HK - what your take on Ruto's macademic revolution

[RV Pundit]

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The ban on export of in-shell macadamia has paid huge dividends from national annual production of 11,000 metric tonnes in 2009 and four processors to over 40,000 metric tonnes and 30 processors currently, said NutPAK executive officer Charles Muigai.https://allafrica.com/stories/201810280091.html

[hk]

The ban on export of in-shell macadamia has paid huge dividends from national annual production of 11,000 metric tonnes in 2009 and four processors to over 40,000 metric tonnes and 30 processors currently, said NutPAK executive officer Charles Muigai.https://allafrica.com/stories/201810280091.html

This just not true. Export ban of raw macadamia isn't what has led to increased production, on the contrary its what has hampered even more production. From late nineties coffee farmers started diversifying to macadamia farming. Macadamia farming isn't as labour intensive as coffee and one gets better return per tree. A macadamia tree will produce 50kg annual while coffee tree 15-20kg, price for macadamia even at 100 that's better return than coffee on average being 60. Once production increased foreigners and collectors started selling raw macadamia shell which led to more production cause farmers could get another alternative income source. The ban is what has capped macadamia prices down which has led to several protest https://www.the-star.co.ke/news/2018/08/17/meru-macadamia-farmers-want-to-sell-their-nuts-to-chinese_c1789706 . The processors only dry,crack and vacuum pack macadamia which internationally fetches lower price than raw macadamia .  Talk about value destruction to create a few thousand jobs. Farmers will produce even more once the ban is lifted(And it'll be lifted cause farmers are suing to get it lifted). There's no reason why farmers should be subsidizing processors, let them compete with chinese and other buyers. The smart thing should be to encourage processors to be contract manufacturers so that their factories can be EU,FDA and chinese approved, then they can create their own brands. Even the most successful processor kenya nut contracts a british manufacturer so that they can sell to British airways. Farmers will not allow government to mess up macadamia and avocado farming like it destroyed coffee with over regulations.

[RV Pundit]

Interesting. So it's coffee farmers who are going nuts. Yes production is now impressive - I think we overtook South Africa - are 3rd biggest manufacturer globally - but don't agree on less regulation - kenya can only get more value from it's tea, coffee, macademia, avacodos - by forcing the value chain to improve.

I don't know what ails coffee - seem to have began irreversible slide from 1990s - while here at Uganda - coffee production is ever on the rise. I know gov has tried nearly everything on the books to resuscitate coffee sector but like sugar & maize it seem to be all in vain.

This just not true. Export ban of raw macadamia isn't what has led to increased production, on the contrary its what has hampered even more production. From late nineties coffee farmers started diversifying to macadamia farming. Macadamia farming isn't as labour intensive as coffee and one gets better return per tree. A macadamia tree will produce 50kg annual while coffee tree 15-20kg, price for macadamia even at 100 that's better return than coffee on average being 60. Once production increased foreigners and collectors started selling raw macadamia shell which led to more production cause farmers could get another alternative income source. The ban is what has capped macadamia prices down which has led to several protest https://www.the-star.co.ke/news/2018/08/17/meru-macadamia-farmers-want-to-sell-their-nuts-to-chinese_c1789706 . The processors only dry,crack and vacuum pack macadamia which internationally fetches lower price than raw macadamia .  Talk about value destruction to create a few thousand jobs. Farmers will produce even more once the ban is lifted(And it'll be lifted cause farmers are suing to get it lifted). There's no reason why farmers should be subsidizing processors, let them compete with chinese and other buyers. The smart thing should be to encourage processors to be contract manufacturers so that their factories can be EU,FDA and chinese approved, then they can create their own brands. Even the most successful processor kenya nut contracts a british manufacturer so that they can sell to British airways. Farmers will not allow government to mess up macadamia and avocado farming like it destroyed coffee with over regulations.

[hk]

Interesting. So it's coffee farmers who are going nuts. Yes production is now impressive - I think we overtook South Africa - are 3rd biggest manufacturer globally - but don't agree on less regulation - kenya can only get more value from it's tea, coffee, macademia, avacodos - by forcing the value chain to improve.

I don't know what ails coffee - seem to have began irreversible slide from 1990s - while here at Uganda - coffee production is ever on the rise. I know gov has tried nearly everything on the books to resuscitate coffee sector but like sugar & maize it seem to be all in vain.

You can't regulate your way into higher value chain. How are you suppose to regulate into creating an acceptable global brand? Government will destroy macadamia if allowed to meddle. The collapse of small farmers coffee production is what has led to rise of macadamia farming. The beauty of macadamia tree is that it can be inter-planted with coffee. Coffee farming doesn't need bailout or even fertilizers, it just needs liberalization so that cooperatives don't have monopoly over small coffee farmers. uganda Cooperatives don't have monopoly over small holders unlike kenya.

[KenyanPlato]

Ruto is a moron. A certified lunatic. Hk is right on macadamia is a revolution over 35 years in making. Started with about 3 trees per farm and exponentially grew. West healthy eating movement. May be contributing to demand.

Ruto is like moi. He wants tp poke his sick fingers everywhere.

