Uplifting poor smallholder farmers in kenya through the mobile phone


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Uplifting poor smallholder farmers in kenya through the mobile phone

  1. 1. Uplifting Poor Smallholder Farmers in Kenya through the Mobile Phone By Kamau Gathiaka School of Economics University of NairobiPaper prepared for presentation at the collaborative conference on,“Uplifting the poor: Opportunities for poor people to improve theirlivelihoods”, University of Nairobi and Linkoping University, KenyaScience Campus, Nairobi February 14 – 16, 2013  
  2. 2. AbstractThe mobile phone is proving to be a powerful marketing tool. The few business calls or shortmessages made through the phone make a lot of difference to the livelihoods of many smallscale business people and smallholder farmers. They link producers and consumers, andproducers and marketing outlets. Mobile phones enable producers and market outlets obtaincritical information rapidly. By linking these groups directly and at low costs mobile phoneshelp to reduce information asymmetries between producers and consumers. Access to rapidand low cost information help farmers make better marketing and production decisions.Smallholder farmers use mobile phones to build networks that help them edge out theexploitative middlemen, and to pool produce that is then marketed collectively.Subsequently, the farmers realize higher returns. This work looks for evidence from theinternet to show how farmers use mobile phones to improve their livelihoods. The case ofusage of mobile technology to link rural potato farmers in Narok to the urban market inNairobi; the use of iCow, a voice-based WAP enabled application to manage dairy cattle inKiambu and Nakuru counties, and to source for market for dairy products; and the effect ofuse of mobile phones by onion farmers from Endarasha in Nyeri County on production,marketing and sales clearly demonstrate that mobile phone usage have increased growth inincome levels among the rural poor.  
  3. 3. 1.0 INTRODUCTIONAlthough the mobile phone is mainly a gadget for social interaction with around 60–70percent of calls being made to family and friends, it is proving to be a powerful marketingtool. The 5–10 percent business calls make a lot of difference to the livelihoods of manysmall scale business people and farmers. These calls link producers and consumers, andproducers and marketing outlets. Mobile phones enable producers and marketing outlets toobtain critical information rapidly. By linking these groups directly and at low costs mobilephones help to reduce information asymmetries between the groups effectively edging out theexploitative middlemen. Mobile phones strengthen smallholder farmers in their day-to-daytrading.Smallholder farmers use mobile phones to link with consumers and marketing outlets (hotels,supermarkets, schools, etc), and also to build networks among themselves. An increasingnumber of farmers are turning to mobile phones as management tools with respect tomarketing and obtaining information on inputs and farming technology. Rapid and low costaccess to information seems to help farmers make better marketing and production decisions.They accurately know how much to produce and when, and how much to supply where andat what price using the mobile phones.Due to limited access to extension services in most parts of the country with the nationalextension-staff: farmer ratio standing at 1:1,500 most farmers are unable to keep pace withchanging technological advances. Information access is central to increased food productionand improved livelihoods. Technology-based information flow is a cheap way ofdisseminating information to farmers in lieu of extension services. Some private operatorshave of late started to sell subscription-based information services to farmers via mobilephones. The information relates to inputs, farming technology and answers to any plant oranimal disease in a farm. These services generally rely on text messages to farmers’ phonessometimes in local-languages. Some reports, as shown below, indicate the information to beaccurate, timely and positive in impact.Besides facilitating reduction of information asymmetries between producers and customers,mobile phones help to lower transaction costs when the middle man is removed. Middlemendictate the prices they pay farmers. This is because individual farmers produce is small and 1    
