Stimulating a Reliable Market for Maize

Stimulating a Reliable Market for Maize
By Elizabeth Adams, Technical Specialist, Agriculture & Food Security, Global Communities. Originally published on Medium

In Kenya, maize markets are fragmented and volatile, especially for vulnerable smallholder farmers. Many farmers continue to trade directly with middlemen who often take advantage of them. Partnering with major commodity buyers is a win-win strategy to empower smallholder farmers to live with prosperity and dignity and drive inclusive trade and economic development. One exciting example of this type of collaboration is Global Communities’ partnership with Cargill in Kenya. Since November 2017, we have been working with Cargill to provide a stable, reliable market for 150 maize producer organizations in Nakuru, Trans Nzoia and Uasin Gishu counties in the Rift Valley region of Kenya. In return, Cargill will secure suppliers they can count on to provide sufficient quantities and quality of maize.

The partnership is supported by the U.S. Department of Agriculture (USDA), which has funded Global Communities’ Agribusiness Investments for Market Stimulation (AIMS) program since its inception in 2014. Cargill, a major commodity trader, purchases several thousand tons of grains including maize in Kenya per year.

In the past, Cargill has struggled to source sufficient volumes of maize in Kenya to meet the demand of its commercial customers. Cargill usually sources maize directly from maize traders who buy from farmers and resell to Cargill. They find that the quality is often poor and end up rejecting whole consignments. Likewise, smallholder maize farmers struggle to find markets that are reliable and can pay a good price within a reasonable time frame. With this challenge in mind, Global Communities and Cargill partnered to identify and link Cargill to suitable farmers’ groups that can supply good quality — and sufficient quantities — of grain.

In the 2017/2018 harvest season (Dec. 2017-Feb. 2018), the partnership facilitated the sale of 6,200 bags (90 kg) of maize to Cargill. This volume came from the sale from just nine farmer organizations that were ready to sell at that time. Preparations are already underway to expand this group up to 150 groups for next harvest season which begins in October 2018.

In an effort to scale up the volume, to date, Global Communities has identified and profiled a total of 143 farmer organizations based on their production capacity and potential to be a reliable supplier to Cargill. During the profiling process, a needs assessment was conducted to identify specific capacity building needs. Global Communities then hosted a series of engagement meetings to introduce the farmer organizations to Cargill. For most groups, this was their first time to meet and learn about Cargill. The forums were designed to share Cargill’s procurement requirements, buying processes, and unique payment method which pays farmers within 48 hours. This is particularly attractive to farmers as most buyers take 90 or more days to make payments hurting the ability of farmers to prepare for the next planting season and meet their regular household payments.