MercyCorps AFA - Ken Bench v8 FINAL May 12 2016 JH

supported by

AGRIFIN ACCELERATE

Benchmark Study of Smallholder Farmers

of Kenya, 2015

www.MercyCorpsAFA.org

Survey Locations

› Two regions were surveyed; Central and Western Kenya

› A total of 50 villages were randomly selected within the two regions; 25 villages in Central and 25 villages in Western.

› Had to own a phone or a SIM card

Demographics

Gender Segregation Age Segregation

Overall Central Western

51% 257 258

49% 249 247

Age Central Western

Male Female Male Female

18 1% 1% 1% 2%

19 - 30 16% 17% 19% 35%

31 - 43 24% 31% 23% 30%

44 - 55 19% 23% 19% 17%

56 - 67 20% 14% 24% 12%

68 - 80 13% 11% 11% 4%

81+ 3% 1% 1% 0%

A total of 1,010 farmers were surveyed; 506 farmers in 25 villages in Central and 504 farmers in 25 villages in Western Kenya

51% of the interviewed respondents were females

Demographics

Highest Education Attained

27%23%

21%14%

5%3%

2%1%

1%1%

Primary education completePrimary education incomplete

Secondary education, completeSecondary education, incomplete

No formal educationDiploma Complete

Some secondary vocational…DK/Refused

College/University incompleteComplete university Degree

› 50% of the farmers report their highest level of education attained as primary, either complete or incomplete

› 75% of the respondents are monogamously married

N=1010


Respondents from Central are less likely to fall into lower income PPI brackets compared to the respondents from Western

0.60%

14%

23%

51%

12%11%

49%

18% 19%

3%

1.25 USD 2.50 USD 4.00 USD 8.44 USD > 8.44 USD

Central Western

N=1002

PPI: Progress out of Poverty Index

FARM CHARACTERISTICS Subtitle Goes Here



Regardless of PPI tiers, farmers consistently stated they own the land they cultivate.

3% 5% 2% 3%

98% 95%90% 89%

97%

12%16% 13% 14% 13%

2% 2%3% 1% 4% 4% 1%

1.25 USD 2.50 USD 4.00 USD 8.44 USD >8.44 USD

Leased (long term) Land owned

Rented in(short term) Communal

Land owned by someone else-made available for free

N=1002


70%

21%

7%

2%

15%

5%2%

53%

15%

5%2%

34%

9%4%

1%

36%

11%

3% 1%

1 2 3 4 5 6 7

Overall 18-30 years Over 30 years Male Female

How many parcels of land did you cultivate in the last 12 months?

› Few youth cultivate more than one parcel of land› Men and women are pretty evenly split on the parcels they are cultivating, but…..

Age

Average size of land under cultivation in acres

Parcel 1 Parcel 2 Parcel 3 Parcel 4

18-30 Years 1 0.95 0.7 0.4

Above 30 Years 1.3 1 0.8 0.8

Gender

Male 1.4 1 0.7 0.8

Female 1 0.95 0.95 0.7


What is the size of land under cultivation?

…Youth and women tend to cultivate smaller parcels of land.

Marital status Single/ Never

marriedPolygamously

marriedMonogamously

married Divorced Separated Widowed

Living together/

Cohabiting

Average size of land under cultivation (acres)

1.5 3.6 2.1 1.3 1.1 1.8 1.0


Size of land under cultivation varies with marital status of the respondents

› Average size of land under cultivation varies with the marital status of therespondents.

› Married respondents tend to cultivate larger pieces of land as opposed to thesingle respondents and divorced/ separated or widowed respondents.

› This finding suggests that marriage may comprise an indicator for credit scoring.

