Unlocking the market

Agriculture plays a key role in reducing poverty. The World Bank’s World Development Report 2008 estimated that growth in the agricultural sector is twice as effective in reducing poverty in developing countries as growth in other sectors. Commercialising smallholder farmers’ production by introducing ICTs would give them better access to markets and boost growth in the agricultural sector.

In Kenya, agriculture is the mainstay of the country’s economy. According to the Kenyan government’s 2009 Agricultural Sector Development Strategy, agriculture accounts directly for 24% of the country’s GDP and another 27% indirectly as a result of business with the service, manufacturing and distribution sectors. Agriculture is responsible for 65% of Kenya’s total export revenue, and in rural areas it provides work for over 80% of the population. These figures make agriculture the single-most important sector for Kenya’s general economic and rural development.

One of the most persistent problems for smallholders in Kenya’s agricultural sector is accessing information and markets, which prevents them from pushing through commercialisation. But attempts are being made to tackle these problems through the introduction of ICTs, such as mobile phones, the internet and mobile phone applications.

In 2013, I completed a study entitled Market in their Palms, which explored the use of mobile phone applications in Kenya by smallholder farmers to access information and markets. More specifically, I wanted to find out what kind of an effect the use of the apps had on these smallholders’ farming businesses and whether the apps helped them to improve their marketing ability. I explored four key areas while interviewing these smallholder farmers:

Type and cost of app

The 12 smallholder farmers in five counties in Kenya (Nairobi, Kajiado, Narok, Nyandarua and Nandi) were interviewed using three mobile phone farming application services: M-Farm, mFarmer and the National Farmers Information Service (NAFIS). M-Farm and mFarmer are privately run agri-business companies based in Nairobi and provide a platform for farmers to access markets, information and inputs through their mobile phones. NAFIS is run by the Kenyan ministry of agriculture. Its integrated mobile app and internet service provides farmers with broader access to key agricultural information, which farmers can access by sending a text message or by calling.

The smallholder farmers used these applications in different ways. The concept of contract buying was important for those using M-Farm, for example. ‘First I had to send a text to M-Farm with all the information about my produce, its quantity and quality, and the price I would prefer,’ one female M-Farm user in Nairobi county farmer explained. ‘Then I was linked up with a buyer. The buyer and I agreed on the price, the quality and quantity. I then signed a contract with M-Farm, as did the buyer, containing all the information we had agreed on.’

For the other two applications, mFarmer and NAFIS, the process of contacting a potential buyer involves sending a text message through the app containing information about the produce on offer, the price, the quantity and quality, and the area where the farmer is based. Once the information is in the application system, it is sent to other buyers in the system. Interested buyers then contact the farmer directly, after which they can agree on the price, quality and quantity, and the mode of delivery and payment.

The farmers using these two services often completed sales without meeting each other, since payment was made via mobile money payment systems such as M-Pesa. ‘When my produce was ready,’ said a male mFarmer user in Narok county, ‘I would send a text to the number 8988 indicating the number of bags of Irish potatoes I had and the price I was offering per bag. The message was then relayed to interested buyers by mFarmer who could contact the service. mFarmer would then send me the buyers’ details, and from that point on I contacted the interested buyer myself to conclude the business.’

In terms of accessing price information, the farmers simply need to send a text message containing the name of the produce and the city of interest to the service provider. The service then replies with the price of the produce in the particular city of interest. M-Farm, for example, has developed a permanent mobile phone app for Android phones that farmers can download and install on their phones. The app enables them to easily access current price information as long as the phones have internet access. Access to production information via these apps is limited because production information is bulky and accessing it via text messaging is complicated.

Not only did these three apps help farmers gain better access to the market, but all the farmers interviewed agreed that the cost of using these apps was affordable. Sending a text message or making a call through these apps did not cost more than the normal rates for texting or calling in Kenya. The farmers who installed M-Farm on their phones also felt that the cost of accessing price information via the internet was affordable. ‘For me the cost is not an issue,’ a male M-Farm user in Nyandarua county said. ‘Even if the cost goes up a little bit, I would not mind as long as I have better access to markets.’

Overall impact

What difference, if any, has the use of mobile phone apps made to the smallholders’ farming businesses? Has better access to information affected these farmers’ marketing and production? All agreed that these apps made accessing information easier, faster and cheaper. The services were affordable, and communication with buyers and others was faster. Moreover, the information was reliable and current, and so particularly useful for farmers. It enabled them to make quick marketing decisions yielding them higher returns.

‘One of the advantages,’ said a female NAFIS user in Nandi county, ‘is that I now know the prices that my produce is fetching. Even if I still decide to go through a middleman, at least now I know what my produce is selling for, so I can insist on a better price. If he doesn’t like my price, I am now at liberty to tell him to go away since I can access another market more easily.’

The farmers interviewed agreed on an additional benefit. Because the various apps made communication easier, farmers were able to link up and form networks among themselves and with traders. Some even said that these networks have become their main source of information on production.

Thanks to these marketing opportunities, farmers no longer have to rely on middlemen or greengrocers, for example, as they have a larger pool of buyers to choose from. ‘Can you imagine,’ said a male M-Farm user in Nyandarua county , ‘that now I sometimes get more than two responses from different buyers interested in my produce? I then simply choose the buyer who offers me a better price and who accepts that he has to pick the Irish potatoes right here at my own farm at his own cost.’

M-Farm, mFarmer and NAFIS have brought the world closer for these farmers. Previously, rural smallholders had to transport their produce, which was time-consuming given the poor road infrastructure in many rural areas in Kenya. But now, farmers with contracts via M-Farm, for example, can remind buyers about the agreed date of sale as their produce is harvested and also remind them to pick it up. As a result, the produce does not have a chance to spoil, which cannot be underestimated since most of these farmers lack good storage facilities.

The answer to the question I posed in my study Market in their palms? is yes. These three apps have unlocked the door to better market and information access for smallholder farmers in the five Kenyan counties mentioned above. In that sense, the next step is to spread the word of these services to as many smallholder farmers in Kenya as possible. In addition, the interviews have shown that the apps did not encourage smallholders to access agricultural extension services, which is another issue that can be improved on in the future.