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    Kenyan cereal farmers long buffeted by post harvest losses and poor farm gate prices have found relief in a new scheme that allows them to store produce until a market shortage while using it as collateral to access financing.

    Traditionally most of the cereals harvested were susceptible to post harvest losses especially attack by weevils. And then there was the risk of a market glut due to farmers harvesting and selling at the same time.  The end result was poor pay. Middlemen would also cash in on farmers desperation to buy it at a rock bottom prices.

    But a new model is now allowing small farmers to store their produce in certified warehouses and use it to obtain credit from banks, avoiding middlemen who paid them and enable them buy good seeds and fertilizer and raise their yields.

    “Brokers have always been a thorn in the flesh of  poor farmers because they take advantage of the harvesting season to purchase farm produce very cheaply, then sell (inputs) to the farmers very expensively when such commodities are scarce in the market,” said Paddy Likhayo, a Kenyan-based grain storage expert.


    Joseph Karanja, a smallholder farmer in Rift Valley, said prices of farm produce, especially cereals, are always very low at harvest time and very high during the planting season, making it impossible for poor farmers to buy farm inputs at the right time.

    “Sometimes we end up planting without fertilisers because we cannot afford it, or at times we plant when it is too late because we did not get the finances in good time,” Karanja said.

    Experts say that a one-week delay in planting can reduce a crop’s yield by more than 50 percent, and Peter Njau, a research scientist at the Kenya Agricultural Research Institute (KARI) , says late planting because of financial problems is one of the main reasons for poor yields among small farmers.

    To bridge this gap, the Eastern Africa Grain Council (EAGC), in collaboration with theAlliance for Green Revolution in Africa (AGRA) and selected commercial banks, is supporting farmers by letting them store their cereals in certified warehouses and use the warehouse receipts as collateral for loans to finance their farming activities.

    The process is known as a ‘Structured Grain Trading System,’ said EAGC Executive Director Gerald Masila, “This is a business venture for smallholder farmers. Those who tried it at first two years ago have already become self sustaining and can obtain loans without our support.”

    Many Kenyan smallholders do not produce enough to make up a consignment of 100 tonnes, the minimum required by standard EAGC warehouses, so they form groups and deliver their cereal together. In exchange, they receive a warehouse receipt which they can present to a bank as collateral for a loan.

    “In January 2011, we stored 113 (90kg) bags of maize at Lesiolo Grain Handlers and used the warehouse receipt to acquire a bank loan of Sh200,000  ($2,500). This enabled us to prepare our pieces of land in good time, buy the required farm inputs in advance, and plant on time without having sold our produce to brokers,” said Lydia Njoroge Gichuma, chairwoman of the 25-member Mwihoko Self Help Group in Nakuru, in the Rift Valley.

    “That was the first bank loan of my life,” said Gichuma, a mother of four.

    Lesiolo Grain Handlers Ltd is a private company that has joined the warehouse receipting system.

    Lending money to smallholders, particularly farmers, has always been a challenge because shifting climatic conditions and emergencies in the form of pests and disease mean there is no guarantee the crops will perform as expected, says Nixon Bugo, the Programme Officer, Innovative Finance, Policy and Partnership Programme at AGRA.

    Gichuma’s self-help group sold their grain in April, when the price had risen to Sh3,600 per bag from Sh2,200 in December. “This enabled us to pay off the bank loan at once, pay the warehouse charges and divide the remaining amount among ourselves depending on the amount of cereal stored by each individual,” she said.

    They now have another crop growing, which they expect to harvest soon, and take to the warehouse. Another group, the Kirima Self Help Group, deposited 111 bags of maize at Lesiolo in 2012, and withdrew it after the price appreciated.

    “The warehouse system reduces many risks because once the grain is stored, we do not worry about it being attacked by pests or aflatoxins, or being stolen. There is always a guarantee that we will get back our grain as indicated on the receipt whenever we need it,” said David Kamau Thuo, of Kirima SHG in Menengai, Nakuru.

    So far the EAGC has certified 10 warehouses with a capacity of 30,000 tonnes each in different parts of the country.

    Masila says that banks and related financial institutions are crucial to the scheme. “Their willingness to accept warehouse receipts as collateral is an important achievement for smallholder farmers,” he said, as it enables them to plant in good time and get better yields.

     The UN Food and Agriculture Organization (FAO)’s Gender and Development Plan of Action underscores the importance of financial capital for farmers to improve production. “Buying seeds, fertilisers and other agricultural inputs often requires short-term loans, which are repaid when the crops are harvested,” the report reads.

    “With innovative financing, many banks are already changing their perception about giving credit to smallholder farmers. And that is the way to go, if we are to achieve a green revolution in Africa,” said Bugo of AGRA.

