Helping Smallholder Farmers Reach Big Markets
The Success: The Muthomis—two enterprising famers in rural Kenya started a produce business that now employs 160 people and purchases produce from over 4,000 smallholder farmers.
The Elements of Success:
- Local produce buyer seeks to tap growing demand for bananas in urban markets.
- Local banana farmers organize into business groups linked to produce buyer.
- Farmers boost yields by improving production, harvesting practices.
- Success attracts investors that allows business to expand.
AGRA Partners: Mount Kenya Gardens, TechnoServe, East African Development Bank, Norwegian Investment Fund for Developing Countries (NorFund), Pearl Capital Partners.
A major challenge for smallholder farmers as they develop the capacity to double and even triple their yields is finding markets for their surplus production. In rural Meru, Kenya, Gerald and Rosemary Muthomi decided to start Mount Kenya Gardens, Ltd. as a way to capitalize on the growing harvests from smallholder farmers in their region.
After initial success in reaching larger buyers, the Muthomis worked with AGRA grantee TechnoServe—which has focused on developing banana markets for smallholder farmers—to expand their reach. Initially, the Muthomis were considering canning and exporting beans to Europe. But TechnoServe advisers suggested they consider selling bananas produced by local farmers to urban supermarkets.
TechnoServe experts, with additional funding from the East African Development Bank and NorFund, helped workers and suppliers adopt production, harvesting, and handling processes that would boost yields and quality and reduce post-harvest losses. They also helped organize local farmers into business groups linked to Mount Kenya Gardens.
The company was able to double its purchases from farmers and dramatically increase sales. It now employs about 160 people and works with 4,300 smallholder farmers. And the bean plan is now also moving forward. In 2014, the company attracted a large investment from Pearl Capital Partners to establish a vegetable processing and canning factory in Machakos County, Kenya, that will provide a new opportunity for local smallholder farmers to produce vegetables— particularly French beans—for export.
The Lesson: There are many opportunities for local entrepreneurs to form mutually beneficial partnerships with smallholder farmers to meet rapidly rising demand for food products in urban areas of Africa. In the case of Mount Kenya Gardens, the initial investments from AGRA and other partners helped the owners develop the business skills required to select and supply a market niche and gave the farmers knowledge and resources they needed to boost production and reduce losses. But now the steady income from the banana contracts should allow the work to be self-sustaining and for more traditional investors to fund the expansion.