Farm Concern International
Winning markets for farming communities
Value chain concepts
Mumbi Kimathi Mrs.
Programmes Director
Market & Chains Analyst
Farm Concern International
• Mission
To build Pro-poor market development
initiatives and commercialization of
poor households in Sub-Saharan Africa
for enhanced community
empowerment
• Vision
Commercialized African households
with increased incomes and better
livelihoods
Value chains
• The value chain approach, is a
concept that links raw materials,
components and manufactured
goods and further highlight the
various transaction levels as good
& services are moved to final
consumers.
• Value chains are highly dynamic,
ordinarily with several value
addition levels.
Market Destinations and Value
Chains as a means
• Nature of destination markets highly
dictate value chains systems
developed by market players. Value
chains only enhance entry to markets.
Key market segments;
– Consumer markets
– Business markets
– Reseller market
– Governments & Institutional markets
– International markets
Market environment
• Traditional or formalized marketplace
determines who are the Value chain
players & systems
• Africa is characterized by traditional
markets
– Kenya’s horticulture sub-sector;
Market shares [ Based on Volume]
• 92 % Domestic market
• 8% International markets [ 6% cut flowers &
2% fruits & vegetables]
• Domestic market shares: 18% Supermarkets
& Groceries and 82% Traditional markets
Value chain discrimination
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Commercial BDS systems established
Relatively high investment levels
Medium / large-scale farmers
Low poverty index
High private sector investments
Cash economy
Active regional and global value chains
Well established business partnerships
Poverty line
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Minimally identified value chains and BDS systems
Under- developed marketing infrastructure
Minimal economic activities
Large parcels of land characterised by low productivity
Mixed food and cash economy
Semi – commercial production systems
Typical value chains
Farm gate
sales
Financial
Intermediaries
•Banks
•Credit Co.
•Insurance Co.
Village-based
broker
Level 2 Brokerage
services
Wholesalers
Market
Intermediaries
• Physical Dist. Firms
•Market service firms
• Resellers
Business markets
e.g. Processors
Specialized
consumer markets
Govt. & Institutional
market
Retailers
Consumer markets
e.g. traditional fresh
produce markets
Emerging threats in Sub-Saharan
Africa
• Weak production systems that will eventually
fail to support food chains in both rural and
urban areas
• Increased urbanization in Sub-Saharan
• Africa demands stable rural production
systems to support emerging food demands
for priority products e.g. roots & tubers,
cereals, legumes, horticultural products etc.
• Food prices would increase as result of
weak food chains thus increased cost of
living….and more slums in SSA
MOA
Benefits Analysis:
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benefits sought by the medium processors
– quality, consistency and competitive prices.
•
large scale processors often supply them with
lower grade nuts with fluctuating prices.
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With increased efficiency and economies of scale
the cottage processors can supply top grade nuts
at competitive stable prices of Ksh. 400 per kilo.
•
medium processors outsource nuts as semiprocessed from large processors
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quality assurance system needs to be installed in
the cottage processing industry.