Kenya has been part of the international supply base over the past 20 years with the majority of the fruit going to France and Holland. In 2016, avocado contributed KES4.63 billion from 246,057 tons of fruits accounting for 8% by value of the fruit sub-sector. The value increased form 4.45Billion in2015 to 4.63 in 2016 which was a 4.2% increase from 2015. This was due to improved prices in the international market as well as opening of the Russian market that demands high volumes of Fuertes avocados which were not very popular in the European market.
The area under production increased from 10,383 Ha in 2015 to 11,017 in 2016 a 6.1% change that was attributed to planting of new orchards in non-traditional areas of the rift valley while production increased from 230,984 tons to 246,057 in 2017 representing 6.6% increase. The leading county was Murang’a that accounted for 53% by value of produce followed by Kisii, Kiambu and Nyamira that contributed 11%, 9% and 4% respectively of the total. The factors that led to a high value in Murang’a were county government intervention in marketing as well as inclusion of Kakuzi avocado data that was previously unreported. Although the avocado exports have marked an increased growth to the EU market, there were a host of constraints and challenges faced by the Kenya avocado export sector.
Challenges Faced By Kenyan Avocado Exports
Several constraints and challenges face the avocado export sector in Kenya and can be highlighted as below;
a).The Quality of Kenyan arrivals vary a lot due to the nature of the production as the majority of the fruit is small holder grown and has lots of variance during production.
b) The packaging is also not strong enough and this results in consistent claims and lack of confidence from the markets.
c) Disruptions to shipping and less capacity available also slow the markets down as Northern Europe does not want as much Fuerte.
The initial development of the Kenyan imports of avocados was controlled by a number of large French importers who used Kenyan production to cover gaps in the market and on average paid prices 20-30% cheaper than other origins. The buying patterns in Europe have changed significantly and the French have lost their dominance.
Reasons behind the Avocado Export Sector Growth
There has been production consolidation in Kenya between 2007 and to date as the industry decided to reduce the loadings due to commercial reasons and strategically focused on improving the production of the fruit in the fields, developed stronger and more attractive packaging, worked on a number of different add-ons that helped modify the atmosphere in the reefer containers that would help the fruit travel and last longer and there has been more stringent controls on maturity index and opening of export season by the government regulators.
During this time more of the new plantings which were predominantly Hass have come online. This automatically opened up new markets in Spain and Northern Europe. The quality has been excellent and Kenyan fruit is now achieving considerably better prices and despite the Kenyan share of the European market dropping from 31% to 5%, the value has increased by 11%. The growth in value of the Kenyan avocado exports to EU can be attributed to largely to the Hass Variety which fetches better premium than Fuerte variety.
The European market achieves good prices as long as the weekly import volumes stay below 1,000,000 cartons [4,000 MT]. With increased volumes from Peru imports into Europe were crossing this threshold and prices were affected. South Africa had also suffered devastating damage from hail storms and so Kenya had a bumper year. Spanish and Israeli production has been affected by extreme drought, and the collapse of Agrexco, and the recession in Spain has slowed down their production and again given more opportunities to Kenya.
The Quality Aspects For Export Avocado
The initial sorting of fruits is done at the point of harvesting. Then before collection at each production unit the agent will carefully select & buy the fruit prior to loading it if it is for an export order. The final and more thorough grading is done at the factory level where sorting is done visually and then each fruit is washed, brushed, waxed, dried, and graded through electronic sizing machines that sort the fruits by their weight. The required sizes by the market are counts 12, 14, 16, 18, 20, 22, 24, 26 and 28. The sizes co-relate to international standards that links the count to the weight of the fruits.
The EU standards for avocados are well documented and thorough.
I. Fruits should be clean, free from debris and skin damage (blush or sunburn). They should be physiologically mature.
II.Fruits should have the stalk intact (0.5 cm)
III. Fruits for processing market should be fully mature so that they can ripen uniformly at room temperature and have good oil levels. Size specification not required.
IV. Both export and processing market require the fruits to be free from pests and disease.
V. The packaging needs to have all the necessary information as required by the EU and most importantly, traceability. The country of origin, weights, count, product description, shipper and classification of category of fruit are mandatory.
VI. All the wooden pallets that the boxes are loaded must be fumigated & free of pests.
VII. Phytosanitary inspection and certification by KEPHIS is a must.
VIII. A EUR1A certificate that guarantees duty free access is also needed.
The Kenyan Avocado Value Chain
As the fruit matures at different times in the year depending on altitude, rainfall and temperatures, farmers market their fruit differently to a range of outlets. A key factor on how far the fruits go from the production region depends heavily on the infrastructure, local conditions & consumption habits. Kenyan farmers initially produced and sold the avocados for the export markets only and all the production that was not sold due to slow markets or quality issues was fed to livestock or left to rot. Over the past decade Kenyans have now started to actively eat avocados and an active national education & marketing drive needs to be embarked upon.
The avocado value chain has developed with a business oriented approach that aims at capturing the best return at each stage of production, processing and trading. The chain is made up of several individual players, who are closely linked to each other and depend on each other’s trust, co-operation, communication and ability.