N=1010


Main planting season is March/May. Another planting season is in August/September/October

0%

50%

100%

150%

200%

250%

300%

350%

400%

450%

500%

January February March April May June July August September October November December

Planting

Maize Beans Tea Coffee Irish Potatoes Cabbages

Kales Groundnuts Sugar cane Cassava Bananas


Farm inputs form the highest expenditure for the farmers, but they are also hiring and paying labor throughout the seasons

11%

19%

20%

25%

28%

29%

81%

82%

16%

23%

23%

32%

29%

40%

74%

75%

5%

15%

18%

18%

27%

19%

88%

89%

Manure

Hired labor for harvesting

Hired labor for weeding

Hired labor for planting

Hired labor for land preparation

Pesticides/insecticides/fungicides

Fertilizer

Seeds (planting materials)

Western Central Overall

VALUE CHAINSSubtitle Goes Here



89%

74%

60% 60%

32%26% 24%

20%15% 14%

81%

61% 64%

50%

31%

47%

25% 27%

3%

23%

97%

87%

56%

70%

33%

4%

22%

13%

27%

6%

Total Central Western

Top 10 value chains for the two regions


89%

72%63%

50%

28% 28%19% 18% 17% 14% 13% 12%

Value chains for the youth vary with marital status

› Unmarried youth tend to focus more on vegetable growing and poultry keeping as opposed to married ones who focus both on mixed cropping and livestock production.


Farmers are involved in multiple value chains

7%

75%

10%5%

1.50% 0.50%

1 2 3 4 5 6N=1010

› 75% of the farmers grew at least two different crops in their farms in the past 12 months › Crop production and livestock keeping are done concurrently by the farmers› Farmers growing Tea, Coffee and Sugar Cane as their primary crops do not intercrop


36%

51%

17%10%

22%

36%

7%14%

38%

29%

68%

84%

100%

50% 47%

92%84%

2% 3% 3% 5%10%

1%

26%18%

12%3%

23%

6%1%

Maize Beans Irish Potatoes Kales Coffee Groundnuts SweetPotatoes

Cabbages Tomatoes

consumed sold Shared Stored

Small holders farm crops for both consumption and selling

N=1010

Buyers of farm produce

Channel of payment used

Cash ChequeM-PESA /Mobile money transfer

Account transfer (EFT) In kind

Middleman/trading company 93% 2% 2% 2% 0%

Local market 100% 0% 0% 0% 0%

In the village 98% 0% 1% 0% 1%

Co-operative 13% 2% 3% 76% 0%

Processor 58% 13% 9% 16% 0%

At farm to a neighbor 100% 0% 0% 0% 0%

To a travelling merchant 100% 0% 0% 0% 0%

Retailer 98% 0% 2% 0% 0%

Direct to the public 100% 0% 0% 0% 0%


Where do you sell your produce and how are you paid?

79% of farmers who sell to coops report they are paid electronically; 25% who sell toprocessors report they are paid electronically.

N=986


Not How but When: Why do you prefer to sell to this buyer?

51%

28%

17% 17%

5%1%

Pay at hand Pay the bestprices

Lack transportto take to other

markets

Flexiblepaymentschedule

Check offs Poor roadconditions

N=986

“I prefer cash in hand since it helps in off setting pending bills. While for M-Pesa Iuse it with buyers who reside far from where my farm is located. They make theirorders. When they are ready they pay me through M-Pesa” FGD participant

INCOME SOURCESAND REMITTANCES



Dairy farming is one of the major activities and sources of income for the farmers in both regions

26%

74%

Consumed Sold

Milk

N=600


Central farmers earn more from livestock and livestock products than Western farmers

0

20000

40000

60000

80000

100000

120000

Central Western Total

Poultry Cattle

Farmers have multiple sources of income, including as farm labor


Activities Average Monthly income(Kshs) Channels of payment

Self-Employment

Kiosk 5,721 CashMobile money transfer Transport 13,967

Retail shop 10,852

Regular Jobs

Civil servants 22,508 CashCash Deposit to a bank account EFTMobile money

Teaching 16,357

Farm worker 9,487

Seasonal Jobs

Farm casual worker 7,875 Cash

Construction 20,800

“When I am not busy with farming I am involved in brick making in which I have employed two people” FGD participant .“I am as well involved in jua kali business which I run twice per week” FGD participant

Farmers receive more remittances than they send


52%

36%

28%

Receive Send Send and ReceiveN=671

› Farmers send and receive money from family and friends either once every month or once after every two months


Do you send or receive remittances?

57%

43%

23%

76%

57%

43%

65%

34%

23%

76%

53%47%

Central Western 18-30 Years Above 30 years Male Female

Sending Receiving

› Fewer youth are sending and receiving remittances› Women report sending and receiving fewer remittances than men.