  4. 4. the farmers lack knowledge on market prices. Mobile phones link the farmer to the marketdirectly and also helps him to link with peers. Removal of the middle man and the pooling ofseveral farmers’ produce so as to market as a group helps farmers realize higher returns.Exploiting the economic benefits of the mobile phone is a skill that takes some time todevelop and younger users are typically better able to exploit the mobile phone technologyquickly and to put it to business advantage. Through this way, mobile phones are seen to havea positive impact on agricultural incomes.The evidence shows that farmers use mobile phones to gain wider knowledge andinformation than they could access without the phones. The farmers build up a network ofcontacts which they save in their phones, and which they call upon from time to time and asmarket situations demand. to draw on this wider experience and expertise to obtain criticalinformation more rapidly. They use them to speak to multiple traders and fellow farmers toestablish prices and market demand. Phone access is rapidly changing marketing systems.Greater access to market information and buyers steadily adds to farmers’ market knowledgeand gives them insights into what areas to diversify into with great confidence (e.g.,diversification into higher-value perishable products). Many smallholder farmers now haveaccurate understanding of consumer demand and an enhanced ability to control production inline with the demand and to manage supply chains. Through this knowledge, smallholderproduction is changing from pure subsistence and a way of life to become commercialfarming.The advantages of using the mobile phone to the farmers include: (1) dealing directly withlarger-scale and far-off buyers that offer better prices without making long trips to the market(2) ability to conduct market search over many markets (3) ability to construct a broadnetwork of contacts unlike peers without mobile phones (4) higher ability to organize andcoordinate among phone users thus consolidating volumes and enjoying economies of scaleand higher prices. Phone using farmers are able to compare prices in different markets thusgetting an advantage while negotiating prices with produce buyers. 2    
  5. 5. 2.0 EVIDENCE OF THE IMPACT OF PHONES ON MARKETINGAvailable evidence from internet search indicates that farmers using mobile phones havelower marketing costs, realize higher prices for their produce and they adjust supply easily inresponse to changes in market demand. While the findings are global, we focus on theKenyan cases which we can verify easily if in doubt. Fortunately, we are not in doubt.For a long time in Kenya, there has been huge discrepancy between what farmers earn andthe value of their produce at the market level due to the many middlemen in the agriculturalproduce marketing chain. Sometimes the middlemen earn more than the farmers. The mobiletechnology has started to change this by linking rural farmers to the urban market.The case of potato farmers in Narok demonstrates this clearly. Narok County is a potatogrowing region with production averaging 45 sacks per acre. Using the mobile phones potatofarmers in Narok are now able to sell their potatoes directly to the urban buyers. TheSokoshambani (Swahili for, market at the farm), a free SMS service that runs on the 8988short-code (facilitated by Twitter) has made this possible. Small-scale farmers today accessmarket intelligence and sell their produce directly to market outlets, particularly the fast foodrestaurants. Sokoshambani has also helped the small-scale potato farmers to access micro-finance loans, order quality seeds and other inputs, and access training materials which werehitherto they could not even think of.There are reportedly 1,953 potato farmers from Narok and 17 hotels in Nairobi using themobile-based platform that bridges the more than 150 kilometres separating them. Onefarmer James Radama reportedly started potato farming in year 2000 selling a sack ofpotatoes for $17.00. By using Sokoshambani services, he is now able to sell at $53.00directly to the buyer. He also enjoys an additional advantage of prompt receipt of payment.Before joining the service he reports that it was taking several days before he could receivepayment.It is also reported that Sokoshambani has also been enabling small-scale farmers to accesshigh-yield seeds and other inputs with support from USAID-funded Financial Inclusion forRural Microenterprises (FIRM) project. The project connects farmers to micro-finance andbanking institutions who finance their acquisition of inputs. 3    
