Why smallholder avocado farmers are yet to benefit
Kenya is the world’s third largest producer of avocados and it is also Kenya’s leading fruit export, accounting for nearly one-fifth of its total horticultural exports.
But Kenya only exports 10 per cent of its total avocado production. By comparison, Chile exports 55 per cent and South Africa exports 60 per cent.
Avocado is grown in several parts of Kenya and about 70 per cent of avocado production is by small-scale growers. They grow it for subsistence, local markets and export purposes.
The avocado export market in Kenya is dominated by five major exporters: Kakuzi, Vegpro, Sunripe, Kenya Horticultural Exporters, and East African Growers. These companies source their avocados primarily from smallholder farmers, although some firms also source from larger growers or own plantations.
In a new study, we surveyed 790 avocado-farming households in Kenya and analysed what factors get in the way of smallholder farmers participating in export markets.
We then looked at the implications this has on their farming businesses. This included labour inputs – such as hired and family labour – farm yields, sales prices, and finally, incomes.
The barriers to entry
We found that exporting more of Kenya’s avocado production could raise the incomes of Kenyan smallholder farmers. But, to do so, programmes and policymakers need to reduce the barriers that smallholder farmers face when they want to participate in export markets. These include the costs of harvesting, transport and having liquidity. There are also farmers’ organisation transaction costs, such as membership fees and the opportunity costs of time when attending meetings.
Smallholder avocado farmers in Kenya face numerous big barriers to participate in export markets.
Capital and liquidity constraint: They often don’t have enough capital to meet the high costs of participation in export markets. For instance, being able to buy or grow higher quality avocados. In most cases, contract farmers need to harvest the produce themselves and transport it to collection sheds or company premises. Their payment then usually arrives after a delay of one to two weeks.
Limited access to production technologies
Limited access to production technologies and institutional support: For instance, credit and training. This means smallholder avocado farmers are left out of important parts of the value chain.
Poor infrastructure: In rural areas, a lack of good roads makes it difficult and costly to bring produce to markets in far-off areas.
The benefits of exports: We found that participating in export markets raises smallholder farmers’ incomes by nearly 39 per cent. This is mostly on account of higher prices offered in international markets. For example, a dozen Hass avocados, distinguished by their dark green and brown skin and smaller than average avocado stone, sell for Sh3.5 ($0.03) in domestic markets. But they fetch nearly double, Sh6, in global export markets.
Smallholder farmers’ participation in export markets also increased employment opportunities within the community. International markets demanded higher quality avocados which required additional labour.
Our study found that hired labour costs increase by about Sh1,300 (US$13) and smallholder farmers’ family labour inputs increase by about 15 days, if they participate in export markets.
We also found that smallholder farmers who participated in export markets were older and had received more training than those who participated in local markets only. Additionally, participants’ farms were on average about 0.11 acres larger, with more Hass avocado trees, the favoured variety in international markets.
Those smallholder farmers who were cracking export markets were also more likely to live near an organised and established farmers’ group. These groups allow farmers to share agricultural techniques to improve their produce quality and increase yields.
The groups were more likely to focus on contract farming that grants higher prices for farmers’ produce while reducing the costs and barriers for communication between contract firms and farmers. However, we found only a few smallholder farmers are linked to export markets through contract farming.