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Value Addition In Agricultural Commodities And Why Every Farmer Should Do It

Generally, value addition is the process of changing or transforming a product from its original state to a more valuable state. Many raw commodities have fundamental value in their original state. For example, maize grown, harvested and stored on a farm and then fed to livestock on that farm has value. In fact, value usually is added by feeding it to an animal, which transforms the maize into animal protein or meat. The value of a changed product is added value, such as processing wheat into flour. It is important to identify the value-added activities that will support the necessary investment in research, processing and marketing. The application of biotechnology, the engineering of food from raw products to the consumers and the restructuring of the distribution system to and from the producer all provide opportunities for adding value.

Economically a commodity is added value by changing its current place, time, and from one set of characteristics to other characteristics that are more preferred in the marketplace. A better meaning would be like processing wheat into flour and eventually into more desired products by customers such as bread, cakes. Those involved in value addition should think of themselves as members of a food chain that processes and markets products to consumers.

In Kenya, the majority of agricultural commodities are marketed in their raw forms, hence losing the opportunities for higher earnings and generating employment.

The main constraints that face Kenya’s agro processing industry include among others, the high operational costs mainly due to the high prices of imported fuel and spare parts, unavailability of appropriate processing machines and spare parts, and the limited knowledge in operation of the machines.

However, despite these constraints, agro processing has a tremendous potential for increasing income through value addition and increasing shelf life and access to food security through the establishment of small scale agro processing enterprises and rural based industries.

Once these commercial agro industries are efficiently run and are responsive to the ever-changing market demands, this will be a precursor for overall economic growth of the country.

Meaning of Value addition

For farmers in Kenya, value addition has a particular importance in that it offers a strategy for transforming an unprofitable enterprise into a profitable one. In fact, there are very few items that a Kenyan small holder farmer can produce and sell profitably at the first level (that is, on the open wholesale market).

Therefore, a value-addition strategy is critical to the long-term survival of most small farms in Kenya.

A good example is say, a coffee farmer who simply grows and harvest coffee cherries, and then sell them “as is” to a local processor. Here, they usually sell at a price below the cost of production. This marketing strategy may be viable in the short run, because it may cover the cash costs involved in producing the crops.

This is, however, a poor strategy because it usually does not cover the total costs of production, and, therefore, the coffee enterprises will not be sustainable.

Value addition strategies could also be easily drawn from the production of tropical fruits, vegetables, livestock, grains and other commodities.

Many small holder farmers should be encouraged to increase their profitability by vertically integrating their operations rather than simply expanding horizontally to increase their volume of production.

Here, they are adding value to their crops by taking their product one or more steps up the vertical ladder of processing and marketing rather than staying at the same level and trying to increase quantity.

Agribusiness support agencies should be seen to support the promotion of rural agro industries. This is mainly crucial because of the following reasons;

  • Agro –industrial products, unlike the basic commodities, do not exhibit a long-term real-price decline so they are more effective in increasing local incomes.
  • Value addition activities in the rural areas tend to increase local employment and income and usually have a positive impact on the local economy mainly due to forward and backward linkages.
  • Product differentiation as a value addition strategy is easier for goods that have been processed, transformed, packaged and labeled.
  • The agro-industrial products where value has been added tend to enjoy a higher profit margin than basic commodities.

In conclusion, for those in agribusiness, as markets become more competitive, it is important for mainly small holder farmers and other value chain actors to seek ways of taking advantage of the value adding opportunities to be able to increase the incomes of the rural producers.

Deliberate efforts should be put in place in establishing market research teams to help in investigating both fresh and processed markets.

The value added products can be those that are traditional or those that already exist in the rural areas, or can also be new products, which can be processed using new, low cost technologies

Advantages of Value Addition in Kenya

  • Increased profit – any value addition increases financial value to the product and has the effect of improving the income of a farmer.
  • Value addition gives a farmer a chance to focus on the consumer
  • The producer/farmer can get a share of the marketing bill which is the difference between the farm gate value and the retail value and it is growing bigger day by day.
  • Enhanced shelve life – this is a benefit any farmer would want. the longer the product can stay without getting spoilt, the more guarantee one has of a product selling at their preferred price and time. for instance raw milk doesn’t last for long but when processed into ghee, yogurt and other products can last longer.
  • Improved bargaining power
  • Creation of a brand – if a product goes to the market being identified to you or your farm, then your future is defined.
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How is The Future of Agriculture and Agribusiness

Agribusiness in Kenya

The importance of agriculture to the Kenyan economy cannot be underestimated. It is well documented that agriculture is key to economic growth and contributes to socio-economic development of the country. The sector accounts for around 25 percent of the country’s GDP and contributes over 70 percent of the national export earnings.