A poor peasant like ruto cannot be allowed to rule. At least Uhuru knows that he has no business telling people how to run their life. He understands basic business stuff that this thief called ruto cannot conceputalize.

Coffee is a bad crop to farm. As more peasant farmers get alternatives coffee fsrmkmg declines

[gout]

Kenyan coffee farmers are the best paid globally even today. The main challenge is low productivity per tree which goes back to cost of fertilizer and pesticides just like maize and vegetables.

Macadamia were seen as a wild bush and the nuts were largely for boys to play with but once the price hit 100 this changed dramatically. And now with the hype there is increased adoption but the effect of the new trees is yet to start being felt given it takes 7-10 years to yield anything meaningful. To me it is the care for old trees and brokers being everywhere collecting the nuts.

[hk]

Kenyan coffee farmers are the best paid globally even today. The main challenge is low productivity per tree which goes back to cost of fertilizer and pesticides just like maize and vegetables.

Macadamia were seen as a wild bush and the nuts were largely for boys to play with but once the price hit 100 this changed dramatically. And now with the hype there is increased adoption but the effect of the new trees is yet to start being felt given it takes 7-10 years to yield anything meaningful. To me it is the care for old trees and brokers being everywhere collecting the nuts.

While the above statement is true its also a little misreading. What determines quality of coffee? Its acidity and depth of soil,altitude and husbandry. Everything being constant the tie breaker is husbandry. The productivity of a tree key determinant is husbandry, the better husbandry the higher production and quality. Though husbandry is a key determinant, cooperatives pay their farmers the same prices whether an individual farmer is producing AAs (high quality)or Es (poor)quality. Cause they just average out the prices. In the coffee Auction you'll see  best quality beans selling for $8 but the same cooperative society will have majority of its beans selling at $2, this is what brings down the overall average. Coffee its like wine, our best coffee isn't to be sold to nestle or even starbucks but to artisan coffee shops that pays top dollar like https://www.intelligentsiacoffee.com/ or https://counterculturecoffee.com/
So in a nut shell, the lower productivity per tree means kenyans are producing lower quality beans hence lower coffee prices. The problem is the cooperatives monopolies. The farmer with good husbandry ( things he/she can control) aught to be rewarded.
BTW the new grafted macadamia seedlings only take 3.5yrs to start producing. Coffee farmers can and do inter-crop coffee with macadamia. So

[hk]

Pundit,
Here is what banning export of raw nuts does https://www.economist.com/middle-east-and-africa/2019/09/12/mozambiques-nut-factories-have-made-a-cracking-comeback
and Kenya cashew nuts https://www.nation.co.ke/business/Cashew-nut-farming-collapse-looms/996-3885600-ryd3ocz/index.html

[gout]

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

[RV Pundit]

Interesting 1.3M against 16 factories employing 17,000 people, which process about half the cashews sold.

What Asian tigers taught us - is infant industry should be protected for a limited time period - and once they are mature enough - they should be allowed to compete with global firms.Blanket ban lasting since 2001 like Moz is bad.


We need to do same in all agri sectors - protect those that are infant - and then slowly open up for global competition.

Pundit,
Here is what banning export of raw nuts does https://www.economist.com/middle-east-and-africa/2019/09/12/mozambiques-nut-factories-have-made-a-cracking-comeback
and Kenya cashew nuts https://www.nation.co.ke/business/Cashew-nut-farming-collapse-looms/996-3885600-ryd3ocz/index.html

[RV Pundit]

Agriculture everywhere is hard nut to crack. The farmer get a pittance - while the consumer pays huge prize at the counter.That is why farmers have to form co-operatives - get into value -chain (agro processing) and build own brands.

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

[hk]

Interesting 1.3M against 16 factories employing 17,000 people, which process about half the cashews sold.

What Asian tigers taught us - is infant industry should be protected for a limited time period - and once they are mature enough - they should be allowed to compete with global firms.Blanket ban lasting since 2001 like Moz is bad.


We need to do same in all agri sectors - protect those that are infant - and then slowly open up for global competition.

That's the wroing policy, its actually an economic rights issue. Farmers should sell to whomever they deem fit to buy their product. Asia countries productivity per worker is very high compared to africans. That's why protection or in actuality subsidizing processors ends up eventually killing the industry. 

[hk]

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

The problem is we haven't addressed productivity of our labour force. This low productivity means  low wages hence incomes are quite low. So in essence the type of tea kenyans can afford its the cheap stuff. This has hampered creation of brands that can excel even globally. We need to create brands that though local (affordable to kenyans) meet global standards. 

[RV Pundit]

Short term the farmer loses... because he cannot sell to anyone. But long term the economy benefits - we are talking 20% of value derived from processing them. Those farmers have children who require jobs. Those jobs will come if we build the value-chain - from farmer to cooperatives to factories to transporters to etc. The multiplier effect of one factory job is 10 times...so those 17K Mozambique factory works...are equivalent to say 170K jobs.

