JM Social Icons

    Traders’ pricing sound the death knell for farmers’ income

    J28nairobi-marketohn Mbugua is a farmer in the Kinale area in Kiambu district. It is Thursday morning and he has delivered 300 cabbages from his quarter -acre plot to soko mjinga market along the Nairobi Naivasha highway.

    The scenario looks promising in terms of business. The market is full of activities, with farmers, traders and middlemen bargaining for better prices. Mbugua sells the cabbages at Sh3 a piece. He pays Sh1 apiece for transport to the market and Sh20 cess to the local county council for the consignment. Mbugua is well known in soko mjinga. “I have been here for a long time”, he says, “but the situation is not getting any better.”

    David Thugu transports four big bags of sukumawiki to soko mjinga. On his 1-hectare piece of land he plants cabbages, sukumawiki and carrots. Thugu pays his casual workers Sh150 a day. Going to the market, he has to pay Sh50 for the five sacks on the donkey cart, not to forget the contribution to the local council: Sh40 for parking the donkey and Sh20 for the trading space.

    This morning, he is offered Sh200 for one full bag of sukumawiki. “This is the same amount as 15 years ago”, says Thugu, “but now we have higher production costs. The price of all commodities has gone up. For instance, the price for a bag of fertilizer has gone up to Sh2,000. This means that I am getting less than what I got 15 years ago”, he said.

    On this chilly and foggy day only the faces of the middlemen and traders are smiling. They have parked their hired trucks and pick-ups beside the market and wait for the middlemen to haggle for prices with the farmers. The middlemen buy directly from the farmers. They decide and mark up the prices for cabbages, sukumawiki, carrots, spinach and potatoes for that particular day, depending on the demand from the traders and the amount being supplied. Although most of the farmers here in soko mjinga do have a mobile phone, they do not make any effort to find the market price for the day, as David Thugu confirms.

    In this business, the middlemen and the traders are the big winners. They decide the price – and that’s why they have reason to smile. Jane Wanjiku sees herself as a broker. She buys the cabbages from Mbugua and other farmers for between Sh3 and Sh5 and sells it for between Sh12 and Sh15 to traders from Nairobi, Mombasa and other towns; she has a profit of Sh 8 to 10 per cabbage.

    A middleman who will not give his name is buying sukumawiki for Sh200 from David Thugu; he sells it to a pick-up driver for Sh400. This means that in two or three hours and without breaking a sweat, the middlemen earn double the amount of money the small-scale farmers get after months of hard work on the shamba. Middlemen do not have any risk. They only buy if there are traders around or if they have a clear order from a trader. They never sit on a mountain of sukumawiki as farmers do when they lack buyers. In soko mjinga, the middlemen ensure by all means that the farmers do not sell directly to the traders as this would put them out of business.

    So why do farmers not cooperate and fix the prices? What would happen if the farmers came together and decided, “Today, we will sell a bag of sukumawiki for Sh350”? Mwangi Kariuki, a father of four, who is at times forced to work as a labourer in other people’s farms, says without any illusions, “I have to sell my cabbages at any price. I cannot risk to go home without money”.

    Even if the farmers organised themselves and hired lorries to transport their vegetables to other markets such as Nairobi, it would still be difficult to sell. This is because the vegetable market is dominated by middlemen who operate like a cartel or the mafia: They are ready to do anything to protect their interests. From our research two issues become clear: First, small-scale farmers rarely get the real value for their produce. This is the most important reason for the increasing poverty in most rural areas in the country. Secondly, most small-scale farmers do not even try to find ways of avoiding middlemen and traders by taking the produce directly to retailers.

    Joe, a trader, buys a bag of sukumawiki in soko mjinga for Sh400; he sells it in Kangemi for Sh900. He pays Sh60 per bag for the transport, Sh5 to the loaders for each of the 30 bags on his own small lorry, and Sh10 per bag for bringing the bags to the retailers in Kangemi.

    The total costs a day are Sh14,250. If he sells all the 30 bags for Sh900 a bag, Joe remains at the end of the day with a profit of Sh12,150. Chege Gichinga, a trader at the Kangemi market, travels every two days to Naromoru near Nanyuki. He buys between 2600 to 3000 pieces of cabbages atSh11 apiece and hires a lorry at Ksh 13,000 to deliver it to Kangemi, where he sells each piece at between Sh20 – 25, depending on the size of the cabbage and season. In a week he makes two or three trips that earn him a weekly net profit of between Sh30,000 – 40,000. On this day, Elijah Muiruri buys a bag at Sh900.

    On his small stand in Kangemi, he ties the vegetables into small bundles, which he sells at Sh5 a bundle, making him a profit of Sh250 for every bag he sells. Sometimes he cannot sell all the sukumawiki, so he has to sell the vegetables at a throwaway price before they get spoilt. Elijah’s neighbour Simon Gitonga says that five days earlier a bag was going for Sh500, but even then, he only made a profit of Sh350 a bag. The two traders sometimes sell cabbage and agree that the earnings are more or less the same. The traders cannot tell what the price for the day will be, as this keeps on changing depending on demand and supply.

    Comments powered by CComment

    Editor's Pick

    All News

    Powered by mod LCA

    Sign Up

    Sign up to receive our newsletter
    FarmBiz Africa © 2020