How small-scale maize farmers lose to middle-men

A farmer harvests maize at Mukinyai village in Molo  PHOTO:KIPSANG JOSEPH

Middle-men paid small-scale maize farmers peanuts, even as the Government rewarded commercial farmers handsomely for their harvests.

This, according to a new report launched this week, is after small-scale farmers had spent more on their crops than their large scale farmers.

The survey, Cost of Production for Maize & Rice in Kenya, 2017, by agricultural policy think-tank Tegemeo Institute, found that large-scale farmers in Nakuru, Trans Nzoia and Uasin Gishu sold a 90 kilogram bag of maize at Sh2, 533 having incurred a production cost of Sh1, 375 per bag.

However, small-scale farmers in the three counties and Kakamega sold a bag of the cereal at Sh2, 200 after spending Sh1, 560 on land preparation, seeds, fertiliser, pesticides, weeding and other costs of production.

Dr Timothy Njagi, a research fellow at Tegemeo, said this was because large scale farmers sold either to the Government through the National Cereals and Produce Board (NCPB) and millers, with the latter paying above the marked price. “So, for example when the Government announced that it was buying maize at Sh3,000 millers were buying it at Sh3,200,” said Njagi.

Large scale farmers thus had 0.84 per cent return on investment (ROI) while small-scale farmers managed a trifling 0.07 per cent, bringing into question the rationale for the latter’s continued involvement in farming of maize as a business.

Small-scale farmers’ small land-sizes means they don’t employ machinery effectively as their large-scale, a fact that significantly reduced the cost of production for large scale farmers. A quarter of the total production costs for large-scale farmers went into hiring machinery.  

Worse still, small-scale farmers sold almost all of their harvested grains to middle-men who paid them less than what the Government and millers gave to commercial farmers. “Most of the small-scale farmers sell immediately after harvest, mostly to traders who go round with trucks,” said Dr Njagi, who noted that large-scale farmers, enjoying the economies of scale, sell directly to NCPB.

Moreover, small-scale farmers used expensive commercial fertiliser while large-scale benefited from cheap subsidized fertiliser from Government, an irony given that the subsidy programme was meant for small-scale farmers. In fact, total cost of production, inclusive of land rent, for small-scale farmers was Sh2,065 but went up to Sh2,256 without the subsidised fertiliser.

The survey also found that large scale maize farmers in Nakuru County raked in better returns on their harvests following substantial use of machinery.  

Nakuru farmers’ return on investment was 1.49 per cent. This as its peers in Trans Nzoia and Uasin Gishu managed ROI of less than one per cent.

EMPLOYMENT OF MACHINERY

The difference, said Njagi, was due to the extensive use of machinery by Nakuru farmers. For every ten shillings that a Nakuru farmer invested in the farm, three (29 per cent) shillings went to machinery.

However, for farmers in Trans Nzoia and Uasin Gishu only 23 per cent of their cost component went to machinery.

Farmers in Nakuru were able to substantially cut-down on their investments in land preparation, fertiliser, weeding, harvesting and handling and working capital in what the researchers attributed their extensive employment of machinery.

With a production cost per bag of Sh 1,006 - compared to Uasin Gishu’s Sh1, 483 and Trans Nzoia’s Sh1, 649- large scale farmers in Nakuru were able to sell a bag of maize at Sh2,500. Those in Trans Nzoia sold a bag of the cereal at Sh2, 700 while farmers in Uasingishu sold it at Sh2,400.

The survey was carried out in six counties, selected because of their importance in the production of maize and rice in the country.

For small-scale farmers, the report concentrated on Kakamega, Trans Nzoia, Uasin Gishu, Nakuru counties while for large-scale farmers were Trans Nzoia, Uasin Gishu and Nakuru.