Tuesday, October 13, 2009

Issue 1 2009

How AGOA benefits the Kenyan cotton farmer

By Davis Wafula,
Field/Training Officer, KCGA

The African Growth and Opportunity Act (AGOA) was passed in the year 2000 by the United States of America (US) congress, that is, the US parliament. This law was made so as to encourage 39 Sub-Saharan countries to export an agreed number of products to the US’s huge market, duty free.

The goal of AGOA was to give Africans a competitive advantage in the US, the largest market in the world, for various products such as textiles.

This advantage would mean better prices, which would encourage more value-addition of Africa’s agricultural and manufactured products. Under this favoured or preferential arrangement, 39 African countries that qualified were allowed to export over 6,000 products in large attractive
quotas to the US market duty-free.
Kenya is one of the 39 countries that qualified.

But Kenyan cotton farmers and textile manufacturers are yet to benefit from this preferential trade arrangement.

“The goal of AGOA is to give Africans a competitive advantage in the US market, the largest in the world,in over 6,000 products including textile”

This is because few cotton farmers and textile manufacturers know about this big market which is now open to Kenyans. Also, Kenyan cotton farmers and textile manufacturers produce too little cotton, which sometimes is of low quality, making it difficult to supply orders in the US. The money and investment that has been put into cotton is too little for the industry to prosper.

Is Kenya benefiting?
The intention of AGOA was that the people who would benefit most from it would be local producers of raw materials and local manufacturers who add value to locally produced materials.
This for example includes local cotton farmers and local textile manufacturers. Local cotton farmers produce cotton, which is then ginned and processed into textiles, then the textiles are
used to make garments for export to the US market duty-free. So based on these links from the market to manufacturer to the farmer, cotton farmers in Kenya stand to benefit a lot as there is high demand for cotton raw materials from local garment producing companies in the Export Processing Zone (EPZs) near Athi River town. Because of this improved stable market, cotton farmers who produce large amounts of quality cotton will get a good price for it. Their incomes will improve, as well as their lives. The Government also stands to gain from the money raised through cotton exports and from the better lives of its citizens.

Which way forward?
The AGOA trade arrangement expires in 2015 but the African Governments are pushing for it to be extended for good. They are doing this because they want cotton farmers and other stakeholders in the cotton and textile industry to still have a good opportunity to reap the benefits of this preferential trade arrangement with the largest cotton/textile buyer in the world. Another very important deadline is the expiry of the “special rule” which is due in the year 2012. Under the special rule, countries that qualified for AGOA are allowed to source raw materials like cotton fabrics and yarns from non-AGOA qualified countries. After 2012, Kenya will only be allowed to source raw materials from local cotton/ textile industries or from other AGOA eligible countries, or from the US itself. This means that after the deadline, cotton farmers, ginners and textile manufacturers stand to benefit even more because the demand for locally produced cotton and textiles will increase. The Government has stepped up its efforts to revive the once vibrant industry. The government wants both to fully benefit from this duty-free trade arrangement and cotton farmers to reap maximum benefit from the growing trade.
Some of the measures the Government has taken include:

  • Waiving Value Added Tax (VAT) levied on all locally produced and ginned cotton.
  • Cotton farmers will also be paid upfront for their crop deliveries and all cotton buyers and ginners will be registered under the Cotton Development Authority (CODA), the newly created industry regulator.
  • CODA will henceforth gazette buying centres and dates for buying cotton and the minimum price per season. To support the industry, all taxes levied on imported textiles including second hand clothes (mitumba) will be used to boost the production of cotton in the country.
Because of these reasons, the Kenyan cotton farmer has a great chance to benefit from the existing and expected increase in demands for cotton. A demand created by the local garment -
producing EPZs.

Cotton - our white gold

By Ian Gatere,
IEC Strategy Ltd

“Cotton is money, even if you get rain for just four days, you will harvest something,” states Joel Mwanzi Mutali, a farmer from Chuluni Division, Kitui district.
Joel was born in 1954, he is married to Joyce Mwanza and they have 10 children all whom are in school or are working. Most of their family income comes from their two farms that measure six acres in total, two and a half acres of which are under cotton. Kitui district is cotton country. This
is especially so in Chuluni division, Kitui district, where all of Chuluni’s six locations grow cotton.

Out of the 600 paid up KCGA members in Kitui, 400 come from Chuluni. And out of the total 4,000 registered KCGA members in Kitui, 1,500 come from Chuluni.
“Chuluni is what Kitui Ginnery relies on,” explains Stephen Kiema Mwanzi, 48 years old, chairman of the Chuluni Cotton Farmers Association, “If we suffer, they suffer.”
Mwanzi is also a board member of KCGA.
Mwanzi has been kind enough to take us round to visit different cotton farmers on this hot September day. In Kitui, the drought was especially harsh this year. Save for a few mango trees that dot the countryside with the rare welcome green; what greets your eyes currently are dusty fields, dry riverbeds, and trees stripped bare of their leaves. “This season, I harvested 200 kilos and sold them at Sh.28 per kilo,” Joel says, giving the farm gate price for cotton, which
he notes is up from the Sh.24 they got last season. Joel too is a member of KCGA. He says that the harsh drought greatly reduced what would have otherwise been a good harvest for him. “I used to get Sh.30,000 per season from cotton,” he recalls. “Pamba can reach 20 bags an acre when planted with rain.” To harvest his four bags, Joel had to spray his cotton five times.