Agribusiness sector is undergoing sort of a technology revolution period. Many  people are working towards streamlining the process for agricultural business. We need to cap the losses this industry suffers due to poor management and illicit commission agents. Because the future of the Kenyan Agribusiness sector depends on farmers and traders. Seeing as how farmers are ending their lives or succumbing to debts, we need solutions which will ensure the future of the sector. Its worrying seeing our counterparts from north lift always complaining about maize prices. Although we have been telling them to diversify, they need to feel that their land will continue giving them value.

The Future of Farming is  Agribusiness and farming Smart

The area of land available for agriculture in Kenya and the entire world has decreased. If Kenya for example wants to expand or maintain its current food output it needs to increase its productivity – without imposing an additional burden on the environment. More with less, welcome to the world of Smart Farming

What is Smart Farming?

Smart Farming is a farming management concept using modern technology to increase the quantity and quality of agricultural products. Farmers in the 21st century have access to GPS, soil scanning, data management, and Internet of Things technologies. By precisely measuring variations within a field and adapting the strategy accordingly, farmers can greatly increase the effectiveness of pesticides and fertilizers, and use them more selectively. Similarly, using Smart Farming techniques, farmers can better monitor the needs of individual animals and adjust their nutrition correspondingly, thereby preventing disease and enhancing herd health.

Goat Farming in Kenya: how to start & make money

What are the requirements for Smart Farming?

Knowledge and capital are essential for any innovation. New farming technologies require more and more professional skills. A farmer today is not only a person with a passion for agriculture, he or she is also a teacher, a doctor, a politician, a lawyer (to find their way through a growing maze of regulations) and a part-time accountant (making a living from selling agricultural produce requires bookkeeping skills and an in-depth knowledge of market chains and price volatility).

Furthermore, Smart Farming requires capital. Thankfully, there are a wide range of options available. From using low capital investment smart phone applications that track your livestock to a capital-intensive automated combine. In principle, implementing Smart Farming technologies can be easily up scaled.

Blogs and companies such as Oxfarm provides farmers with information and helpful insights that farmers can rely on.

 

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Why you Should Trust Oxfarm Ag Ltd

At oxfarm ag ltd, we like doing the best for our customers and making farmers get value of their investment is our business. in this short article you will get to know why you can trust our products and services.

    • You can choose from hundreds of agricultural products/services, all from the highly rated brand name for instance, Machinery, farming equipment, irrigation kits e.t.c
    • We are accredited by certifying bodies such as HCDA and KEPHIS (our tree fruit seedlings are the best)
    • There are no Agriculture companies “pulling our strings.” Our fierce independence means you’ll get the best values when we partner with you.
    • Oxfarm Ag officers are experts at matching you up with farming information that makes the most sense for your unique situation. (We’ll never recommend a farming project that we don’t think is the best option available for you).
    • People have been investing their money and land with us since 2015.
    • Nearly 1,000 customers have already put their trust in us, buying millions in seedlings and packages.
    • Want to speak with us outside of regular “business hours”? We’re open long hours and Saturdays so we’re here when you need us.

So again, why trust Oxfarm Ag Ltd? Well, here’s what we tell people.

Earn more than 10 million per acre with 40k investment.

You Should Buy Agricultural Products and Services from Whoever Gives you the Best Advice

At the end of the day, you should buy from the person you believe cares about you and gives you the attention and quality guidance you’re looking for: and that person is no other than oxfarm Ag Ltd.

If you get the best advice and guidance from us, we hope you’ll trust us to handle your request. Of course, we believe that no one does it better than we do.

If you want to experience the Oxfarm Ag difference, just reach out to us and get your quote. You can call us at the numbers on our website.

We’d love the opportunity to earn your trust, and it would be our privilege to work with you. Visit us today at Ridgeways Nairobi along Kiambu Road.