4.3 Outcome 3: Access to markets by priority VCAs improved
This has the objective of improving access to markets by Value Chain Actors. This will be achieved through three intervention strategies:
1). Improving market access linkages for priority VCAs;
2). Improving access to market information by VCAs and
3). Improving access to financial services by VCAs.
The realization of these interventions will be monitored by comparing targets and achievements on:
1). Increase in number of VCAs accessing markets by gender,
2). % increase in number of market segments, and
3). % increase in handling capacity of the market segments.
There is need for every county to establish baselines on these three indicators during the first three months of the programme. To facilitate the measure of changes brought about by interventions, surveys and or data on the achievements should be taken periodically. This data of achievements should be taken at least three times during the programme period, at start, midterm and end term.
In order to transform agriculture into a commercially viable and modern enterprise, markets will be placed at the center of all production, processing and product development.
In addressing market access needs, the Programme will take stock of recommendations on market access from market studies and surveys that have previously been carried out. Additionally, VC analyses undertaken under ASDSP I including those undertaken by VCPs will provide the basis for identification of institutional, financial, legal and physical barriers to equitable market access.
The imposition of levies across counties at roadblocks is one such barrier that hinders movement of agricultural products to urban markets and reduces their price competitiveness locally and internationally.
Particular attention will be accorded to issues confronting women,youth, and vulnerable groups. Lessons learnt from ASDSP I on market access will provide a basis for determining the right approaches which will be incorporated into updated Action Plans. The Programme will support the development of a marketing system for VCAs. Where gaps exist, new studies on marketing and market access will be conducted.
Most of Kenya’s agricultural products are facing stiff competition in the local, regional and global markets due to high cost of production, inefficient infrastructural services, non-compliance with local and international standards and trade barriers. Inadequate value addition and use of obsolete equipment and machinery in bulking, milling and processing of agricultural produce make the price of the final products uncompetitive in the market.
ASDSP II will, through partnerships, promote adoption of modern processing and value addition technologies as one way to increase demand for agricultural produce.
4.3.1 Output 3.1: Improving market access linkages for priority VCAs
Market access linkages increase commercial viability of VCs by facilitating trade at each node of the chains. The output from one level of the chain may be the input at the next level. At all the VC nodes, there are limited market access linkages due to disorganized groups that would otherwise ease activities of the next node in the chain.
ASDSP II will support stakeholder-led initiatives in identifying market access opportunities and possible linkages. The main activities to be undertaken to realize this output is the inventorization of VCA groups, inventorization of the different types of market linkages and helping develop market linkage instruments.
This will be measured by the number of VCA groups aggregated and the number of market linkage instruments signed and operational. Counties should establish strategic targets on each of these indicators that will subsequently be used for annual planning targets.
Based on priorities established by VCFs and VCPs in collaboration with VCD support partners, the County Programme Secretariats will coordinate training of VCAs in market access with emphasis on input supply, production; processing and value addition; product development; packaging; labeling; branding; standards and grades; certification; health and public safety and marketing.
The County Programme Secretariats will support incorporation of stakeholder identified market related infrastructural needs into the county development planning agenda and to secure funding for such investments through PPPs with support from NPS.
These actions will mainly address the “hardware” requirements relating to market infrastructure including rural access roads, electricity supply, sanitation, adequate clean water, physical markets, warehousing, cooling warehouses and refrigerated trucks
Additionally, CPSs will encourage conformity to sanitary and phyto sanitary requirements. NPS and relevant structures at the national level will, on the other hand, advocate for: improvement and maintenance of trunk roads by the National Government and regulation of roadblocks through gazette notices in order to eliminate illegal taxation paid in the form of bribes by transporters.
In order to enhance profitability of agricultural commodities and products, the Programme will support strengthening of formal marketing groups to cushion them from inefficient and exploitative intermediary linkages to markets.