What works is to protect infant industries for some time - like South Asian tigers did - and if those infant industries don't grow - then cut the losses. For example our cashew nut story hasn't changed - but Macadamia is doing very well. It's been about 10yrs since Ruto started those interventions time to let go.

For Tea - we really have to stop the Liptons and others buying our tea in bulky and start building our brands. For example Sudan don't want tea in bulk but we still insist on selling them in bulk.

Sri lanka - which produce half our tea - earn twice - because Ceylon Tea is a well-known brand.
 
KTDA has to start exporting our Tea to Africa and Asia countries. We have to take the war to LIPTON TEA - maybe even ban them from buying our tea in bulk.

That's the wroing policy, its actually an economic rights issue. Farmers should sell to whomever they deem fit to buy their product. Asia countries productivity per worker is very high compared to africans. That's why protection or in actuality subsidizing processors ends up eventually killing the industry. 

[gout]

Coffee cooperatives have been sunk by corruption, outright thefts and governments. Look at the direction KTDA, Githunguri dairy is heading.

Agriculture everywhere is hard nut to crack. The farmer get a pittance - while the consumer pays huge prize at the counter.That is why farmers have to form co-operatives - get into value -chain (agro processing) and build own brands.

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

[RV Pundit]

Yes, coffee cooperatives got into mismanagement and debt spiral. But probably more fundamentally the land fragmentation due to urbanization & population explosion is probably the main cause.

Coffee cooperatives have been sunk by corruption, outright thefts and governments. Look at the direction KTDA, Githunguri dairy is heading.

[gout]

Rational human beings know where to invest their energies, brain and money. Muguka farmers in Embu are drawing water from Thiba using bowsers at kshs. 6,000 each because they are assured of cash by 10 in the morning. Primary productivity is dictated by value obtained not by motivation speaking.

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

The problem is we haven't addressed productivity of our labour force. This low productivity means  low wages hence incomes are quite low. So in essence the type of tea kenyans can afford its the cheap stuff. This has hampered creation of brands that can excel even globally. We need to create brands that though local (affordable to kenyans) meet global standards. 

[hk]

Rational human beings know where to invest their energies, brain and money. Muguka farmers in Embu are drawing water from Thiba using bowsers at kshs. 6,000 each because they are assured of cash by 10 in the morning. Primary productivity is dictated by value obtained not by motivation speaking.

Agriculture in africa seems to be a hard nut to crack.

The high cost of processed agricultural products across africa means there is hardly any meaningful local consumption. It does not make sense why these wild bushes fruits have to cost so much after simple processing. The dependence on export markets means lamentation like the one we are seeing in coffee and now tea due to global economic slow down. Even worse for coffee as we have to consume instant coffee rubbish starch which is still not that cheap.

It is depressing that even with robust tea drinking cullture in Kenya or coffee culture in Ethiopia, producers are not insulated against global shocks.

Nyeuthi agricultural value chains seem to benefit labourers (tea pickers getting Ksh. 10 per kilo!!); brokers and the global cartels or they just nonsensical economic activities. Clearly, agriculture has failed to lift nyeuthi from poverty- it can't.

The problem is we haven't addressed productivity of our labour force. This low productivity means  low wages hence incomes are quite low. So in essence the type of tea kenyans can afford its the cheap stuff. This has hampered creation of brands that can excel even globally. We need to create brands that though local (affordable to kenyans) meet global standards. 

Yes Muguka is doing well why? Its a finished product as it is. And its also a free market, no monopolies like cooperatives controlling the market. Muguka illustrates clearly the linkage between market and production. Actually muguka might help salvage local coffee industry, why? Muguka chewers drink lots of coffee.

[hk]

Yes, coffee cooperatives got into mismanagement and debt spiral. But probably more fundamentally the land fragmentation due to urbanization & population explosion is probably the main cause.

Coffee cooperatives have been sunk by corruption, outright thefts and governments. Look at the direction KTDA, Githunguri dairy is heading.

The problem with coffee is the coffee act, cooperatives once they were given a monopoly over small scale coffee holders its was the death knell of small coffee holders production. Small estate coffee production has been growing rapidly. But the growth of small estate can't make up lost production of small coffee holders.

[gout]

It is clear there is need to know what is the right regulation dose. I would prefer policies putting stringent measure on ensuring quality and price of inputs and little interfrence on marketing. Most regulations are very aggressive about revenue generation by the enforcing agencies - this license, this cess, tax this - very litttle on inputs.

We can look at and invest in succesful value chains - meat (chicken, goats, beef) and Muguka are thriving because of little government involvement. You want to slaughter your bull or goat and eat or sell, no government official really cares- the sector is thriving and sustaining North Eastern, North &South Rift and is worth hundreds of billions given nearly every household is spending some 100-1000 per month on meat.

Coffee did pitiable 11 billion while tea had 87 billion, yet the noise on coffee is deafening.

https://www.businessdailyafrica.com/markets/marketnews/Coffee-earnings-drop-Sh3bn-in-11-months-to-August/3815534-5270832-do0764/index.html

https://www.businessdailyafrica.com/markets/commodities/KTDA-meets-to-set-pay-for-farmers/3815530-5269504-10fjh9j/index.html