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Kenya strengthens links to multiple retailers

03 November 2013

According to press reports, the British retailer Marks & Spencer (M&S), which accounts for 10% of trade between Kenya and the UK, “has announced plans to step up [imports] of Kenyan produce for sale in its stores”. M&S has 766 stores in the UK and 420 spread across 50 other countries in Europe, the Middle East, Asia and North Africa. Products sold by M&S include “Kenyan goods such as cut flowers, vegetables, tea and coffee”.

The decision is attributed by Robert Swannell, the chair of M&S, to “the great quality of products” obtained from Kenyan producers. In an interview with Business Daily, Mr Swannell noted that M&S imports from Kenya have increased by 15% in the last 2 to 3 years, adding that “Kenya is ranked the fourth-largest sourcing location for Marks & Spencer food division.” All the company’s tea and coffee sourced from Kenya is Fairtrade-certified. The coffee comes from Dormans and the Gikanda Coffee Growers Association; tea sources include Finlays and the Kenya Tea Development Agency (KTDA); and fresh flowers and vegetables are sourced from the Naivasha-based VegPro Group.

Similar efforts to strengthen direct links between Kenyan farmers and local multiple retailers, hotel and restaurant chains are also under way, according to Business Daily. The development of sustained direct supply relationships is boosting on-farm investment and expanding both production and employment.

One of the country’s “agripreneurs” interviewed by the newspaper noted that quality assurance and consistency of supply were important factors in developing direct trading links. The negotiation and signing of direct supply contracts also required a major upgrading of on-farm management and planning to ensure that daily delivery schedules were met. Over time, as the supply relationship developed, a broader range of horticultural products was supplied. Direct supply relationships also eased the cash-flow situation of farmers, with prompt payments facilitating reinvestment in irrigation and protected agriculture systems, thus improving the overall level of productivity of the enterprises linked to the direct supply relationship. 

Editorial comment

For Kenya, establishing high levels of assurance for quality production appears to be an important factor in the development of direct supply relationships with retailers. This applies to both export markets such as the UK and the local market. The development of direct supply relationships enables producers to better understand the retailers’ requirements and opens up scope for local value addition, as products are prepared and packed in line with the shelf-ready requirements of the individual retailers.

In many respects, the development of direct supply relationships with overseas retailers and local retailers, hoteliers and restaurants can be seen as complementary, given the challenges faced by smallholder farmers in cost-effectively meeting and verifying compliance with food safety, SPS and retailer standards.

Earlier in 2013, an International Federation of Organic Agricultural Movements (IFOAM) review found that the introduction of participatory guarantee systems (PGS) of verification of organic produce, aimed at local markets, provided a cheaper means of accessing quality-differentiated markets. The systems are based on the East African Organic Products Standard, which is recognised by IFOAM (see Agritrade article ‘ Report highlights expansion of organic production for local markets in t...’, 13 June 2013).

Large Kenyan supermarket chains, such as Nakumatt and Uchumi, are now selling vegetables and fruits, including organic ones from local sources. Traditionally supermarkets did not sell fresh fruits and vegetables, but this is rapidly changing as increasingly affluent middle-class consumers become more conscious of food safety and quality.

As PGS schemes become more well established in East Africa, the question arises of whether specific overseas retailers such as Marks & Spencer would be willing to accept PGS-based organic certification within their procurement practices.

However, there remains the danger of the reverse trend, with the ‘domestication’ of international standards taking place in ways that disadvantage smallholder farmers, resulting in their loss of local market share, as consumer purchasing patterns change.

Given the sophistication of the Kenyan horticultural sector in serving local and international markets, the question also arises of what lessons fellow ACP countries can learn from this experience as they seek to develop their own programmes to directly link agricultural producers to retailers serving high-income consumers.

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