1. Uplifting Poor Smallholder Farmers in Kenya through the Mobile Phone
By
Kamau Gathiaka
School of Economics
University of Nairobi
Paper prepared for presentation at the collaborative conference on,
“Uplifting the poor: Opportunities for poor people to improve their
livelihoods”, University of Nairobi and Linkoping University, Kenya
Science Campus, Nairobi February 14 – 16, 2013
2. Abstract
The mobile phone is proving to be a powerful marketing tool. The few business calls or short
messages made through the phone make a lot of difference to the livelihoods of many small
scale business people and smallholder farmers. They link producers and consumers, and
producers and marketing outlets. Mobile phones enable producers and market outlets obtain
critical information rapidly. By linking these groups directly and at low costs mobile phones
help to reduce information asymmetries between producers and consumers. Access to rapid
and low cost information help farmers make better marketing and production decisions.
Smallholder farmers use mobile phones to build networks that help them edge out the
exploitative middlemen, and to pool produce that is then marketed collectively.
Subsequently, the farmers realize higher returns. This work looks for evidence from the
internet to show how farmers use mobile phones to improve their livelihoods. The case of
usage of mobile technology to link rural potato farmers in Narok to the urban market in
Nairobi; the use of iCow, a voice-based WAP enabled application to manage dairy cattle in
Kiambu and Nakuru counties, and to source for market for dairy products; and the effect of
use of mobile phones by onion farmers from Endarasha in Nyeri County on production,
marketing and sales clearly demonstrate that mobile phone usage have increased growth in
income levels among the rural poor.
3. 1.0 INTRODUCTION
Although the mobile phone is mainly a gadget for social interaction with around 60–70
percent of calls being made to family and friends, it is proving to be a powerful marketing
tool. The 5–10 percent business calls make a lot of difference to the livelihoods of many
small scale business people and farmers. These calls link producers and consumers, and
producers and marketing outlets. Mobile phones enable producers and marketing outlets to
obtain critical information rapidly. By linking these groups directly and at low costs mobile
phones help to reduce information asymmetries between the groups effectively edging out the
exploitative middlemen. Mobile phones strengthen smallholder farmers in their day-to-day
trading.
Smallholder farmers use mobile phones to link with consumers and marketing outlets (hotels,
supermarkets, schools, etc), and also to build networks among themselves. An increasing
number of farmers are turning to mobile phones as management tools with respect to
marketing and obtaining information on inputs and farming technology. Rapid and low cost
access to information seems to help farmers make better marketing and production decisions.
They accurately know how much to produce and when, and how much to supply where and
at what price using the mobile phones.
Due to limited access to extension services in most parts of the country with the national
extension-staff: farmer ratio standing at 1:1,500 most farmers are unable to keep pace with
changing technological advances. Information access is central to increased food production
and improved livelihoods. Technology-based information flow is a cheap way of
disseminating information to farmers in lieu of extension services. Some private operators
have of late started to sell subscription-based information services to farmers via mobile
phones. The information relates to inputs, farming technology and answers to any plant or
animal disease in a farm. These services generally rely on text messages to farmers’ phones
sometimes in local-languages. Some reports, as shown below, indicate the information to be
accurate, timely and positive in impact.
Besides facilitating reduction of information asymmetries between producers and customers,
mobile phones help to lower transaction costs when the middle man is removed. Middlemen
dictate the prices they pay farmers. This is because individual farmer's produce is small and
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4. the farmers lack knowledge on market prices. Mobile phones link the farmer to the market
directly and also helps him to link with peers. Removal of the middle man and the pooling of
several farmers’ produce so as to market as a group helps farmers realize higher returns.
Exploiting the economic benefits of the mobile phone is a skill that takes some time to
develop and younger users are typically better able to exploit the mobile phone technology
quickly and to put it to business advantage. Through this way, mobile phones are seen to have
a positive impact on agricultural incomes.
The evidence shows that farmers use mobile phones to gain wider knowledge and
information than they could access without the phones. The farmers build up a network of
contacts which they save in their phones, and which they call upon from time to time and as
market situations demand. to draw on this wider experience and expertise to obtain critical
information more rapidly. They use them to speak to multiple traders and fellow farmers to
establish prices and market demand. Phone access is rapidly changing marketing systems.
Greater access to market information and buyers steadily adds to farmers’ market knowledge
and gives them insights into what areas to diversify into with great confidence (e.g.,
diversification into higher-value perishable products). Many smallholder farmers now have
accurate understanding of consumer demand and an enhanced ability to control production in
line with the demand and to manage supply chains. Through this knowledge, smallholder
production is changing from pure subsistence and a way of life to become commercial
farming.