The CPSs will coordinate improvement of governance within marketing groups and emphasize private sector involvement in all nodes of the VCs. The Programme will support Value Chain Organizations to enter into supplier agreements with agro industries and SMEs that are linked to agribusiness and market development.
The National Government will, through the support of the Programme, link VCAs to initiatives under the National Industrial Transformation Programme (NITP) such as Export Processing Zones (EPZs), Special Economic Zones (SEZs) and Ease of Doing Business to enable them enjoy available export market opportunities for their products.
Other linkages with institutions and initiatives like the Export Promotion Council (EPC), Brand Kenya and Buy Kenya Build Kenya will be supported.
The Programme will also support innovative approaches in creating and enhancing market linkages in order to widen the scope and efficiency in market access linkages. This will include the use of virtual linkages through ICT and other web-based linkages such as e-marketing.
Output indicator 3.1.1: Number of VCA groups aggregated
Marketing is the most important reason for the formation of agricultural groups and accounts for over 37% of groups formed. Aggregation of VCA groups entails merging of small unviable VCA groupings into formal and viable entities that can ride on economies of scale and thus become more market-oriented and sustainable.
Aggregation may take the form of farmer associations, primary commodity co-operatives and county or cross county co-operative unions or an apex body at the national level. Evidence of aggregation includes registration certificates to ensure legal status for continuity and sustainability.
Groups that are dealing with similar value chains or commodities across the counties within the same agro-ecological zone will be encouraged to merge into strong and viable marketing entities. VCPs will determine the viability of VCA groups using an economic viability assessment tool.
The Programme will support formation of producer marketing organizations or strengthening of existing ones to achieve sustainable market supplies and ease product certification and traceability.
In the first and second year of the Programme, CPS will encourage existing VCGs to aggregate into viable economic groupings to enhance their bargaining power, market competitiveness and sustained market supply. This will involve taking stock of all the groupings that have been formed around prioritized value chains in each of the counties.
An assessment of their current status and market orientation will be undertaken by the CPS with the support of partners and NPS.
Output indicator 3.1.2: Number of market linkage instruments signed and operational
Market linkages enhance trade within the counties, across the counties, regionally and internationally. Market linkage instruments include MoUs,contracts, Joint Ventures and franchising.
VCGs will determine their marketing needs and inventorize potential market outlets for their products per node. Guided by CPS and VCPs, VCGs will identify suitable instruments and engage relevant trading partners by way of signing one of them.
ASDSP II will support the national government to improve cross-border agricultural trade with neighboring countries through existing trade agreements in the Regional trading blocs such as the EAC and COMESA. CPS will promote contract farming among VCAs to improve market access.
4.3.2 Output 3.2: Improving access to market information by VCAs
Access to marketing information is critical for the sustainability of most VC groups whose main objective of coming together is marketing. Access to markets is constrained by lack of market information especially information on what the market demands in terms of commodities, volumes, quality and timeliness.
Currently there are several governmental and non-governmental organizations charged with collection and collation of agricultural market information but coordination of these institutions is minimal leading to conflicting market signals.
The main activities that will be used to realize this output is the;
– Inventory of the market information providers,
– Type of market information provided per VC with a view to VCAs identifying the appropriate and acceptable types of information that they require.
The indicators that these activities have been undertaken include:
1). The number of market information providers supported
2). The number and type of information provided and
3). The number of VCAs using market information by gender. Counties should establish strategic targets on each of these indicators that will subsequently be used for annual planning targets.
Output indicator 3.2.1: Number of market information providers supported
VCGs will analyze their value chains to determine their marketing needs. NPS and CPS will take stock of the governmental and non governmental organizations charged with collection, collation, packaging and dissemination of agricultural market information and partner with them based on expected impacts on VCG’S or VCAs’ access to markets.
NPS and CPS will profile the organizations and develop vetting criteria to identify those that best serve the marketing needs of VCAs with an intention of strengthening the best market platforms.