If his farm is infested with ‘terrible dudus’ like the Red Spider Mite, Joel sprays up to six times. “It all depends on how you spray,” he adds. But the good thing with cotton, especially when grown in areas with little rain, is that it’s drought resistant. “With cotton you will harvest something, even if you get rain for just four days,” he emphasizes. Joel used approximately two litres of pesticide that cost around Sh.1,550. This gave him a gross income of approximately Sh.5,600 against expenses of Sh.1,500 leaving a gross profit of Sh.4,100. From this, Joel deducted his labour costs especially during planting and harvesting. Joel did not use fertilizer but
instead made his own compost using manure from his cows. “Manure is good because if you put it in the farm now, in a year or two you will really see the benefit,” he explains. “It builds the soil.” Joel used approximately X kilos of manure. Now when you remove all the expenses from Joel’s cotton farm, and you compensate for the fact that Joel used free cotton seeds given to him by the Government, you will still find that he made some little profit in a year of harsh drought. And a little profit is better than a loss. According to Joel, there are many benefits to planting cotton. “(The price of) pamba never goes down, it is always climbing,” he explains. “We had no CODA, but now the government says, ‘it’s Sh.30 per kilo’, so it’s better now,” he adds. “Also cotton matures for selling at the time of paying school fees and buying things of the house and you can harvest cotton twice, in February to March and in June to July,” Joel says. “This stops you from selling food like maize or beans that you have in the home to get money.” Some of the challenges farmers in Chuluni face when planting cotton include raising enough money to pay for pesticides and abour. They also pray that extension officers will get budgets that can enable them to inspect farms regularly at critical times like planting or controlling of pests. “During the days of Cotton Board, every sub-location had an extension officer who went from farm-to-farm daily,” says a nearby farmer who steps into the discussion. “These days they sit in the office and say they have no petrol.” One thing farmers in this area agree on is that cotton is an ideal crop for their zone.

As Joel says, “Cotton is not food, it’s money. Cotton is business.” Mwanzi then concludes: “Cotton is the cash crop of Kitui.

The Value-Chain Based Matching Grant Fund - in brief
Josephine Mulaa

The Government of Kenya through the Ministry of Industrialization is implementing a Pilot Value Chain Based Matching Grant Fund. This is one of the sub-components under the Micro, Small and Medium Enterprise (MSME) Competitiveness Project - a public/private partnership with support from the World Bank. The Value Chain subcomponent focuses on the coffee, cotton, pyrethrum and leather value chains. This sub-component is implemented by Deloitte Consulting

It is a five year project that begun in January 2005. The government has proposed extending the project for another 24 months.

Project Objectives;

1. To strengthen competitiveness and raise value-added in the selected supply chains by enhancing access to business development services (BDS).

2. Strengthen linkages (both between firms and from MSMEs to markets).

3. To stimulate increased demand by MSMEs for Business Development Services (BDS) through provision of financial incentives for eligible BDS.

4. To enhance BDS supply oriented towards servicing specific markets on a sustainable basis.

Technical Assistance.
The matching grant fund program provides financial incentives for eligible
training and other BDS, particularly ‘knowledge-based’ services directed toward improving competitiveness and performance at critical points in value chains. Specifically, funds from the
matching grant can be applied towards the purchase of technical assistance to train out growers/suppliers or, at the factory level, to procure process specific technical assistance to improve the quality, cost and delivery of products. For example at the farming level, grant funds can be used to finance on-farm technical training, training in quality control, postharvest handling and other activities that strengthen the backwards linkage between the corporate intermediary and their growers/suppliers to better respond to demands of the market. Implementation strategy The Deloitte-Matching Grant Management Team acts as the secretariat to the established apex committees to implement the project. The four value chain APEX Committees act as coordinating bodies in each value chain. They lead in the preparation
and implementation of their respective industry-wide strategies that reflect issues identified by the value chain analysis. The committees also act as the principal bodies when developing consensus between various sector entities to help implement strategies and
approve pilot projects. Access to the matching grant fund is based on commercially sustainable
pilot project proposals. Pilot project proposals are drafted jointly by firms or representative industry associations/networks that define their membership along two or more segments within the entire value chain of an industry. The entities then form a Pilot Project Management Team (PPMT) for the purpose of executing the pilot project. This team has the responsibility of implementing the pilot project. The cotton to garment sector Of the 46 pilot projects implemented since the project started in January 2005, 11 are in the cotton to garment sector.
Most of the pilot projects focus on increased production in order to address the issue of Kenya’s below average cotton production. The Sauti ya Pamba publication is also one of the pilot projects. It is expected to disseminate relevant information to the cotton stakeholders in Kenya. With the establishment of the Cotton Development Authority (CODA), we expect the industry to take a turn leading to improved production and marketing of cotton in Kenya. The Value Chain Based Matching Grant Fund plans to collaborate with CODA to address cotton stakeholders’ concerns, especially access to quality planting material and credit for farm inputs.