The advantages of using the mobile phone to the farmers include: (1) dealing directly with
larger-scale and far-off buyers that offer better prices without making long trips to the market
(2) ability to conduct market search over many markets (3) ability to construct a broad
network of contacts unlike peers without mobile phones (4) higher ability to organize and
coordinate among phone users thus consolidating volumes and enjoying economies of scale
and higher prices. Phone using farmers are able to compare prices in different markets thus
getting an advantage while negotiating prices with produce buyers.
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5. 2.0 EVIDENCE OF THE IMPACT OF PHONES ON MARKETING
Available evidence from internet search indicates that farmers using mobile phones have
lower marketing costs, realize higher prices for their produce and they adjust supply easily in
response to changes in market demand. While the findings are global, we focus on the
Kenyan cases which we can verify easily if in doubt. Fortunately, we are not in doubt.
For a long time in Kenya, there has been huge discrepancy between what farmers earn and
the value of their produce at the market level due to the many middlemen in the agricultural
produce marketing chain. Sometimes the middlemen earn more than the farmers. The mobile
technology has started to change this by linking rural farmers to the urban market.
The case of potato farmers in Narok demonstrates this clearly. Narok County is a potato
growing region with production averaging 45 sacks per acre. Using the mobile phones potato
farmers in Narok are now able to sell their potatoes directly to the urban buyers. The
Sokoshambani (Swahili for, market at the farm), a free SMS service that runs on the 8988
short-code (facilitated by Twitter) has made this possible. Small-scale farmers today access
market intelligence and sell their produce directly to market outlets, particularly the fast food
restaurants. Sokoshambani has also helped the small-scale potato farmers to access micro-
finance loans, order quality seeds and other inputs, and access training materials which were
hitherto they could not even think of.
There are reportedly 1,953 potato farmers from Narok and 17 hotels in Nairobi using the
mobile-based platform that bridges the more than 150 kilometres separating them. One
farmer James Radama reportedly started potato farming in year 2000 selling a sack of
potatoes for $17.00. By using Sokoshambani services, he is now able to sell at $53.00
directly to the buyer. He also enjoys an additional advantage of prompt receipt of payment.
Before joining the service he reports that it was taking several days before he could receive
payment.
It is also reported that Sokoshambani has also been enabling small-scale farmers to access
high-yield seeds and other inputs with support from USAID-funded Financial Inclusion for
Rural Microenterprises (FIRM) project. The project connects farmers to micro-finance and
banking institutions who finance their acquisition of inputs.
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6. Potato farmers in Narok have improved their livelihoods thorough innovative market-driven
solutions. One farmer, John Bonana, has reportedly managed enough money to purchase
foods to supplement his family’s nutrition. Narok farmers' success in minimizing transaction
costs of marketing through adoption of new innovations is not just a life transforming
experience for them but a national model for poverty reduction.
The iCow is another model of adopting new technology to improve life circumstances of the
farmer. iCow is a voice-based WAP enabled application developed by Green Dreams Tech
Limited to change the way smallholder farmers in Kenya manage their dairy cattle. It keeps
farmers abreast of essential animal breeding and feeding methods through information
technology. A farmer registers his cows free of charge through the iCow portal and gets
regular short text messages (SMS) through the phone about the breeding and production
needs and patterns of his/her livestock. The farmer is guided on feeding patterns, the oestrus
cycle of his livestock, common diseases to watch, milking calendar and calf management.
The SMSs cost Ksh5 each and come at varying intervals during the day depending on the
unique needs of the animals. iCow is reportedly the brain child of a Kenyan, Charles Kithika.
One farmer, Susan Wanjiru who reportedly registered her three Friesian cows on the iCow
portal is said to get daily texts about the animals’ nutritional needs and milking patterns
which she then forwards to a farm hand in Kinangop for action. Through this way, she is said
to keep track of the individual needs of each cow and relay the information to someone on the
ground even though she works in Nairobi and her farm is several miles away in Kinangop.
She is said to have acquired a lot of information on dairy farming, animal diseases and
feeding patterns through iCow while at the same time holding onto her job.
Another farmer Naomi Wambui, a small holder dairy farmer in Kieni area of Nyeri County,
is also said to be managing her dairy cows through the iCow platform with good results. She
has reportedly boosted the productivity of her small herd of four cows since she registered the
animals. With an average of two messages a day giving instructions on what kind of feeds to
use, medication to any bloated calves, details about the animals’ breeding cycles, etc.,
!
Wambui is said to have raised her output of milk by up to 50 per cent. From about 1! to 2
litres of milk per day from each cow she has reportedly managed to raise output to 3 litres
from each animal.
