Mechanization and Agribusiness Hub: Report of The Experience

Pascal Kaumbutho Uncategorized

Background:

The large potential for agricultural production has not been realized in sub-Saharan Africa (SSA). One of the key development paradigms for long-term increased agricultural production in SSA is sustainable agricultural mechanization. The benefits are multi-faceted ranging from:

  • reducing drudgery,
  • improving the timeliness of agricultural production operations,
  • increasing the efficiency of input use,
  • facilitating the implementation of the sustainable intensification of production systems, and
  • making agriculture more resilient to increasingly extreme and unpredictable climatic events.

Sustainable mechanization can also be applied to the development of improved post-harvest, processing and marketing activities, enabling more timely, and concise operations, with value added to primary products. This can foster the delivery of more nutritious foods and higher value products to final consumers. Sustainable mechanization has the capacity to contribute to entrepreneurial activities in rural and remote areas, with hire services that can provide much needed mechanization services to those involved in the agri-food sector. In addition, farm-based sustainable mechanization hire services can also contribute to wider development efforts, such as rural-urban transport of goods (and people), rural feeder road construction and maintenance, power for water pumping, provision and distribution of drinking water as well as the collection of bio-waste in rural, peri-urban and urban areas.

Sub-Saharan Africa (SSA) has a history of strong public sector leadership in agricultural mechanization development. Over the years, differences in the priorities, perspectives and approaches for development of agricultural mechanization have left the private sector playing a minor role. In the long run, this approach needs drastic change, backed by workable business models that will grow public, private sector engagements from bottom-up. In this, the KENDAT Agribusiness Hub model has been found to be the answer. The KIE supported initiative has reached the end of the Proof of Concept (POC) phase and is ready for Roll-Out.

There have been many challenges and achievements in process and learning that are now reported from the POC period. There is a primary need to see mechanization in a wider and more holistic context. There are numerous cross-cutting and cross-sectorial factors that can contribute to well-functioning, inclusive and sustainable mechanization systems. These begin with availability of farm power and enrichment of farmer clients as they fit their business learnings and practices into viable crop and livestock value chains. Afterall, mechanization is a means to an end and not an end in itself. This POC has been implemented on a rich ground, with KENDAT partner actors of many years, available to help build a strong and more holistic foundation, to support the design, formulation and implementation of targeted sustainable mechanization processes and even policies.

The overarching question, hence the Hub model as a Centre of Excellence for Agribusiness growth is HOW sustainable mechanization can have greater impact and positively contribute to the urgent need to align agricultural (production) systems in climate-smart ways that include adaptation and mitigation strategies. There is urgent need for more resilient production systems in order for Kenya and sub-Saharan Africa to meet food needs and reduce heightened pressures on the natural resource base.

The Innovation:

Utilising her 25 years’ experience, learning the needs, challenges and solutions for smallholder farmers, KENDAT formed a private sector Agribusiness company Agrimech Africa Ltd (AAL). With the innovative support and partnership of USAID’s Kenya Innovation Engine’s (KIE) Feed the Future Programme, AAL has been able to add business knowledge and practice. Earlier support was by the Australian Centre for International Agricultural Research (ACIAR) which helped to select the best-bet 2-Wheel Tractor seeders for smallholder farmers. The Agricultural Mechanization Hub that is quickly getting advanced to be the One-Stop Centre of Excellence and The Agribusiness Hub for farmers, has come to be. The Proof the Concept of the venture titled Agricultural Mechanization Hubs to Boost Youth-Attractive Commercial Ventures has come to an end and it is time to grow and rollout the business established to other localities, among the solid beneficiary partners that are ready to jump onto the attractive band wagon, and journey, this Innovation has become.