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    As global demand for coffee reaches unprecedented highs, Kenyan farmers are replanting what they uprooted decades ago due to its poor returns and this time even the government is keen to reap from the international demand.

    In the 1980s Africa produced about 30 percent of the world’s coffee, but today, going by current statistics, it only accounts for 13 percent, a far cry from its potential according to data from the Ministry of Agriculture.

    According to InternatiAs onal Coffee Organization, Ethiopia with 7.45 million bags in 2010 was lead producer, followed by Uganda with 3.1 million, Ivory Coast with 2.2 million, Tanzania 917,000 and Kenya 850,000. Coffee is the second most traded commodity in the world after oil with an estimated value of $80 billion annually.

    A reality check on the performance of most African producer countries indicates that all is not well as evidenced by recent statistics that the continent produced an estimated 17 million bags in 2010. This accounts for only 13 percent of the global coffee production compared to 30 percent in the 80s. In Kenya despite the good prices and government interventions, coffee production has remained low averaging between 40,000 metric tones and 55,000 metric tonnes.

    “In 10 years the supply gap will be 30 million bags. This is a big opportunity for farmers in the country to increase production and earn more from their produce,” said Coffee Board of Kenya Managing Director Ms Loise Njeru. The government projects to introduce coffee production to 100,000 metric tonnes according to Vision 2030. This however will still be below the peak of 130,000 metric tonnes achieved in 1988/89.

    World coffee prices are expected to remain high for over 10 years according to experts with supply falling below demand last year. About 158 million bags of coffee were consumed in the world in 2010 compared to 159 million bags the previous year.
    In 2010 the country received Sh16 billion, an improvement from Sh10 billion registered the previous year. Coffee earned the country Sh22 billion in 2011. “We have witnessed crazy prices at the Nairobi Coffee exchange. Speculation may correct this in the long run, but the prices will not come to the low levels they were due to constrained supply,” said Mr. Kennedy Gitonga an economist at Coffee Research Foundation.

    He said the Columbian mild which is similar to Kenya’s coffee will be coming to the market in few years after maturing, which will tilt the coffee market with added supply. However prices will be stabilized by rising demand, estimated at 2.5 percent per year.
    Mr. Gitonga said Kenya could exploit the anticipated decline in coffee production in the world, by taking measures to mitigate the effects of climate change and increasing production per tree. “Kenya has no carryover stocks, even in times of high supply, indicating that local coffee is highly sought after at the world market,” he said.

    And as researchers brace for challenges associated with the climate change, they are advising farmers to introduce measures that ensures that production is not reduced. Some of the challenges expected are new diseases and insects, drought and floods. Coffee Research Foundation, the body charged with carrying out coffee research in the country has advised farmers to initiate primary farming practices that have long been forgotten, to cushion the crop from the vagaries of nature.”The threat of climate change is real and the time to act is now to avoid being caught up a few years down the line. That is why we shall factor in climate change in our development of new varieties,” said the director of research Mr. Joseph Kimemia.  Among the measures cited by the research body include plating coffee friendly trees to keep the crop shaded. Planting grass strips in coffee rows and regular pruning are others.

    Tree shaded Mr. Kimemia said can reduce temperature by 4 degrees Celsius while the other measures can hold more water for the plant. Firms like Kakuzi have reduced acreage of coffee to reduce risks as production plummeted. They have converted some of the land under coffee to mango growing.

    But with the fast growing markets in China, India and Brazil, global supply of coffee is expected to be in a tight supply situation for several years and Africa has an opportunity to increase its production, the meeting convened for African coffee producer states and which deliberated on how to increase production and consumption noted.

    A growing middle class in these countries that is increasingly taking to drinking coffee, has led to reduced exports from some of the traditional coffee growing countries. There are other emerging markets like Russia that the continent could use to increase exports. The continent with an estimated population of 1 billion also has a potential to increase local consumption but also has to increase value addition and produce brands for local and export markets.

    However Kenyan coffee is a favourite in the global scene where it is purchased to blend produce from other countries.  This demand is rekindling hope to thousands of farmers who had previously abandoned the crop due to poor returns.

    That coffee sector is on the road to recovery can be seen from the eyes of  farmer Jeremiah Muthomi of Meru Greens who says that in parts of Eastern and Central where his firm has contracted out growers, farmers have gone back to coffee on parcels where they were growing horticultural produce. “With the current coffee boom, farmers have started replacing horticulture with coffee trees,” he said.
    Elgon Kenya Ltd is positioning itself to be a lead supplier to the coffee industry following the encouraging developments.

