Comparing the Value Chains

It is worthwhile to comparing the two value chains in the two respective countries to discover any potential for the other chains.

In general the research team found that a number of similarities exist in both countries especially in the fact that the level of legal regulations applied is quite low and that almost all transactions are of a spot market nature.

However the markets in Kenya – even though access to them is limited - seem to be much more complex often including many more actors than in Tanzania, where some of the markets are strictly controlled by cartels (see Chapter 5.2). It can be stated that this applies even more to the onion chains in both countries, where more brokers and intermediaries are involved.

A very special aspect of the chain is to be found at the input level, as the breeding and reproduction of seed material is much more liberalized in Tanzania than in Kenya, with the result that such inputs are quite cheaper on average in Tanzania.

6.2.1 Comparing the Value Chains of Tomatoes

The similarities found in the chains of Tanzania and Kenya are that farmers prefer to plant Col J and Onyx to other varieties. There seems to be a high use of chemicals on farms in both countries with few producers implementing ecological/organic production methods. In both countries the majority of tomato farmers do not store their produce, chiefly because facilities are not available. The level of cooperation among the actors is low, as they do not consider it necessary to build up long tern relationships. The packaging used for tomatoes is not standardized by law but has established itself in the market in both countries with a more or less standard weight even though the produce is not generally weighed. In both countries brokers do not play such a dominant role. The only exceptions to this can be found in times of low supply for the retailers esp. the big supermarket chains and in times of high supply for the more remote farmers, who have to find buyers for their produce in a short space of time. In both countries the better graded tomatoes are sold to the important wholesale markets (Arusha, Nairobi), while the poorer grades are sold in the local markets in the region. However, farmers in Tanzania seem to be more involved in trade and transport than their respective colleagues in Kenya. Therefore they have better and more frequent relationships to their customers and possess a better overview of prices and the market situation. While brokers and other actors elongate the chain in Kenya, tomato farmers in Tanzania are less dependent on them.

The differences in the chains were various. While the Mwea production region mostly employs rain fed irrigation the Tanzanian farmers had access to furrow irrigation systems. Record keeping was weak with farmers in both countries but skill seemed to be wider spread in Kenya. At trade level the team found that tomatoes were graded into six grades in Kenya, while only 2-3 grades were used in Tanzania. The packaging uses different crates in both countries (TZ: 30-40 kg; KE: 32 kg and 64 kg). The Kenyan farmers prefer to sell most of their commodities directly at farm gate, while Tanzanian producers sell the majority of the goods at the markets. When brokers buy directly at the farm gate they normally also act as wholesalers on the markets in Tanzania, while in Kenya this is often performed by a different person.

While Tanzanian brokers also offer inputs, credits and similar to producers, brokers in Kenya also act as information agents, providing news about market demand, diseases etc.. The competition among brokers seems to be higher in Kenya esp. at the farm gate. Farmers in Kenya depend more on them in terms of market access

and information. In Tanzania they depend more on brokers and intermediaries in terms of input supply.

Table 32: Comparison of costs in tomato production Costs in US$/kg Kenya

1. season

Kenya, 2. season

Tanzania, 1. season

Tanzania, 2. season

Seeds 0.001 0.001 0.001 0.002

Fertiliser/Pesticides 0.019 0.019 0.010 0.019

Labour 0.026 0.026 0.011 0.014

(Source: own computation)

6.2.2 Comparing the Value Chains of Onions

The differences in the chains could be found first and foremost at the input level, as the seed quality in Tanzania is better and more adapted to the climate and soil than seeds in Kenya are. Farmers’ costs for pesticides in total are lower in Tanzania than in Kenya as farmers require less due to the good seed material. However, Tanzanian farmers tend to use more fertiliser even while costs are higher in Tanzania. As Kenyan onion farmers in Kieni West do not have access to irrigation their situation is worse. They also reported higher post harvest losses in the 1^st season (high supply in Tanzania) due to finding no buyers for the products as Tanzanian onions flood Kenyan markets. Packaging in Kenya is standardized in 14 kg bags. However, their content generally tends to be more than 14 kg. This is an advantage to the farmers compared to Tanzania where farmers are forced to use the enlarged 120 kg bags.

The biggest difference however is in the overall quality of onions which is much higher in Tanzania than in Kenya. Tanzanian farmers have specialized in regional trade and produce directly for it. As a consequence, the seasons for the farmers are reversed. High season in Kenya is when the supply from Tanzania is low. In the low season in Kenya the farmers could grow more onions but there is no market because of competition from Tanzanian onions. In this season most farmers only cultivate onions “to keep the ball rolling”, i.e. to maintain their links to the market. But they plant fewer acres and not all farmers do so. Tanzanian farmers profit from a slew of advantages, some of which have been stated above. Others are: dryer climate, which helps to dry onions on the field, better soil, lower labour costs, lower costs for land and better exchange rates. We assumed that the Kenyan farmers cut the onions earlier than in Tanzania because of the weather (see chapter 4.5.). In Tanzania the dry season is longer and in Kenya the risk of rain during harvest is much higher.