Building futures using cotton
Beatrice Obara is a TruTrade franchisee and a director of Dedeby Green Ventures Capital Ltd (DGV), a Kenyan company, operational since 2009. Beatrice explains how she has been working on the development of the cotton value chain
Cotton cultivation in Kenya used to be high but this has been in long-term decline as farmers do not have assurance of good market and with variability between years also due to changing weather.
DGV, a limited company, focuses on value chain financing and market linkages in the agricultural sector, specializing in cotton. The company has roughly 20 sourcing agents; seven main collection centers; and works with five Cooperative Unions and 56 Self Help Groups, making a total of 3,180 farmers.
For 2015, DGV’s primary goal was to re-energize its farmers’ groups and to get them more interested in growing cotton again. In order to accomplish this, I wanted to increase the amount of cotton seeds that DGV could distribute for AFFA (Agriculture, Fisheries and Food Authority). The price per kg of cotton seed in 2015 was set at Ksh 42 per kilo, an affordable price that allowed farmers to purchase the required amounts - it takes around 7 kg of seeds to cultivate one acre. At first not all the seed sold was used by the farmers because their land needed to be ploughed, so DGV linked its farmers’ networks with a tractor business in order to help these farmers.
The government contracted DGV in 2015 to be the sole cotton seed distributer in five counties in Kenya. DGV was given an order to deliver specified quantities of seed to farmers in these areas. It’s a complex value chain; DGV bought back seeds from two ginneries that the company works with at a price of Ksh 25/kg, treated the seeds with pesticides and repackaged it, then selling it to AFFA for Ksh 30/kg who then supplied it to DGV and other agencies to distribute. DGV ended up distributing 100 tons of cotton seeds for the government. The income from sales of cotton seeds made a big difference to the business.
DGV is committed to make the cotton business in Western Kenya vibrant again. With farmers’ groups re-energized, and access to seed improved, the next step is to have a more cost effective way to gin and for farmers to retain a share in the cotton as it moves up the value chain. DGV plans to increase its cotton trade in 2016 and through this trade to increase the incomes of smallholders in its networks. This requires DGV to monitor the farmers who purchased cotton seeds to make sure that they plant at the right time, apply pesticides, weed, and harvest correctly to supply the right amount of seeds to the approved bulking storage facilities.