Posted on Leave a comment

Kenyan Avocados: Connecting to High-value Export Markets

Kenya is frequently cited as a “bright spot” in African agriculture. Conducive government policy, strong donor support and private-sector leadership have helped to create success stories in exports to the EU. Policy changes supporting this growth include the liberalization of the fertilizer market. Following the removal of price controls and subsidies, increased competition led to lower fertilizer end-prices, triggering a 14 percentage-point increase in adoption rates among smallholders. Today, agriculture amounts to half of Kenyan GDP and employs 75% of the Kenyan workforce. Kenyan policy-makers and agribusiness players continue to prioritize the growth of agricultural exports, both in green beans and other cash crops like avocados. be

Kenya is one of the world’s largest producers of avocados, with production of 200,000 tons in 2017.For comparison, the largest producer is Mexico with about 1 million tons produced annually. Local varieties dominate Kenyan production (about 70% of total), whereas Fuerte and Hass, the varieties suitable for export, make up approximately 20% and 10%, respectively.

 

Kenyan Avocado Export Supply Chain

 

An estimated 70% of Kenyan avocados – even those for export – are produced on smallholder farms. When not linked to exporters through an out-grower scheme, farmers market their avocados through middlemen, either legally government-certified agents or unofficial brokers. These middlemen typically harvest avocados themselves and organize transport to Nairobi packhorses. This initial leg of transport is usually done with small pickup trucks. Once at the factory, avocados are quality-checked, sorted, washed, waxed, pre-cooled and packed in cartons. Once packed, exporters stuff the cartons into refrigerated containers (“reefers”) outside the processing gate, and shipping companies then transport the reefers to the Mombasa port. There, the reefers, which are controlled-atmosphere-treated, are loaded onto a ship and later trans-shipped in Salalah, Oman. Finally, the reefer containers are unloaded in Europe and delivered to importers

Most often vertically integrated with exporters, packers procure and package a 4-kilogram (kg) carton of avocados at a cost of about US$ 4.10. An additional US$ 1.60/carton is required for shipping to Europe by sea in a reefer. With the import price fluctuating around US$ 7-8/carton, the supply chain overall is profitable. This situation was enabled by government-led infrastructure investments, followed by private-sector investment in reefers, which helped to reduce transport costs versus expensive air shipments. Once this tipping point of profitability was reached, investments started to naturally flow into the sector.

Impacts of Supply Chain Barriers and Potential Solutions

Successful initiatives to overcome supply chain barriers are presented, as well as some remaining opportunities to overcome challenges to future growth.

Transport and Communications Infrastructure

Mombasa is the pivotal port for East African countries and is accessed via the main corridor, the Nairobi-Mombasa highway. By the early 1990s, the quality of this road had deteriorated due to high traffic. The Kenyan government, with the help of the World Bank and the EU, decided to invest in rehabilitating the highway.  Investments were made over approximately a decade, ending in 2005. Travel time from Nairobi to Mombasa was reduced by 40%, from 12 to 7-8 hours, and costs decreased as well. Typically, road rehabilitation projects in East Africa drive operational cost reductions of 15%. Although this saving has a marginal impact on the Kenyan avocado industry – less than 1% of the European end price – the incremental benefit is applied to many different value chains. The overall benefit for Kenya and Kenyan agricultural export value chains is thereby important.

Also Read: how to grow peaches and nectrines

 

Introduction of reefer container technology has made Europe accessible for Kenyan avocados.

One of the major challenges previously faced by this industry was the lack of suitable transport equipment. If not cooled, avocados ripen faster than the time it takes to ship them to Europe. Exports to Europe, therefore, were only possible through expensive air shipments. Alternatively, transporting by sea was only feasible for the more proximate Middle East, where avocados sell for much less than in Europe.

Recognizing this opportunity, exporters first engaged temperature-controlled, break-bulk vessels to replace expensive air freight. They then approached A.P. Moller-Maersk to present the business case for refrigerated container transport. Shipping companies consider a number of factors when evaluating a value chain for reefer investment. Most importantly, they look at the economics and growth potential of the value chain. In this case, if Kenyan avocados were able to be sold profitably when transported by air, there was a clear case for investment in sea freight, provided quality could be maintained during the journey. In addition, key enablers must be in place to ensure sustainable operations. Fortunately, the Kenyan government had invested in the Mombasa port and was able to provide the necessary infrastructure (e.g. specific plugs, berth capacity) to support reefers. Continuous investments are being made to accompany the growth of reefers in the Mombasa port, including a new berth to open this year.