The Value chain Players comprise of:
A. Input suppliers
This encompasses agrochemical distributors, agrochemical shops, financiers and extension workers
B. NGO’s and Development Agencies
There are a number of NGO’s working under contract from development agencies to provide training and capacity building of individual farmers and groups in areas of Good Agricultural Practices (GAP), Microfinance, market linkages, environmental & sustainable production. Some also provide seed capital for production use & inputs.
C. Farmers
As the Kenyan farmers evolve and get more sophisticated in their farming techniques, due to the multitude of programs and aid that Kenya receives for the sector, their cropping is changing. The farmers are now looking at markets and growing a range of cash crops depending on the season, the rainfall and the pricing. There is investment in covered tunnels, high quality seeds and inputs so that the farmers have quick turnaround cash crops like tomatoes, cabbage, onions etc; Annual crops of maize or beans, and then the tree crops that include Avocados, Mangoes, Pears or Bananas. The skill levels of the farmers varies a lot by county and in the leading regions, the farmers employ a lot of labour during the harvest season.
D. Brokers/ Middlemen/ Suppliers (Marketing Agents)
This group provides important marketing channels for many small scale avocado farmers who have small volumes which would be expensive to market individually and so work with producers to consolidate their production. They also facilitate collection of fruits and become contact persons to other middlemen in their respective areas. They form the most important part of the current value chain in place in Kenya as they link the production to the export market. Most farmers have no choice but to work with them as they get paid in cash directly ex-farm gate. The Marketing Agent plays very important role in determining what the producer gets paid as most exporters and processors don’t have direct links to the farms. The Agent covers the cost of harvesting, transport and rejects and often the farmers feel they get a raw deal and have very little bargaining power due to their scale. Mobile communications throughout the country are excellent and this allows efficient flow of information on orders, weather and money transfers/payments which has revolutionized the banking system in Kenya.
E. Transporters
These are vehicle owners who hire out their vehicles to middlemen to transport the Produce to either the processor or the exporter as required. To maximize on the weight capacity the open pickups are lined with banana leaves to act as buffers and provide insulation to the loose loaded fruits from the farms to the market, the pack house or the processing center.
F. Cess Collectors
Each County now has barriers along their main roads and stop vehicles carrying fresh produce to collect cess from each one depending on the quantity / size of the truck. This is supposed to go towards infrastructure upgrades, repairs and maintenance but is rarely the case.
G. Processors
The role played by processors is increasingly getting important as they take most of the grade 2 & 3 fruit that is perfectly good for the consumption in the local market but the volumes are too high. The operations sort fruit on maturity, process and carry out the primary extraction for unrefined oil. One facility can currently refine the oil to final state for final supermarket sales. The 4-6 processors in Kenya pack, store and ship the oil over a period of 4-5 months when the main crop is flushing and oil levels are higher. The rest of the year there is minimal processing.
H. Exporters
Exporters are the main drivers of this industry and handle about 20% of the crop for export into all of Europe, the Middle East, within Africa and small loads into Asia. They perform the role of sorting Grade 1 fruits at various pack houses equipped with processing lines that clean, disinfect, wash, wax and grade fruit that is then packed in export packaging, cooled down and shipped out primarily by sea, with reasonable amounts by air to the Middle East, especially during Ramadhan holiday.
There are three groups of exporters;
I. Tier 1 is the exporters that grow, pack and export their own Avocadoes
II. Tier 2 are large established exporters that have all the investments in pack houses to handle post-harvest processing & marketing of primarily smallholder avocado fruit.
III. Tier 3 is the smaller operators who do not have the facilities nor the experience and technical knowhow but still export fruit to try and cover gaps in the markets. These groups of exporters is the weakest link and provides no traceability and are a threat to the industry as they are responsible for devaluing prices and reducing the prices & returns.
I. Wholesalers
Wholesalers buy in bulk from brokers. They then distribute to urban and rural selling points, supermarkets and major markets. They also sell to retailers.
J. Retailers
Retailers normally buy from wholesalers and sell to consumers. They either operate small retail shops or supermarkets.
K. Small informal retail Kiosks and “Mama Mbogas”
These form the majority of the sales outlets in Kenya and provide the majority of Kenyans with fruit and vegetables on an informal basis. They will either be road side for passing trade or will move from home to home hawking. It is all cash business and the total value of this sector for all fruit & vegetables is in the ballpark of US$150 million each month (KHCP /TNS Reports)
L. Consumers [hotels/airlines/local]
Consumption of avocado fruits is both direct and indirect. The direct consumption is where the unprocessed fruits are taken as whole fruits for the range of markets whereas the indirect consumption is whereby the processed avocado oil is an ingredient in some consumer goods.
The overall consumption of the fruit at national levels continues to grow year on year as the awareness and spending power grows. Tourism brings in close to a million visitors each year and all the hotels & lodge have avocados on their menus.
Murang’a County and the Central region are well developed with an excellent road network that is essential to move fruit quickly to market after harvest. The producers in this region are also the best farmers and have been trained up in good agricultural practices over the years.
