Kenyan Brokers’ Association is Changing Impressions and Transforming Business Relations
Seasonal buyers, commonly referred to as brokers, play a key role as the main maize marketing channel for most smallholder producers in western Kenya. However, the relationship between brokers and smallholders has grown increasingly adversarial over the years as farm-gate brokerage has employed unscrupulous buying practices largely seen as exploitative to the farmers. With the hope or reversing this trend, the Highway Cereal Traders' and Marketing Brokers' Association is partnering with ACDI/VOCA’s Kenya Maize Development Program (KMDP) to provide improved services to farmers and other stakeholders to establish itself as a viable and reputable business organization.
In accordance with the BDS approach*, KMDP seeks to improve the ability of private service providers—such as traders and brokers—to effectively deliver the services needed to make maize production and marketing more efficient. The Highway Cereal Traders and Marketing Brokers Association consists of 70 traders operating within Trans Nzoia and Uasin Gishu districts. With a central office in Kitale, the group serves as an important market outlet for the maize producers in this high-yielding region. The association recently registered as a legal business entity with the local municipal offices and is also registered as a Self Help Group (SHG) with the Ministry of Gender, Sports, Culture and Social Services. The group buys and sells about 27,000 metric tonnes of maize per year, mainly from medium- and small-scale farmers, and is currently looking to expand its operations into neighboring Uganda. Through assistance provided under KMDP, the traders have joined forces to achieve greater economies of scale and streamline their operations in order to more effectively serve their clients.
The benefits of participation in KMDP have been as far reaching for the brokers as they have been for farmers. Farmers are now better informed than they were in the past through access to timely and accurate price information provided through Market Information Centers (MICs) and Market Information Points (MIPs). This has revolutionized the business relationship between brokers and farmers as brokers have been forced to improve service delivery to retain their clients. Better service delivery has included more competitive prices as farmers begin to present cleaner maize with lower moisture content. In the past, brokers have had difficulty in obtaining quality maize from smallholder farmers, which in turn resulted in lower farm-gate prices. Through KMDP, both farmers and brokers have received training in post-harvest handling, leading to an improved quality of traded produce.
According to the leadership committee of the SHG, working with KMDP has also provided association members with useful skills in business management through participation in ACDI/VOCA’s Farming as a Business training. With a growing membership and knowledge base, the group anticipates an improved capacity to accumulate savings, leading to greater opportunities in accessing credit financing. As a result, the group has plans to build warehouse facilities that will enable it to handle a greater volume of produce, especially during the peak harvest season. The association is also working with other partners within KMDP to establish market linkages for the acquisition of moisture meters and certified weighing equipment which will enable it to provide effective and reliable services.
With an increasing number of brokers soliciting maize from smallholder producers, it has become increasingly difficult to distinguish unscrupulous dealers from honest traders. The formation of the brokers association, however, has enabled its members to establish a reputation for fair trading and better services. The association is providing identification numbers and business cards for registered brokers. As explained by Mr. Mbugua, the association chairman, “This protects farmers from exploitation and also enables us to monitor and regulate our operations more effectively. We are also looking into expanding our membership to other service providers including loaders, transporters and shellers. This way we can offer a comprehensive, premium service to all our clients.”
To the brokers, formation of the association has also led to an increase in business opportunities. During the current buying season, the SHG has been able to link with major buyers including Unga Millers Ltd. Attending business fairs, such as the one organized by KMDP team at Moi’s Bridge, has opened up new linkages for the traders, including the option of selling fertilizers and seed through contracts with manufacturers and input suppliers. “We see big opportunities ahead of us as we continue to work as a group,” stated Vice Chairman, Mr. James Chege. “Through KMDP we have found ways of strategizing to improve our efficiency and realize increased benefits and profitability.”
*Business Development Services (BDS) refers to any non-financial service provided to businesses on either a formal or an informal basis. The BDS approach takes into consideration promotion and support of essential non-financial services that lead to increased profitability and incomes for microenterprises as well as small and medium scale enterprises.