Passion fruit farmers in Rift Valley have been earning a quarter from the sale of passion fruits compared to the price of the value added product, in a sorry state of affairs depicting how farmers are losing to the unexploited value addition sector.
Investment in the growth of fruits and vegetables for pharmaceutical, medicinal, confectionery, health and nutrition industries is unexploited in Kenya.
Growth of nuts – especially cashew and macadamia – is also not fully exploited, yet these products fetch high prices and there is a rising global demand, according to a document titled “National Horticulture Policy” produced by the Ministry of Agriculture.
It is not only in horticulture that agro-processing and packaging is underdeveloped. This applies to the whole agricultural sector, experts say. “Kenya is the second-largest coffee exporter in the world after Brazil, yet its coffee is exported unprocessed and resold back into the country after some developed countries process and add value to it,” said said Peter Gachomo, a horticulture exporter.
The horticultural sector in Kenya is set to benefit from government efforts to encourage investments in the areas of farming, agroprocessing, services provision, cold-storage facilities and transportation to overseas markets, among others.
Analysts say the country has attractive opportunities for investors who wish to venture into processing and value addition. “Most of the produce is exported in its raw state and resold back to the country after value addition,” Gachomo said. The fruits- and vegetable-processing sub sector is underdeveloped due to lack of expertise and funds to set up processing factories, he said.
Agro-processing, a Kenyan government report says, “improves shelf-life, reduces post-harvest losses and also improves product acceptability in local and international markets.” The government is also encouraging investments in production and export of propagated materials – plants that have undergone cross-breeding - an area unexploited in Kenya, the report notes.
But despite room for new investment, the industry has been successful, accounting for 60 percent of Kenya’s total exports. Horticulture has overtaken tourism to become the country’s second-largest foreign-exchange income earner after tea. The tropical-to-temperate climate that makes commercial agriculture a viable investment is partly responsible for this success, according to the report.
It was the favorable growing conditions that initially attracted Willem Dolleman, a native of the Netherlands, to come to Kenya in 1978 to work for a Dutch seed house. He instantly fell in love with the country. Together with Gordon Murray and Vitacress Salads, he founded Vitacress Kenya in 1994. Murray offered his 350 hectares of land in Timau, 225 kilometres north of Nairobi, in exchange for a 30 percent stake in Vitacress Kenya. Dolleman, who runs the operations, owns another 30 percent of the company. The remaining 40 percent is owned by Vitacress Salads, the largest watercress grower and marketer in the U.K. and Portugal.
The company specializes in growing garden peas, salad onions, broccoli, sweet corn and baby leaf lettuce. The products are sold in Marks & Spencer and Sainsbury’s Supermarkets in the U.K.. The company not only grows but also processes the products to market specifications including packaging and labels. The Kenyan government is banking on the availability of expansive, undeveloped land to attract investors to farming. Cheap labor and freshwater lakes and rivers make investment in large-scale horticultural farming an attractive proposition.
“The soils are rich in natural nutrients for growth of fruits and vegetables. With the recent E.U. restrictions on maximum residue levels for exported food products, no farmer wants to risk using excess fertilizers,” Gachomo said. Most of Kenya’s horticultural produce is exported to the E.U., while some is consumed locally. Produce grown in Kenya that fetches high profits includes snow peas, asparagus, chillies, passion fruit, apples, bananas, raspberries, mango, pineapple, avocado, oranges, papaya and bananas.
Cold-storage for horticultural products, which are generally highly perishable, is another area that the government says is unexploited. Most farmers suffer losses due to spoilage. This is especially true of small-scale farmers since they cannot afford the huge investments needed to purchase and install coolers and freezers.
Kenya is also hoping to attract investors in the manufacture of greenhouse plastics. Most horticultural produce is grown in greenhouses, ensuring fast maturity and protection against rodents, insects and pests. Greenhouses also guard against unexpected harsh climatic conditions. Despite this, most of the construction material for greenhouses is imported from the U.S., China, and Europe.
This shortage of greenhouse construction materials has given rise to companies such as Mavuuno Greenhouses Ltd., which imports greenhouse kits from the U.S. The kits were developed by Prof. Mehta Khajan of Pennsylvania State University. Another company, Amiran Farm Inputs, also imports greenhouse kits. “It is worrying that no investor has come forth to exploit the manufacture of the greenhouse kits…yet greenhouses are a major input in agriculture, which employs 80 percent of the population and is also the country’s highest income earner,” said Mavuuno Greenhouses Director Wanjiku Kamau.
The government is also encouraging investors to pursue the field of service provision. “Provision of accreditation services to ensure produce meets market and regulatory requirements is being encouraged,” according to the horticulture policy document. Kenyan farmers have recently lost income due to stringent requirements imposed by the E.U. on food imports. It is as a result of this challenge that the government is appealing to investors to provide accreditation services.
Air transportation service is another area that calls for more investors. Because horticultural produce is highly perishable, quick delivery to consumers is crucial. The government says more providers for airlifting services to Europe will push transport costs down. “Though sea transport is cheaper, many exporters in Kenya opt for air transport due to delays at the port of Mombasa,” Dolleman said.
A well-established export market, affordable labor and investor-friendly arrangements give Kenya an advantage in its pursuit of potential investors, Dolleman said. Export processing economic zones, with their added package of incentives, provide even more advantages to export-oriented investors. The government offers investment and capital allowances to such investors.
Not all is rosy, though. According to Dolleman, the investment climate is hampered by poor infrastructure and complicated bureaucracy. The company pays 32 taxes that, he said, should be consolidated into one. Roads are poorly maintained, potholed and rough, the railway system is dilapidated and delays at the port of Mombasa discourage investment.