Mobile money is the main channel for sending and receiving money regardless of respondents age


90%

16%

6%

1%

95%

5%

3%

Mobile money

Hand Delivery

Commercial bank

Post office

Receiving Sending

N=671

› About half of the respondents said they retain some of the amount received, and don’t cash out the full amount right away.

Remittances are used primarily for basic consumption


76%

28%

19%

13%

8%

5%

Consumption

Education

Purchase farminputs

Medical fees

Electricity

Social functions

› Remittances are sent once per month or once per two months› Purchase farm inputs is the third largest use category, BUT…..

N=671


2304

14980

3643 3988

11912010

0

2000

4000

6000

8000

10000

12000

14000

16000

Consumption Education Medical fees Purchase farm inputs Electricity Social functions

Average amounts sent and received

› …purchasing farm inputs is the second largest value amount remitted for farmers after school fees

AGRICULTURAL ADVISORY SERVICES AND THE USE OFMOBILE TECHNOLOGY



Half of the interviewed farmers had access to agricultural advisory services in the last 12 months

N=550

55%

45%

55%

20%

79%

52%48%

Total Central Western 18-30 Years Above 30 Years Male Female


Trusted sources of agricultural advisory services

33%

15%

12%

8%

6%

3%

3%3%3%

Government agriculturalextension officers

NGOs

Other farmers

Co-operatives

Farmers’ group

Agro vetsN=556

“We trust Agricultural extension officers; they are always ready to support whenever you seek theirservices. Secondly One Acre Fund. And thirdly it is my fellow famers. Whenever I pass by their farmsit is possible I learn something from them ” FGD participant

Listen to radio programs Popular radio stations Popular radio programs

Region Central 67% West FM Mugambo wa murimi

Western 60% Inooro FM Ukulima bora

Gender Male 70% Citizen radio Kilimo bora

Female 58% Kameme FM Kilimo biashara

Age 18-30 Years 58% Shamba shape up

Above 30 years 66%


Farmers listen to agricultural radio programs as a source of agricultural information

N=1010

None of the small holder farmers receiving agricultural advisory services mentioned television as a channel of communication.


But which channels are primarily used to convey agricultural advisory services?

97%

1%1%

1%

Face to face

Voice(either recorded voice orphone conversation)

Radio

SMS

N=550

Only 1 percent of small holders reported SMS as a primary channel for advisory services.


Government extension officers are the largest source of agriculturaladvisory services although in Western other farmers and NGOs arealso significant sources.

25%

6%

%

8%

3% 2% 3% 1% 2% 2% 1% 1%

15%13%

17%

2%

6% 5% 4% 5% 3% 2% 2% 2%

Central Western

N=1010

› Face to face is most common channel used to receive the advisory services, and the services arereceived monthly or less than once per month.

› Non governmental organizations mentioned to support Agricultural activities in Western are theOne Acre fund, MOKWO friends, International Community Services, NALEP.

Cost of agricultural advisory services

Yes 7%

No 93%

› However, 7% of those currently receivingagricultural advisory services cited that theypay for the services from different sources.

› Technical production assistance and pestsand diseases management are the servicesthat are mostly paid for out-of-pocket.

N=556

None said they are willing to pay foragricultural advisory services.


25%

17%

14%11% 10% 9% 8%

5%

24%

27%

11% 11%

1%

9%

4% 2%

26%

7%

16%

11%

20%

10%

13%

8%

Pests anddiseases in field

crop

Too little rainfall Unpredictabletiming andamount of

rainfall

Prolongeddrought/ dry

spells

Too muchrainfall

Pests anddiseases inlivestock

Depletion of soilfertility

Poor qualityseeds


N=1010

Crop pests and diseases are the main constraint for small holder farmers

This finding suggests that advisory services may want to focus on pests and diseases.

Type of

Phone

Overall Youth(18-30

years)

Female Phone Make

Basic Phone 57% 47% 58%Nokia Basic

Techno Basic

Samsung Basic

Feature Phone

30% 35% 29%ITel

Huawei

Alcatel

Smart Phone 9% 19% 9%

Techno Modern Smart Phone

Samsung S series


Overall, farmers mostly use basic phones, but youth are trending toward feature and smart phones.

› 92% of the interviewed respondents own at least one phone; only 4% could not tell us the make of phones they have access to.

About 39% of the total respondents own or have access to phones that are internet enabled, but only 13% cited that they are currently accessing internet using their phones.