KCGA holds the Strategic Planning Workshop
Peter Kivuti KCGA communications

Kenya Cotton Growers Association (KCGA) with the help of AGRITERRA, held a Strategic Planning workshop at the Machakos ATC from the 6th to 11th September 2009. The purpose of the workshop was to draft a Strategic Plan for KCGA for the year 2009/2010-2015. Farmers’ leaders from different cotton growing areas in Kenya that include Bungoma, Busia, Homabay, Kisumu, Kitui, Lamu, Malindi, Mbeere, Rachuonyo, Rarieda, Taita Taveta, Teso, Tharaka and others were invited to contribute towards drafting of the new Strategic Plan. To assist the farmers in the process, the Kenya National Federation of Agricultural Producers (KENFAP) and the Agricultural Sector Coordinating Unit (ASCU) sent Charles Mbuthia and Nicholas Karuku respectively. Also to facilitate and train the farmers in the strategic plan (SP) was Tom Dienya (Maseno University) and economist Simon Gicheru (Ministry of Agriculture). The two facilitators took the farmers and other participants through the program for the five days. It was during this workshop that the KCGA mission, vision and core values were defined and used as a guide throughout the meeting. Challenges facing cotton farmers were highlighted and strategies put forward to tackle these problems with the purpose of elevating the cotton industry in Kenya.
In the SP workshop, the KCGA members through a Special Annual General Meeting elected a new KCGA board.

The board members include:

• Chairman: Maj. Dennis M. Ochwada.
• Vice Chairman: Mr. Wilfred Lesilale.
• Treasurer: Mr. Tom Awara.
• Secretary: Mr. Albert Chebyegon.
• Asst. Secretary: Mrs. Monicah Mkamachi.
• Board member: Mrs. Mary Mutoka.
• Board member: Mr. Moses Mugwate.
• Board member: Mr. Daniel Magondu.
• Board member: Mr. Stephen Mwanzi.

The KCGA workshop was a success and a draft document ws completed. The publication and distribution of the final Strategic Plan is expected to take place in the beginning of next year. The KCGA staff and board would like to thank those who participated in the workshop including the sponsor AGRITERRA for their support in this process.

Good agricultural practices for successful cotton farming
By Goretti Kamau and Davis Wafula
Kenya Cotton Growers Association

Cotton is a cash crop grown primarily for its fiber and secondarily for its by-products extracted from the seed,
which include cooking oil and animal feeds among others. To produce better and more profitable cotton, it is important that
the cotton farmer embrace good agricultural practices (GAP) when farming. This article looks at the benefits of GAP.

Selecting good seeds

It’s important that farmers choose the right seed type in terms of quality and quantity. The seed varieties that are available in Kenya include:

a) HART 89M: it does well in Eastern, Central and Coast provinces. Its potential yield is 2,500 kg/ Ha under rain-fed conditions and 5,000 kg/Ha under irrigation.

b) KSA 81M: it does well in Nyanza, Rift Valley and Western provinces. Its potential yield is 2,000 kg/ Ha under rain-fed conditions and 5,000 kg/ Ha under irrigation.

If you choose the wrong seed variety for your area, you will get low yields. This is because different seed types grow well in different regions depending on the soil, rainfall and other agro-ecological realities found there.

Preparing land well

To make room for timely planting, the land should be prepared early enough. This is during the dry season. Good land preparation involves the following steps:

• Ploughing the land first (deep ploughing is recommended once in every four years to aerate the soil and break the hardpan layer).

• One or two harrowing should be done to give adequate tilth for planting.

• Furrows should be dug where water logging occurs to avoid scorching of plants.

• Cotton may also be planted in tied ridges in sandy soils to conserve water.

Planting in time

If you are a farmer from Eastern or Central provinces, for good yields plant cotton before the start of the short rains in October/November; except if you are from Meru where cotton should be planted during the long rains. On the other hand, if you are a farmer in Nyanza, Western, Rift Valley or Coast, plant cotton at the start of the long rains in the months of March to April. Cotton planted late will give you much lower yields than cotton planted on time. For example, a delay of four weeks in planting can mean a 40% reduction in yields. Remember, it is economical to interplant cotton with beans in Eastern and Central provinces. The non-climbing beans can be grown in between the rows of cotton during the short rains.

cotton price index

cotton price index