  6. 6. Potato farmers in Narok have improved their livelihoods thorough innovative market-drivensolutions. One farmer, John Bonana, has reportedly managed enough money to purchasefoods to supplement his family’s nutrition. Narok farmers success in minimizing transactioncosts of marketing through adoption of new innovations is not just a life transformingexperience for them but a national model for poverty reduction.The iCow is another model of adopting new technology to improve life circumstances of thefarmer. iCow is a voice-based WAP enabled application developed by Green Dreams TechLimited to change the way smallholder farmers in Kenya manage their dairy cattle. It keepsfarmers abreast of essential animal breeding and feeding methods through informationtechnology. A farmer registers his cows free of charge through the iCow portal and getsregular short text messages (SMS) through the phone about the breeding and productionneeds and patterns of his/her livestock. The farmer is guided on feeding patterns, the oestruscycle of his livestock, common diseases to watch, milking calendar and calf management.The SMSs cost Ksh5 each and come at varying intervals during the day depending on theunique needs of the animals. iCow is reportedly the brain child of a Kenyan, Charles Kithika.One farmer, Susan Wanjiru who reportedly registered her three Friesian cows on the iCowportal is said to get daily texts about the animals’ nutritional needs and milking patternswhich she then forwards to a farm hand in Kinangop for action. Through this way, she is saidto keep track of the individual needs of each cow and relay the information to someone on theground even though she works in Nairobi and her farm is several miles away in Kinangop.She is said to have acquired a lot of information on dairy farming, animal diseases andfeeding patterns through iCow while at the same time holding onto her job.Another farmer Naomi Wambui, a small holder dairy farmer in Kieni area of Nyeri County,is also said to be managing her dairy cows through the iCow platform with good results. Shehas reportedly boosted the productivity of her small herd of four cows since she registered theanimals. With an average of two messages a day giving instructions on what kind of feeds touse, medication to any bloated calves, details about the animals’ breeding cycles, etc., !Wambui is said to have raised her output of milk by up to 50 per cent. From about 1! to 2litres of milk per day from each cow she has reportedly managed to raise output to 3 litresfrom each animal. 4    
  7. 7. In Mukurwe-ini about 100 kilometres North East of Nairobi, Peter Muhuri is reportedly adairy farmer with five well-built Friesian cows. Muhuri is said to have embraced moderntechnology farming and is reaping big from the mobile phone application called iCow. Hereceives from iCow information on his cows’ nutrition, reproduction cycle and milkproduction. Through the application, the dairy farmer is said to have taken up breeding as alucrative business after accessing qualified veterinary officers via iCow. His animals havereportedly attained the status of pedigree.    The innovator of the iCow mobile phone application is said to be Susan Kahumbu, an ardentorganic farmer herself since 1997. She is said to have been motivated to develop theapplication by frustrations arising from not getting information on organic farming. Theplatform has reportedly over 25,000 farmers some of whom are said to have more thandoubled their income due to increase in milk yield, thanks to the iCow service. Besides cows,the platform also registers other animals such as goats.Through the iCow another farmer, Michael Ruchu, is said to be able to source for a marketfor the rare and expensive goat milk. After joining the platform Ruchu is said to be selling 30litres of goat milk per week for Sh7,500, a good income with which has improved hishousehold welfare.Multijoy Farm is said to have sold one of its heifers through the iCow’s Soko (market)platform.  The platform got the farm a buyer who took the heifer at Ksh90,000, way above theKsh40,000 that locals pay.In yet another model of how farmers have adopted new technology to improve their lifecircumstances, onion farmers from Endarasha in Nyeri County have reportedly been broughttogether in ‘commercial villages’ made up of several farmers’ groups. The groups sharecommon ideals in increasing production, adding value and marketing their crops. The groupfarmers have been trained by Farm Concern International (FCI) on how to produce, marketand sell onions. Mumbi Kimathi of FCI reports that most of their trained farmers are now indirect contact with traders and are able to know the prevailing market prices in Karatina,Nakuru and Nairobi before selling to traders or other middlemen who visit their farms. 5    