How important would you say your phone is in accessing information about farming?

34%

25%

Very important ImportantN=1010

“I have never tried it (SMS) but if I can get access to information about farming from where I am and the typeof farm inputs accessible in my region; where and how much I can buy them. Which type of fertilizer I can useand generally a lot of information about farming that I can access…..this will be very beneficial for me!” FGDparticipant.


99% 99%

81% 79%70% 66%

34% 33%28%

12% 10% 9%

N=950

Main functions farmers perform on their phones are making/receiving calls, withdrawing/depositing money,

sending/receiving messages and buying airtime

“in our area we use both Safaricom and Airtel but we mostly prefer to use Safaricom because theyhave network across the entire country and have M-Pesa outlets almost everywhere” FGD Participant

FINANCIAL SERVICES Subtitle Goes Here



34% 34% 34%

14% 14%

21%

52%

26%

11%

23%

13%

4%

M-pesa Chama Equity Bank Savings in ahidden place

Mshwari Co-operativeSACCO

Central Western

Which saving instruments do you use?

N=709

› Central respondents tend to use formal saving instruments more than the Western respondents


Farmers report they use numerous savings instruments.

M-P

esa

Ch

ama

Equ

ity

Ban

k

Savi

ngs

in a

h

idd

en

pla

ce

M-s

hw

ari

Co

-op

era

tive

SA

CC

O

A g

rou

p o

f fr

ien

ds

in R

OSC

A

Co

-op

era

tive

Ban

k

Form

al S

AC

CO

KC

B M

-Pe

saA

cco

un

t

Mic

rofi

nan

ce

Ban

k

Farm

ers

’ sa

vin

gs

and

loan

gro

up

Fam

ily b

ank

pe

sap

ap

M-Pesa 303 89 64 43 69 22 33 16 11 12 9 1 4Chama 89 213 45 35 33 19 9 8 8 7 6 1 2Equity Bank 64 45 160 18 32 12 13 8 7 8 4 3 0Savings in a hidden place 43 35 18 130 4 5 31 1 1 0 1 1 1M-Shwari 69 33 32 4 94 5 8 7 7 10 5 2 1Co-operative SACCO 22 19 12 5 5 91 0 7 2 2 2 2 4A group of friends in ROSCA 33 9 13 31 8 0 59 0 0 1 2 0 0Co-operative Bank 16 8 8 1 7 7 0 40 3 2 0 0 0Formal SACCO 11 8 7 1 7 2 0 3 26 1 2 0 1KCB M-Pesa Account 12 7 8 0 10 2 1 2 1 22 1 1 0Microfinance Bank 9 6 4 1 5 2 2 0 2 1 20 0 0Farmers’ savings and loan group 1 1 3 1 2 2 0 0 0 1 0 10 0Family Bank Pesa pap 4 2 0 1 1 4 0 0 1 0 0 0 10

Farmers who report saving on M-Pesa are also more likely to use chamas, Equity Bank and M-Shwari


Most youth save with M-Pesa, and women tend to prefer chamas

51%

29%

17%

23%

19%

6%9%

40%

30%

25%

17%

11%15%

8%

45%

16%

28%

18%

14%16%

5%

40%

45%

17%19%

12%10%

12%

M-pesa Chama Equity Bank Savings in ahidden place

Mshwari Co-operativeSACCO

A group of friendsin rotating ROSCA

18-30 Years Above 30 years Male Female

N=709

M-Pesa Chama Equity Bank

Savings in a hidden place

M-shwari

Co-operative SACCO

A group of friends in rotating ROSCA

Easy access to savings

62% 42% 32% 65% 48% 29% 69%

Location 1% 7% 11% 5% 3% 5% 8%

Cost 2% 4% 9% 0% 1% 4% 2%

Accessibility 33% 24% 28% 28% 19% 21% 8%

Easy access to loan/credit

1% 17% 16% 0% 27% 32% 7%


Drivers for saving vary per saving instrument


76%73%

29% 30%25%

31%27%

74%69%

35% 32% 30%26% 26%

78%75%

36% 36%

29%31%

26%

71%65%

30% 28% 30%23% 26%

Makewithdrawals

Make Deposits Receivepayments

Payment of Bills Access loan/credit

Money transfers Daily purchases

18-30 years Above 30 years Male Female

How do you use your saving Instrument?