    But on the flipside of all this interesting developments, local consumption remains low. Compared with other continents, Africa has an average consumption of only 750 grammes per person per year. In Brazil consumption is at 2.8 kilos. Ethiopia which is the top producer in Africa consumes nearly half of its produce while in Kenya only 3% is consumed locally. Algeria, Morocco, South Africa and Egypt which are non producing countries have a combined demand of 3.5 million bags every year and growing.

    A coffee expert from Brazil Mr Carlos Bando, said the continent needed to invest in local consumption habit surveys to understand their needs in a bid to encourage more consumption. According to ICO, coffee consumption is estimated to be growing at 2.4 percent per year, and in 2010 the volumes were 158.2 million bags, a slight drop from the 159.2 million in 2009.

    Among the reasons raised in the meeting for low coffee productions were concerns that farmers were aging and that it was necessary to encourage the youth to be active in reviving the crop. “We have to find innovative ways to encourage the youth to participate in growing coffee. Coffee has to appeal to the youth and has to be fashionable and trendy,” said Mr Ishak Lukenge from Uganda.

    He said a youth programme had been initiated in his country where tournaments are organized around coffee, where youths plant coffee and discuss the crop before tournaments.

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    In a move that promises to increase Kenya’s milk shelf life and diversify milk products offered locally, members of the Tarboi community of Western Pokot are making yoghurt from goat and cow milk then adding ash made from the native Cromwo tree as a disinfectant and preservative, giving the yoghurt a distinctive aromatic flavor and speckled grey colour.

    The fermented milk is stored in a special gourd that is also treated or seasoned with ash in a practice that has now brought the group to prominence in world fairs such as the world food gathering in Turin Italy. The ash yoghurt was recently on display at the Slow Food Cheese Fair, a biennial event in Italy that brings together cheese makers and cheese lovers from all over the world.

    The group has also been invited to the next Cheese fair to exhibit the yoghurt again and has learnt from other Italian farmers how to make cheese and preserve milk. Behind this international acclaim is a group of 21 pastoral households who have worked tirelessly to ensure that the chain of milk production is strictly high quality and hygienic. The group has enjoyed support from Slow Food international, an international movement dedicated to providing alternatives to fast food by preserving traditional and regional food and encouraging the farming of plants, seeds and livestock that are in line with local ecosystems.

    Based on the fact that good milk comes from the type of fodder eaten and the care given to livestock, the group has monitored the fodder given to the livestock with the pastoralists moving off synthetic feeds. Cows, for example, are only allowed to feed on natural pasture with supplementary organic feeds like milllet, sweet potatoes, napier grass being given once in a while.

    The Slow Food members, who are Kenyans who graduated from the International University of Gastronomic Sciences in Italy, which was founded by Slow Food, frequently organise training for the pastoralists on veterinary services, feed management and have even employed a local veterinary officer.

    Stringent rules are laid out for anyone wishing to produce the ash yoghurt for sale, which include providing a statement of activities specifying the location of their farm and the history of milk production of the cattle. This is then submitted to the Slow Food Western Kenya Office and the Tarsoi group for approval.

    Once both groups are satisfied that the group has met the production standards, a certificate is issued by Slow Food Western Kenya declaring the yoghurt is produced in accordance with the required rules.

    Where there is failure to comply with the standards contained in the specification, the producer incurs penalties and the Commission will evaluate from time to time, depending on the severity of case, any disciplinary action be taken against the producer. The commission will then make a report whereby it will result in the suspension of the mark.

    Peter Namianya is one of the graduates who has seen the Tarsoi group grow and accompanied the pastoralists to the Cheese fair. “The kind of quality that any product that is to be exhibited at the cheese fair has to meet is very high and international. That explains why we have to be very strict with the yoghurt producers who want to be part of us. But we are glad all of them are adhering to these practices and they see sense in this,” he said.

    Depending on the availability of milk, known as Lolon a large quantity of the milk  is prepared at once or alternatively small quantities of milk can be poured into a prepared gourd on a daily basis until it is full. The fermented milk provides the culture for the new milk and accelerates the process of ripening. The milk is left to settle in a quiet place.
    Once it is coagulated, some whey, the watery part of the milk that remains after the formation of curds, is removed and subsequently, some more fresh milk is added on top.This process is repeated until the container is full of partly-drained curd.

    The whole process takes on average one week depending on the size of the container. When the milk ripens a certain amount of ash is added to preserve and flavour it. The ash is obtained by burning the trunk and the bark of the Cromwo tree to get charcoal which is then crushed into powder. The concentrated fermented milk is then shaken before consumption and can last up to a month before going bad.