  8. 8. In the commercial villages farmers pool produce and market collectively thereby increasingthe village cash economy. They bargain as a group for better prices and sell their produce inbulk. Using mobile phones they connect with each other and with the market. They also gainmarket intelligence through their mobile phones, and update their group members on onionprices in various markets. The villages have reportedly enabled farmers to shift fromsubsistence to the commercial production, and to edge out brokers and middlemen.Farmers from Kinyaite Commercial village are said to have gained knowledge from FCI onthe use of best hybrid seeds and the art of storing onions until market prices are right. Usingthe knowledge and their mobile phones fetch the best market prices, the farmers haveincreased the earnings from onion sales exponentially. It is reported that the price of oneacre’s harvest of onions (about 800 kilograms in a season) has risen ten-fold from Ksh 8,000(approximately US$ 91) to Ksh 80,000 (US$ 914) due to the new knowledge and use ofmobile phones.As a result of the improved earnings, the farmers have changed their fortunes and improvedtheir standards of living significantly. A number of farmers have reportedly constructed betterhouses, purchased land and paid school fees for their children from farm earnings. Moreinformation on this project can be obtained from Mwangi Stanley on e-mail:mwangi@farmcocern.org or Mumbi Kimathi on e-mail: mumbi@farmconcern.org.FarmConcern International (FCI).3.0 LESSONS LEARNEDThe experiences in using mobile phones show that farmers using the gadgets have betteraccess to market information and they coordinate with peers easily. Mobile phones enablefarmers to pool produce, market in bulk and thus enjoy economies of scale. Farmers that takeadvantage of the mobile phone technology obtain the latest market information at least cost.Information on prices in multiple markets gives farmers the power of negotiation for betterprices. Phone-using farmers are edge out intermediaries, and by selling directly to larger-scale buyers they realize higher prices.Mobile phone using farmers gather information farm management skills and on best inputs.Thus, information communication technology (ICT) is a factor for increased business incomeamong the rural poor. Mobile phones are the most popular form of ICT among the poor. 6    
  9. 9. With close to half of Kenyans (46%) currently living below the poverty line (one dollar perday), most of them in rural areas (Republic of Kenya, 2010), the levels of income areexpected to rise as the use of mobile phone continues to increase in rural areas.Mobile phone usage in rural Kenya for business clearly supports small scale business andpeasant farmers in marketing and selling their products thereby increasing their income levelsand those of the rural communities. Mobile phone as a technological tool is supporting therural communities to get more customers and to carry out business transactions at least cost.The mobile phone technology has been well received and it is a tool for development. Thereis need to keep the price of this ICT tool and related operational costs down so that more poorpeople can exploit the facility to transform their livelihoods.BibliographyWambua Jimmy (12 2012). "Grow-connect-sell: The wealth formula for small-scalefarmers”. Article available on mfarm.co.ke/.../grow-­‐connect-­‐sell-­‐the-­‐wealth-­‐formula-­‐for-­‐small-­‐scale-­‐farmers.Namaga Ngongi (2012). “Africans feeding Africa: Farm to fork”. Africa Rural ConnectAfrican Farmers Alliance for Green Revolution in Africa Backpack Farm. KUZA Doctormobile phone help National Peace Corps Association, Machakos Agricultural Show.(READ: Mobile technology unlocks dairy farming potential)Mobile phones usage in rural Kenya for business. A survey study in Machakos district.Mwangi Stanley mwangi@farmcocern.org. Farm Concern International (FCI).Mumbi Kimathi mumbi@farmconcern.org. FCI.www.sautiyawakulima.net/research/  kenya.usaid.gov/success-­‐story/1299  newswatch.nationalgeographic.com/.../mobile-­‐meets-­‐farmer-­‐stories-­‐from-­‐kenya/  www.cgiar.org/.../mobile-­‐phones-­‐helping-­‐farmers-­‐make-­‐better-­‐decisions/  www.sautiyawakulima.net/research/tag/mobile-­‐phone/  farmbizafrica.com/.../102-­‐mission-­‐to-­‐position-­‐small-­‐scale-­‐farmers-­‐to-­‐grow-­‐their-­‐way-­‐out-­‐of-­‐hunger  www.egfar.org/.../2721_Nichterlein_thinkpiece_WageningenWorshop.doc   7    
  10. 10. stephb.org/2012/12/mobile-­‐ict-­‐small-­‐scale-­‐farmers/  ictupdate.cta.int/en/Feature-­‐Articles/Track-­‐your-­‐cow-­‐s-­‐development  www.agra.org/.../agrodealers-­‐use-­‐cell-­‐phones-­‐to-­‐keep-­‐farmers-­‐up-­‐to-­‐date/  www.guardian.co.uk/.../farmers-­‐mobile-­‐phones-­‐sms-­‐agriculture 8