The highly replicable Hub (Business Model) was established under the philosophy that:


… before credible business farming in Kenya and Africa can commence, small and medium scale famers need ready access to farm power, agronomic inputs and organized access to markets … this can only happen sustainably, if farmers have hub (information, training, aggregation, value-addition and market-link) technology-transfer and presence platforms which they can grow to love and have as their own, to establish business trust relationships with their business partners and supporters, in close proximity to them …

On 18th November 2016, one and half cropping seasons since breaking ground, The Agrimech Business Hub was formally commissioned and launched in the presence of farmers, their agribusiness finance, input and market providers as well as development supporters from USAID, the local beneficiary County Government representatives and other stakeholders. At this launch, among other many Innovation Platform meetings that KENDAT-AAL have conducted or been called to, all manner of partnership deals and plans have been sealed.

While there were many equipment acquisition, operational, technical and business dynamics and challenges around a high-capital innovation (and business start-up), whose deliverables and impact are vividly observable in the longer-term, the Agricultural Mechanization Hub has proved there is great business to be grown here. This is exemplified by the simple business income records captured in the Appendix and the many requests for services by farmers that went unattended. AAL constructed the hub during the SR 2015 season (October to December, 2015).

She got excellent assistance from KIE to confirm that the business had a solid Business Model and Profitable Business Plan but it needed a strong Human Resource as well as other operational and outreach outlays.

AAL purchased the few equipment the small funds available could afford, late in the LR2016 season (March to June 2016), in a high capita innovation and managed to serve only a few farmers. As the next pre-season work approached and started AAL injected her own (Directors’) Ksh 4 million plus, under great pressure to serve many more farmers who had been recruited and who awaited the attractive mechanization services with a level of frustration.

The income records (see Appendix One) show a major boost to the business in October, when Agrimech directors managed to get the said additional equipment. The boost happened despite the equipment arriving rather late (yet again) in the second operation season, October, 2016 and upon requesting a No-Cost extension of the project period from a May, 2016 to a November, 2016 closure. Ventures, process and business learnings have been many and can be summarised as follows:

Ventures:

    • Some 25 years ago, KENDAT started working with farmers in applied research, interested in scientific and business proof that animal power for farming was as technically sound and useable to expand farm production business as was the elusive tractor, that many thought would not work for Kenya or Africa.
    • Moving from mostly-research to mostly-extension service activities, to fill the void in understanding and providing solutions for smallholder farmers, KENDAT found herself in several ventures and movements in the agribusiness sector. KENDAT
      • Applied engineering and mostly technocrat approaches to improve harnessing and power tools and implements available for draft animals.
      • Joined and eventually led the Animal Traction Network for Eastern and Southern Africa, to add to the voice of the need for appropriate smallholder power and mechanization for the contents needy and powerless rural agricultural producers.
      • Got carried away by the 90s voices that argued that mechanization was not the problem for agribusiness, it was seed, fertilizers and harvests that mattered. KENDAT got sacked into animal welfare, and increasingly drew out of animal power ventures

KENDAT quickly got drawn and even to lead the new wave of the early 2000s that promoted concerns for sustainability, hence Conservation Agriculture (CA) movement and training or artisans, farmers and their service providers, that became KENDAT’s trademark.

