Challenges facing potato value chain

According to Food and Agriculture Organisation, Irish potato is a major food and cash crop grown by smallholder farmers.  It is the second most important food crop in Kenya after maize in terms of production and utilization. Per capita consumption in potato-growing areas is 116 kilogrammes while in other areas it is 30 kilogrammes. About 2-3 million tonnes of potatoes worth Sh50 billion are produced each year.

But why have small holder farmers not achieved the full potential?

Despite this potential, smallholder farmers continue to face endless challenges related to inadequate access to quality inputs, affordable credit and advisory services.

Farmers sell their produce immediately after harvest mainly due pressing need for money and lack of proper storage facilities.  This pushes them to accept low prices offered by traders who on their part have access to price and market information.

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Consumers on the other hand still face high or rising food prices. A major, yet underappreciated, agricultural policy issue is how to maintain incentives for farmers to produce more while at the same time protect consumers from higher food prices. 

Against this context, FIRST initiated a study aimed at creating an in-depth understanding of the price transmissions, distortions and opportunities along the potato value chains.

The study utilised different approaches in data-collection including field visits to key potato-growing counties of Nyandarua, Nakuru and Narok in addition to literature reviews and stakeholder interviews.  

Key findings:

1.     There are numerous players along potato value chain.

2.     Market entry and participation for smallholder farmers is highly limited.

3.     Prices at the farm are determined and set by local traders who seek to maximise their margins by offering low farm gate prices.

For example, prices vary depending on packaging, the most common type of packaging is ‘Kata 3’ 80 kilogrammes bag selling at an average of Sh1,600 at the farm, Sh2,500 at the market and between   Sh3,200 and Sh4,000 retail price (unprocessed).

4.     Packaging (labour, gunny bags and sisal ropes), transport and cess charges accounts for higher proportions of distribution costs.

5.     Just like farmers, local traders hardly participate in wholesale markets which are dominated by a few powerful brokers who set and manipulate prices.

6.     The associated (high brokerage fees, cess and market charges, transport costs-impassable roads) high transaction costs are transferred to final consumers or farmers in form of high retail or low farm gate prices respectively. 

Way forward?

1.     Public investments in physical infrastructure such local feeder roads and cold storage should be given priority to ease distribution and reduce post-harvest losses.

2.     Investments in smallholder irrigation systems will allow farmers to produce potato all year-round minimising production variability and price volatility.

3.     Policy and regulatory environment should encourage farmers to form cooperatives that enable farmers to benefit from economies of scale, and to obtain a better bargaining position. Private sector investments in potatoes processing should be encouraged.

4.     The use of digital marketing platforms like M-Farm and Twiga Foods that help farmers to bypass brokers need to be expanded.