenges, high transaction costs, lack of market information, inadequate farmer organization leading to a dominant role played by middlemen or ‘brokers’, and lack of access to credit to enable farmers to invest in more productive varieties and methods.
  • Lack of training in proper harvesting methods and other Global GAP standards limits the capacity of the small growers to participate in, and benefit, from the export market. The harvesting of avocados requires technical skills in terms of understanding the maturity period and quality standards required by the premium quality avocado exporters. But even when farmers have adequate information and knowledge about the quality standards and export requirements, they do not always sufficiently supervise the fruit pickers, because of old age or simply lack of attention to the harvesting process. Lack of proper training on production and post-production management as well as Global GAP standards and the limited capacity of the small-scale growers leads to a high rate of rejection by export companies (particularly to EU markets), creating significant disincentives for small growers to participate in the chain.
  • The decision-making process regarding the planting and harvesting of avocados is dominated by men, however, women play a minor role in the avocado production process. The same holds true for youth – avocado tree planting in Kenya is dominated by older men although young people play an important role in the harvesting process.
  • Lack of availability of market information plays a critical role in the decision of farmers to invest in the production of avocados. Farmers do not directly receive individualized and clear information about the final grading of their produce by exporters (including how much of their produce was rejected and the final price based on the quality and quantity of the avocados supplied). Access to such information would increase the awareness and motivation of farmers to engage in avocado production and marketing.
  • Farmers indicated lack of transparency within the farmers’ group and with exporters as the main factor hindering production and productivity.
  • The leading avocado export companies are not interested in investing in modernizing the value chain, including providing capital credit, relevant training and timely market information. Except in cases where local government agencies are facilitating interactions, farmer contracts with leading export companies are not always clear and do not allow enough flexibility for innovation in the sector. The export companies consider research on improvements to the avocado sector as the role of donors, NGOs or the government and, hence, are not interested in collaborating or providing financial/logistical support to evaluate specific interventions.

Policy messages

Start with training for avocado farmers on production and post-production processes: Farmers need intensive training on production, harvesting and post-harvest management techniques to participate fully in the value chain and benefit from export markets.

  • Develop trust between and among farmers and exporters: For farmers to realize their potential, trust needs to be established among members of farmers’ groups and with exporters by providing appropriate and timely information on market prices, quality standards, and avocado rejection rates. Existing value chains can be made more inclusive by making information about new or expanding contractual schemes equally available to all avocado farmers.
  • Public-private partnerships are needed to modernize the avocado sector: Public-private partnerships could be a vehicle by which to test new ideas for modernizing the avocado sector, as the major export companies are currently not keen to collaborate with research institutes to innovate and improve the value chain.

Summary

The fresh produce sector in Africa is a promising and dynamic sector driving growth. Also, or even because of this, there is an increasing segmentation in this sector, locally but also globally, between a modern and innovative programmed world and a more traditional non-programmed world. It is not clear, however, how this shift from a non-programmed to a programmed world affects the level and nature of employment in the fresh produce sector, including for smallholders, women and youth.

The main objectives of this proposal are (i) to address the impact of this structural transformation within the dynamic Kenyan fresh produce sector on productive employment, with a focus on the avocado production sector, and (ii) to test, in close partnership with the main local stakeholders, the impact of proposed policies in the National Avocado Commodity Business Plan on segmentation and productive employment.

Products

Publical information

Details

Project number

W 08.370.104

Main applicant

Dr. B. Shiferaw

Affiliated with

Partnership for Economic Policy, Duduville Campus

Team members

P. Ade, M. Amare, Dr. R.A. Fort Meyer MSc, E. Johnny, A. Mutiso, Prof. dr. R.H. Oostendorp, Prof. M.P. Pradhan, S.P. Rupert MSc, Dr. B. Shiferaw

Duration

01/09/2014 to 28/02/2017