On Saturday, 25th October, 2014, Dr. Ndemo hosted a discussion on agriculture value add. The guest speaker was Gem Argwings-Kodhek, an agricultural economist.
In his introductory remarks, Gem talked about how Kenyans are under pressure to do something tangible with their pieces of land regardless of how small the piece of land may be. In some cases, characteristic of a mid life crisis, landowners will realise that they need more than their salaries in order to save money and will then quickly rush into farming. Sometimes, he said, people will get into farming as a hobby, with no record of whether or not it is working as a business. They consider it another activity, just like golf, that they can do to keep themselves busy on the weekends. Other times, he said, Kenyans get into farming because of pressure to do something with their land. Neighbours in the rural areas will consider land owners lazy if they are not constantly tilling it and growing crops, even if only for domestic consumption.
Throughout his talk, Gem emphasised the importance of recognising opportunities in the agricultural sector and then maximising on these opportunities thereby getting into agribusiness. Agribusiness is the business of agricultural production. It includes agrichemicals, breeding, crop production (farming and contract farming), distribution, farm machinery, processing, and seed supply, as well as marketing and retail sales.
We need to learn the production and consumption patterns in Kenya. Others have learnt this already, which is why things like maize are imported from Uganda and Tanzania so that Kenyans can eat enough Ugali. There is no good reason why Kenya shouldn’t produce enough maize locally.
Agribusiness is all around us. It basically involves taking the produce of the earth and turning it into a lot of money. Almost everything from alcohol to food to clothes comes from plants. We need to learn to make this work for us.
With time, as we begin to learn agribusiness, we will find that we are not only an important part in feeding Kenya, but that there is great potential in playing a part in feeding the world.
The market responds to what consumers want, sometimes even before consumers know that they want it. It’s no coincidence for example, that many tomatoes are firm to the touch. Suppliers know that consumers want to buy good-looking tomatoes with no bruises and so tomatoes have been engineered to be firm and withstand transportation without mashing.
As producers, we have a large role to play in shaping technological evolution. Technology is critical for the producer-consumer interface.
With ICT, the tyranny of geography is diluted and we are able to escape national boundaries. ICT has made possible co-authorship on scientific and technical research papers. Knowledge is now more easily shared across the country. With innovation systems in place, time to market for new products and services is drastically reduced. This makes rural areas big players in supplying to retail markets across the country. - Dr. Bitange Ndemo
To conclude, Gem Argwings-Kodhek shared points to consider when getting into agribusiness. You need to determine if you are getting into farming as a hobby, for self employment or for business. Listen to your potential market. Research – do your homework. Many people have no idea about diseases to watch out for or what farm products to use. Don’t dive in alone; create strategic partnerships with formal agreements. Finally, structure the business to grow.
Gem Argwings-Kodhek is an agricultural economist who completed his BSc and MSc at the University of Arizona in the US in 1988. He worked for 15 years in agricultural policy research at the Tegemeo Institute of Agricultural Policy of Egerton University before being seconded to government where he helped develop the agricultural chapter of Vision 2030 and the consolidation of agricultural legislation while he was Coordinator of the Agricultural Sector Coordination Unit driving reforms and coordinating donors in 10 agricultural sector ministries. In 2009 he served as acting Managing Director of the Pyrethrum Board of Kenya before leaving government to join the Africa Enterprise Challenge Fund. At AECF Gem is the agribusiness advisor and coordinates agribusiness investment activities of the fund. The AECF is a US$ 244 fund invested in 190 agribusinesses in 23 African countries. It is run by KPMG. Gem is passionate about the potential of Africa to grow its economy through the agricultural sector and sees young people and technology being key to this happening.