Output indicator 3.2.2: Number and type of market information provided
CPS will partner with organizations involved in agricultural market information systems that are accessible to value chain stakeholders. Market information will be packaged in such a manner that makes it is easily accessible to VCAs and meets their varied needs.
The information will include; product, place, price, promotion, people, processes, physical evidence and productivity & quality currently referred to as the 8 Ps of the Marketing Mix. VCGs will take note of available market information in terms of number and type.
The use of Information and Communication Technology (ICT) such as social media will be critical for information sharing and dissemination.
The Programme will support VCAs to leverage on existing marketing and market information-sharing portals which bring buyers and sellers together. VCPs will be encouraged to establish websites for purposes of marketing their products.
Output indicator 3.2.3:Number of VCAs using market information by gender
Many small businesses for women, men and youth are faced with limited access to knowledge and information on markets. Quarterly reviews will be carried out by CPS in collaboration with relevant partners to assess the number of VCAs using market information by gender.
Market information will be used when developing business plans and also in the during their implementation. The reviews will entail monitoring and evaluating the Programme with regard to VCAs using market information whose data will be gender disaggregated.
4.3.3 Output 3.3: Improving access to financial services by VCAs
In the context of ASDSP II, financial services refer to monetary and insurance services. The Programme will support access to financial services to enhance uptake of technologies and increase productivity of VCAs.
A wide variety of financial institutions are fully operational across Kenya, many are specifically focused on providing services in rural areas to the segment of the population that are not served by conventional banks.
The main activities to be undertaken to realize this output is linking VCAs with financial service providers. In ordert to do this the programme will take inventory of all financial institutions in the counties supporting value chain development, inventorize the different types of financial services including type of products and the amounts of each of the types involved and available.
The achievement of these activities will be measured by the number of VCAs accessing financial services by type and by the volume of financial services accessed by VCAs and by type. Counties should establish strategic targets on each of these indicators that will subsequently be used for annual planning targets.
Output indicator 3.3.1: Number of VCAs accessing financial services
ASDSP II will leverage credit guarantee funds including savings’ mobilization and credit facilities to support rural financial institutions that provide services to VCAs and PPPs in order to engage the private sector in agricultural value chain financing.
Financial institutions that implement lending policies based on gender equity and inclusiveness will be considered for assistance by the Programme to access the SIDA/USAID Credit Guarantee Facility. VCGs and VCPs will establish the financial products used by VCAs.
They will also assess VCAs based on developed procedures to determine their suitability for grants A profile of each institution will be developed providing indications of the products and services they offer.
CPS in consultation with NPS, partners and other VCD support agents will develop an inventory of existing agricultural financial services in every county, evaluate and analyze their suitability for VCAs.
Further, CPS will approach and agree with relevant partners to offer technical advice on financial services to VCAs with a view to developing a sustainable framework for VCD financing that is inclusive of women, youth and other disadvantaged groups.
VCGs will work with partners to promote a saving culture among VCAs and improve their ability to engage financial service providers through training and match-making forums.
The improved capacity of VCAs in financial literacy, skills and management will be recorded in the Programme monthly, quarterly and annual reports prepared by CPS which will also support advocacy towards adoption of the “warehousing receipt system” as an acceptable security to access financial services.
Output indicator 3.3.2: Volume of financial services accessed by VCAs by type
CPS will sign agreements and work with financial institutions in respective counties to improve financial access to VCAs. It will establish from VCGs or VCAs the volumes and type of financial services accessed within a defined period.
On a quarterly basis, CPS will also seek and obtain from financial institutions the volume of financial services accessed by VCAs by type for each prioritized value chain. This action taken together with responses from VCAs on the volumes and types of financial services used will enable identification of the sources of these services, formal or informal. This information will constitute part of the quarterly Programme reports.
Whenever possible, ASDSP II partner financial institutions, especially those that offer cheap and affordable credit, will be assisted to open new branches in deserving areas to improve access to financial services. Further, the Programme will support enhancement of access to financial services by VCAs, especially women and youth, by collaborating with innovative financial service providers.