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7. In Mukurwe-ini about 100 kilometres North East of Nairobi, Peter Muhuri is reportedly a
dairy farmer with five well-built Friesian cows. Muhuri is said to have embraced modern
technology farming and is reaping big from the mobile phone application called iCow. He
receives from iCow information on his cows’ nutrition, reproduction cycle and milk
production. Through the application, the dairy farmer is said to have taken up breeding as a
lucrative business after accessing qualified veterinary officers via iCow. His animals have
reportedly attained the status of pedigree.
The innovator of the iCow mobile phone application is said to be Susan Kahumbu, an ardent
organic farmer herself since 1997. She is said to have been motivated to develop the
application by frustrations arising from not getting information on organic farming. The
platform has reportedly over 25,000 farmers some of whom are said to have more than
doubled their income due to increase in milk yield, thanks to the iCow service. Besides cows,
the platform also registers other animals such as goats.
Through the iCow another farmer, Michael Ruchu, is said to be able to source for a market
for the rare and expensive goat milk. After joining the platform Ruchu is said to be selling 30
litres of goat milk per week for Sh7,500, a good income with which has improved his
household welfare.
Multijoy Farm is said to have sold one of its heifers through the iCow’s Soko (market)
platform.
The platform got the farm a buyer who took the heifer at Ksh90,000, way above the
Ksh40,000 that locals pay.
In yet another model of how farmers have adopted new technology to improve their life
circumstances, onion farmers from Endarasha in Nyeri County have reportedly been brought
together in ‘commercial villages’ made up of several farmers’ groups. The groups share
common ideals in increasing production, adding value and marketing their crops. The group
farmers have been trained by Farm Concern International (FCI) on how to produce, market
and sell onions. Mumbi Kimathi of FCI reports that most of their trained farmers are now in
direct contact with traders and are able to know the prevailing market prices in Karatina,
Nakuru and Nairobi before selling to traders or other middlemen who visit their farms.
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8. In the commercial villages farmers pool produce and market collectively thereby increasing
the village cash economy. They bargain as a group for better prices and sell their produce in
bulk. Using mobile phones they connect with each other and with the market. They also gain
market intelligence through their mobile phones, and update their group members on onion
prices in various markets. The villages have reportedly enabled farmers to shift from
subsistence to the commercial production, and to edge out brokers and middlemen.
Farmers from Kinyaite Commercial village are said to have gained knowledge from FCI on
the use of best hybrid seeds and the art of storing onions until market prices are right. Using
the knowledge and their mobile phones fetch the best market prices, the farmers have
increased the earnings from onion sales exponentially. It is reported that the price of one
acre’s harvest of onions (about 800 kilograms in a season) has risen ten-fold from Ksh 8,000
(approximately US$ 91) to Ksh 80,000 (US$ 914) due to the new knowledge and use of
mobile phones.
As a result of the improved earnings, the farmers have changed their fortunes and improved
their standards of living significantly. A number of farmers have reportedly constructed better
houses, purchased land and paid school fees for their children from farm earnings. More
information on this project can be obtained from Mwangi Stanley on e-mail:
mwangi@farmcocern.org or Mumbi Kimathi on e-mail: mumbi@farmconcern.org.Farm
Concern International (FCI).
3.0 LESSONS LEARNED
The experiences in using mobile phones show that farmers using the gadgets have better
access to market information and they coordinate with peers easily. Mobile phones enable
farmers to pool produce, market in bulk and thus enjoy economies of scale. Farmers that take
advantage of the mobile phone technology obtain the latest market information at least cost.
Information on prices in multiple markets gives farmers the power of negotiation for better
prices. Phone-using farmers are edge out intermediaries, and by selling directly to larger-
scale buyers they realize higher prices.
Mobile phone using farmers gather information farm management skills and on best inputs.
Thus, information communication technology (ICT) is a factor for increased business income
among the rural poor. Mobile phones are the most popular form of ICT among the poor.
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9. With close to half of Kenyans (46%) currently living below the poverty line (one dollar per
day), most of them in rural areas (Republic of Kenya, 2010), the levels of income are
expected to rise as the use of mobile phone continues to increase in rural areas.
Mobile phone usage in rural Kenya for business clearly supports small scale business and
peasant farmers in marketing and selling their products thereby increasing their income levels
and those of the rural communities. Mobile phone as a technological tool is supporting the
rural communities to get more customers and to carry out business transactions at least cost.
The mobile phone technology has been well received and it is a tool for development. There
is need to keep the price of this ICT tool and related operational costs down so that more poor
people can exploit the facility to transform their livelihoods.
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