  • Into 2010 the journey changed to extensive field work to advance CA to one of agribusiness through unsuccessful Farmer Field Schools), which were never linked to markets. This sacked KENDAT into partner ventures and other extension approaches like Commercial Villages, to link farmers to markets.
  • Into 2010 plus it became apparent that despite the various stakeholder and project initiatives ongoing, in a region hit by the adversities of changing weather and other patterns, and the need for Climate Smart Agriculture, practicing CA was given too much emphasis. Effort by-assed the reality that following the stages of agricultural mechanization, Farm Power needed to increase before CA (a mix of several principles, technological and sectoral aspects), could spread in many places and as well as the motorbike was spreading in rural transport. Women and youth engagement in a region seeing huge rural to urban migration, remains real concerns needing practical redress, hence the term ‘Making Agriculture more Sexy for the Youth’ to venture.
  • Looking at the success of the motorbike, the 2-Wheel Tractor opportunity was considered as KENDAT became part of the Farm Mechanization and Conservation Agriculture for Sustainable Intensification (FACASI) project. This was running in 4 countries namely Ethiopia, Tanzania, Zimbabwe and Kenya. Best-bet 2-Wheel tractor powered direct seeders were selected. However there was apparent and desperate lack of 2-Wheel Tractor business models in Kenya, unlike other implementing countries of FACASI or example institutions visited in Asia. Around this and learning from the long and wide experience of KENDAT leaders, the Hub Business Model was agreed as the winning answer to the HOW of mechanization for the country. Agreeing with the presence of a desperate situation, the value chain approach that would make mechanization more integrated and market-linked value chains KIE sponsored KENDAT to Prove the Concept of The Hub as a One-Stop-Shop for farmers’ to sustainably grow their agribusiness. Aware of the complexities of agribusiness and the low chances to deliver impact in a short time and in capital-intensive venture, KENDAT chose to use her already registered private sector company (Agrimech Africa Ltd) to drive the private-sector process needed.
  • The establishment of the AgriHub was well on its way by December 2015, complete with a Hub structure and Business Model and Design processes, but the March 2016 rain season came even faster. Farmer clusters were recruited into February 2016 and 2-Wheeler equipment was boosted by a Sister project. KIE funds saw the arrival of the first 4-Wheel Tractor late into early March and the season that was well underway was not to benefit much from the added power.

Process:

    • A Hub was built way into end of 2015, the agribusiness services process was backed by development of the Business Plan and Model, into early 2016.
    • Farmer base was established via GIS mapping and KIE supported enrolment of farmers that would need our mechanization services.
    • Equipment was acquired and service providers trained for the professional services needed, to hit the services ground with a bang that would be seen as new, progressive, necessary and attractive to already desperate and ‘giving-up’ farmers, to move agribusiness to the next and commercial level.
    • We have had programmes, projects and activities such as:
      • School model farm to attract the young
      • Agrimech 4 and 10 acre CA farms to propel quality and profitable farming by example.
      • Open-day exhibitions and demonstrations of agricultural value chain (aspects and equipment) and competitions of youth and women farmers.
      • We have been called to various national and continental consultancy undertakings including Kenya and regional meetings on mechanization by AGRA, World Bank, FAO and others. (See appendices)
      • Community livelihood advancements such as availing clean water and environment protective building materials for rural farm structures (using Hydraform Inter-locking soil blocks technology).
      • We have undertaken special activities like GIS mapping of our farmer Clusters, Gender and youth studies
      • County Governments of Bungoma, Meru and Laikipia,
      • Soilcares Ltd, providing soil-testing services to farmers
      • Various farmer contractors like BIDCO, Meru Greens, SoyAfric, Sorghum Pioneer and other agencies seeking our mechanization services for their farmers
      • Projects like KAVES and SNV (HortImpact) to mechanization their horticultural farming undertakings (potato and Canola value chains).
      • Technology propellers such as Hello Tractor and Safaricom
      • Input propellers like Syngenta, iProcure and fellow innovators like Caytree, sokoPepe, Lachlan, Value-Farms and many others
      • Sister projects like KENDAT’s Heshimu Punda Programme and their Brooke Hospital for Animals supporters
      • Machinery Leasing companies such as VAELL/Quipbank, RentCo, NIC and Chase Bank
      • Machinery operator trainers such as Manera Farm
      • Financiers like Equity Bank and various SACCOs in the Hub Counties
      • Venture Capitalists like Phatisa

Learnings:

  • A good Hub needs a well-documented Business Model and Business Plan that has a solid profitability forecast and Human Resources to manage it and get it to prosper.
  • AAL is well underway with a Mechanization Hub that can and will be grown into a holistic farm power source, a smart land-use consolidation, input-acquisition, crop-aggregation and trade hub, to be replicated all over Kenya and Africa.
  • The Hub is developing into a platform for all agribusiness supporters. AAL will gain much ownership and business boost by encouraging local and village innovators of all forms, developmental groups, individuals and product sellers to be part of her hub development and growth.
  • There is much to tap into and lead nationally and regionally by establishing Conservation Agriculture value-chain platforms within which suppliers and farmer livelihood supporters of all forms will find organized and ready-to-engage farmers.
  • At Mwireri our farmers are already in 4 Agribusiness Clusters and under micro-finance training, already actively involved in table-banking. Finance empowerment is the foundation for modern-day agribusiness. Holistic Agricultural Mechanization is the previously missed-out and key ENABLER to the much talked about Kilimo Biashara (Farming as a Business). We have a powered and win-win business model. All manner of visitors and walk-ins have expressed the urge to join us and continue to learn together.
  • The Hub is for sure becoming a One-Stop-Shop knowledge exchange platform, where researchers, farmer-trainers and input distributors will be investing, to train at and even open bases for information, outreach or product propulsion kiosk. With a base and enlightened business-oriented farmers, input and knowledge supporters as well as market agents will save the heavy run-around they currently must undertake, in pursuit of dispersed and seemingly undependable smallholder farmers. Continuous presence and referral services will build the hitherto elusive trust relations necessary for agribusiness to take place.
  • The KENDAT-AAL Agricultural Mechanization Hub is unique and timely and is answering THE HOW of entry points, and meeting the necessary ingredients of strategies towards Sustainable Agricultural Mechanization (SAM), not only in Kenya but in the entire continent. Indeed the Hub Model is well anchored on Commercial, Environmental and Socio-economic Sustainability, like the many stakeholders that have been engaged and even the African Union Commission (AUC) recommends and seeks in the initiative of Sending the Hoe to the Museum..

Way Forward – into Rollout:

The Agrimech Africa Ltd team has every confidence that our good works will pass the test of Rigorous Assessment and drive us into the rollout phase. Key partnerships are already line-up, to pursue into the next phase:

  • In the Rollout phase, we will strive to open only one other hub as we perfect the Mwireri one and its deeper reach, around a growing number of Cluster farmers, glued by microfinance, value-chain mechanization and aggregation of produce for identified markets. For the Mwireri Hub, target value-chains will be:
    • Hay and Silage for livestock with Sirimon Cheese and other identified milk market link, or even an Agrimech Milk Cooler with farm to farm, collection transport.
    • Cereals: Maize, Wheat and Barley
    • Pulses: Beans and Garden Peas
    • The 4-set of Irish potato machinery (plough-harrow or bedding machine, the hiller-weeder machine, the planter, and the harvest (wind-row) machine. SNV, a Dutch NGO and their HortImpact project are seeking partnership for the potato chain mechanization as well as smallholder Canola farming.
  • The one other Hub that we will establish will be in partnership with Sorghum Pioneer Agencies based in Meru and Tharaka-Nithi Counties. From here, Agrimech will serve Kitui, Machakos and Makueni with services that will spread and advance production, aggregation and marketing of Sorghum for EABL, Green grams, Pigeon and Cow peas for local and already found Asian market. Here too the livestock value-chain will be advanced. FAO already claims to have trained some 40,000 farmers in Conservation Agriculture in this area and they have called us to venture here, a fertile ground with structured farmer groups, complete with Equity Bank Smart cards for acquiring inputs and linked to KAVES project of USAID.
    • Equipment for this East of Mt Kenya locality will be like what the Mwireri Hub has but with some mini-combines for harvesting the pulses.
    • Small mechanization like self-propelled or 2Wheel Tractor powered threshers will be attached to youth on a use to own basis.
    • Structures to work with seed companies hence equipment like seed-dressers and the Brazagro Kikapu storage structures will be enhanced. Warehouse receipting processes among other innovations will be initiated.
  • We will advance our work through partners to build flagships (additional to farm power) in the soil health, input acquisition, post-harvest operations, aggregation and storage as well as marketing. To serve farmers better, we will use the power of market-pull to get them to adopt a land-use consolidation, hence grow selected crops or livestock. We will acquire a low-loader and camping gear to have an effective mobile unit, able to serve farmers in longer but organized locations away from the hub. Mobility and mapping will enhance the reach of the hub services, other than having to build hubs all over the place.
About the Author

Pascal Kaumbutho