Read Also:Macadamia nuts farming: How to get most returns

Early packing of containers ensures an uninterrupted cold chain. When dealing with perishable produce, maintaining an uninterrupted cold chain is critical for food quality and safety. When reefers were first introduced, exporters preferred to transport avocados to Mombasa in regular trucks and pack the reefers at the port. Over time, exporters realized that they could command a price premium in EU markets if a cold chain was begun as close to the farm as possible. This price premium outweighed the costs of bringing an empty reefer to Nairobi and loading it at the pack house gate. This extended cold-chain-arrangement also simplified logistics by eliminating one touch-point at the port, and is now common practice.

For more information on how to become a better Hass Avocado Farmer, kindly visit our offices or contact us.

Posted on Leave a comment

Regaining Kenya’s passion fruit farming

Kenya exported passion fruits in the 90s and early 2000 but since 2003, decline in production started because of pest management challenges.

Despite Kenya’s potential to grow and export passion fruits, production of the highly profitable crop has been on the decline over the past decade with no imports going into the European Union.

The Fresh Produce Exporters Association of Kenya Chairman Apollo Owuor told a gathering of farmers, buyers and development partners at a conference titled Making Kenya the Global Leader in Passion Fruit Production and Marketing held in Eldoret last month, Kenya produced and exported the fruits in the 90s and early 2000 but since 2003, decline in production started because of pest management challenges.

The European market has strict guidelines on pesticides residues and passion was reported to contain above allowable limits.

He added there has not been efforts to revive the industry partly because passion is listed by the Ministry of Agriculture as a minor horticultural crop therefore not in government policy for priority. The Agriculture Food Authority Horticulture Directorate head Zakayo Magara admitted passion fruit is listed under 100 other minor crops.

Following the day-long deliberations, the Council of Governors Agriculture Committee, represented by Anne Koech, County Executive Committee Member in charge of Agriculture, Kericho, made a commitment to propose and support the upgrading of the crop to a major so that funds can be allocated to development of passion in counties earmarked as suitable to grow it. She said the county governments would subsidise purchasing of seedlings to improve production and create market linkages to streamline marketing among in Western region, considered as a high potential passion fruit production zone.

According to the United States Agency for International Development (USAID) that funded the conference through the Kenya Agriculture Value Chains Enterprises (Kaves), Passion fruits can grow anywhere in Kenya due to availability of varieties for warmer and colder parts of the country. “We have yellow passion for the lower, warmer regions and the more common purple variety for the higher cooler parts,” said Dr Steve New, Kaves Chief of Party.

He added there is potential for Kenya to be a world leader in tropical juice production due to year-round availability of tropical fruits – passion, mango and pineapple, as the only country in the world that can grow the crops continuously.

Related Post: How to improve your fruit harvest

Passion fruit is the most profitable in comparison with other crops, according to the Passion Fruit Value Chain Study undertaken in 2015 by Dr Hezekiah Agwara which indicates a farmer can make good income from a small parcel of land measuring 0.3- 0.6 of an acre. Dr New describes this as “poverty level minimum” that can sustain a livelihood. He added nothing goes to waste from a passion fruit plant. “Minimal wastage in passion fruit production because there is a huge domestic market. Passion is also used by processors for juice while neighbouring Uganda is a big market for Kenya passion fruits taking 50 per cent of total production. South Sudan is also buying lots of passion from Kenya.

Dr New stresses that passion fruit is best produced by smallholders due the attention it requires for maximum productivity. At spraying the plant will be at different stages of pest control making it hard for largescale management. On one vine you can have a flower, a young and mature fruit at the same time. The disease and pest control for each is different and non should affect the other, especially the ready to harvest fruit which shouldn’t have traces of chemicals. Managing this balance it not easy, he said.

According to Eric Ogumo, UK retail giant, Tescos, manager for Africa, passion fruit is the most sought after in their shelves in Europe, retailing at Ksh 2,000 a kilo. “Buyers always ask for Kenya fruits but there are none. “We are here to buy your fruits”, he told an attentive gathering. Mr Ogumo said they are buying from Southern Africa countries of South Africa, Zimbabwe and Zambia. “There is a ready market if we can get your fruits”, he said adding that Kenya is not benefiting from newest varieties because the country is not exporting. “There are newer, better yielding, pest and diseases resistant varieties for export but they are not being grown here.” Mr Ogumo said.

The biggest challenge of meeting pesticides residue limits is caused by there being only one registered product. The Agriculture Committee of the Council of Governors has committed to bring agrochemical firms together with the Ministry of Agriculture and the Pest Control Products Board to discuss extension of labels to include passion fruits in pest control products available in the country to give farmers options.

Biological control products firms have also not conducted research on the passion due to its minor crop status.