    The market for the ash yoghurt is currently concentrated among  neighbours, markets and restaurants in Kapenguria town, but the group now has its eyes now set on big cities like Kitale, Eldoret and Nairobi once the production of the yoghurt stabilizes and producers increase from the 21 households currently involved in the venture.

    “At the moment, we are working on production phase to make more available to meet the local demand before going regional,” said Peter. The group also hopes to now diversify into cheese making based on the successes they learnt from Italian farmers.

    The group is also now looking at cross-breeding the local Zebu cow to give more options of milk source. “Our ultimate hope is that we can manage to promote these products and community so that they are sustainable on their own in future and revolutionize milk production and value addition,” said Peter.

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    In a move that promises to increase Kenya’s milk shelf life and diversify milk products offered locally, members of the Tarboi community of Western Pokot are making yoghurt from goat and cow milk then adding ash made from the native Cromwo tree as a disinfectant and preservative, giving the yoghurt a distinctive aromatic flavor and speckled grey colour.

    The fermented milk is stored in a special gourd that is also treated or seasoned with ash in a practice that has now brought the group to prominence in world fairs such as the world food gathering in Turin Italy. The ash yoghurt was recently on display at the Slow Food Cheese Fair, a biennial event in Italy that brings together cheese makers and cheese lovers from all over the world.

    The group has also been invited to the next Cheese fair to exhibit the yoghurt again and has learnt from other Italian farmers how to make cheese and preserve milk.

    Behind this international acclaim is a group of 21 pastoral households who have worked tirelessly to ensure that the chain of milk production is strictly high quality and hygienic. The group has enjoyed support from Slow Food international, an international movement dedicated to providing alternatives to fast food by preserving traditional and regional food and encouraging the farming of plants, seeds and livestock that are in line with local ecosystems.

    Based on the fact that good milk comes from the type of fodder eaten and the care given to livestock, the group has monitored the fodder given to the livestock with the pastoralists moving off synthetic feeds. Cows, for example, are only allowed to feed on natural pasture with supplementary organic feeds like milllet, sweet potatoes, napier grass being given once in a while.

    The Slow Food members, who are Kenyans who graduated from the International University of Gastronomic Sciences in Italy, which was founded by Slow Food, frequently organise training for the pastoralists on veterinary services, feed management and have even employed a local veterinary officer.

    Stringent rules are laid out for anyone wishing to produce the ash yoghurt for sale, which include providing a statement of activities specifying the location of their farm and the history of milk production of the cattle. This is then submitted to the Slow Food Western Kenya Office and the Tarsoi group for approval.

    Once both groups are satisfied that the group has met the production standards, a certificate is issued by Slow Food Western Kenya declaring the yoghurt is produced in accordance with the required rules.

    Where there is failure to comply with the standards contained in the specification, the producer incurs penalties and the Commission will evaluate from time to time, depending on the severity of case, any disciplinary action be taken against the producer. The commission will then make a report whereby it will result in the suspension of the mark.

    PeterNamianyais one of the graduates who has seen the Tarsoi group grow and accompanied the pastoralists to the Cheese fair. “The kind of quality that any product that is to be exhibited at the cheese fair has to meet is very high and international. That explains why we have to be very strict with the yoghurt producers who want to be part of us. But we are glad all of them are adhering to these practices and they see sense in this,” he said.

    Depending on the availability of milk, known as Lolon a large quantity of the milk  is prepared at once or alternatively small quantities of milk can be poured into a prepared gourd on a daily basis until it is full. The fermented milk provides the culture for the new milk and accelerates the process of ripening. The milk is left to settle in a quiet place.

    Once it is coagulated, some whey, the watery part of the milk that remains after the formation of curds, is removed and subsequently, some more fresh milk is added on top.

    This process is repeated until the container is full of partly-drained curd.

    The whole process takes on average one week depending on the size of the container. When the milk ripens a certain amount of ash is added to preserve and flavour it. The ash is obtained by burning the trunk and the bark of the Cromwo tree to get charcoal which is then crushed into powder. The concentrated fermented milk is then shaken before consumption and can last up to a month before going bad.

    The market for the ash yoghurt is currently concentrated among  neighbours, markets and restaurants in Kapenguria town, but the group now has its eyes now set on big cities like Kitale, Eldoret and Nairobi once the production of the yoghurt stabilizes and producers increase from the 21 households currently involved in the venture.

    “At the moment, we are working on production phase to make more available to meet the local demand before going regional,” saidPeter. The group also hopes to now diversify into cheese making based on the successes they learnt from Italian farmers.

    The group is also now looking at cross-breeding the local Zebu cow to give more options of milk source. “Our ultimate hope is that we can manage to promote these products and community so that they are sustainable on their own in future and revolutionize milk production and value addition,” saidPeter.

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