N=709


28% 27%

23% 23%

27%

total central Western Male Female

Farmers are averse to using credit

“We have the money lenders and micro-finance that are illegitimate whose mainaim is to steal from the common man. It is through such experience that havemade many people to shy away from taking loans.” FGD participant

N=283


28%

21%

27%

Total 18-30 Years Above 30 Years

Are you currently servicing a loan?

N=283


19% 17% 14% 8% 6% 3% 3%

45%39% 45%

17%11%

34%

28% 17%

17%

11%

11% 11%

Chama Bank SACCO Mshwari Microfinance family/friends/neighbor Agricultural Inputsupplier

Total Central Western

Which loan instrument do you use?

“I took I loan of kshs. 30,000 from women’s formal group; use it in farming.” FGD participant

“I took a loan from women’s group(KWFT); you know we have to promote women; I took I loan of kshs. 5,000which was charged an interest rate of 5%” FGD participant

N=283

26%

12%14%

Overall Secured unsecured

21%

12%

21%

11%8% 7% 6% 6%

3% 4% 3% 3% 4% 3% 1%

26% 26%

14%

25%

15%

5% 6% 5%7%

3% 4% 3% 2% 1% 2%

Central Western › Education and farm inputs are the primary reasons for taking loan among the surveyed farmers who are currently servicing a loan

› A slightly higher number of farmers are currently servicing an unsecured loan as compared to servicing a secured loan.

N=1010

N=1010

Farmers are borrowing for fertilizer, livestock and seed purchases


53%

22%

13%

3%

60%

13% 15%

1%9%

Cash EFT Mobile money Third partypayment

Cheque Check off

Disbursement Repayment

N=283

Cash is preferred for disbursement and repayment of loans, but EFTs and mobile money are also used.

Disbursement

18-30 Years Over 30 Years Male Female

Cash 59% 52% 41% 65%

EFT 6% 27% 32% 14%

Mobile money 35% 9% 15% 12%

Third party payment 4% 3% 2% 4%

Repayment

Cash 61% 61% 52% 70%

Mobile money 33% 13% 16% 17%

Account Transfer 8% 16% 19% 10%

Check off 4% 11% 12% 7%


Cash is preferred for disbursement and repayment of loans, but youth also like mobile money to receive and pay loans

N=283

Counts

How payments are made?

Cash Bank Branch/Agent Mobile money

Others (POS, ATM, in kind)

Pay for farm inputs( seeds, fertilizers, pesticides 75990% 0% 1% 9%

Pay school fee 563 63% 24% 5% 9%

Pay for farm labor 396 71% 0% 3% 26%

Pay for livestock feeds 35595% 0% 1% 4%

Pay a medical bill 333 86% 1% 1% 11%

Pay an electricity bill 238 39% 6% 54% 1%

Pay for water 16076% 7% 16% 2%

Pay TV/cable/satellite bill 81 16% 0% 84% 0%


Most common payments are for farm inputs and school fees

Cash is predominant but mobile money is common for paying certain bills. Payment of labor is mostly by cash or in kind N=1010


Low uptake of insurance among smallholder farmers

N=1010

34%

26%

3%

Awareness Usage Excluding NHIF

› Insurance products used by youth are NHIF and NSSF


54%

20%

16%

14%

51%

19%

13%

18%

58%

21%

20%

11%

Don’t understand insurance

Too expensive

Do not need insurance

No interest

Western Central Overall

N=1010

“ I have never considered using insurance for the simple reason that I don’t know how those insurance coverswork. No one has bothered to tell me how the insurance covers work neither am I aware of the insurancecovers that are available for farmers” FGD participant

Lack of information and perceived cost of insurance are the main barriers to use of insurance


14%

3%

11%

8%

6%

Overall 18-30 Years Above 30 Years Male Female

Did you receive any financial advice in the last 12 months?

N=1010


Trusted sources of financial advice

43% 42%45%

32%

27%

37%

8%

14%

2%


No one ; depend on Self Friends/ Family Bank manager

N=1010

Find the full report on www.MercyCorpsAFA.org

Email: [email protected]

MercyCorps Offices

ABC PLACE

NAIROBIwww.MercyCorpsAFA.org

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MercyCorps AFA - Ken Bench v8 FINAL May 12 2016 JH

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