Abstract - Kenya Agricultural Commodity Exchange (KACE): Linking smallscale farmers to markets

Abstract - Kenya Agricultural Commodity Exchange (KACE): Linking smallscale farmers to markets Abstract: - KACE is the first and only national agricultural commodity exchange in Kenya, and it differentiates itself by dealing with a variety of commodities of which maize and beans are the most heavily traded. KACE acting as an intermediary further empowers rural farmers with market information and provides capacity enhancement, business training and technical assistance.

In contrast, the Nairobi Coffee Exchange and the Tea Auction each trade one commodity each. Prior to the formation of KACE, smallscale farmers lacked access to mainstream markets for agricultural produce, leaving them vulnerable to the forces of the market, as well as to exploitation by country buyers. Smallscale farmers were offered very low prices because individual farmers generally produce small amounts that translate into poor bargaining power. Small scale farmers were characterized by small farms, low education, low levels of technology, lack of access to quality markets and low levels of organization. In addition to this, for any one crop, the marketing chain consists of multiple middlemen, each taking a margin at every stage between producer and consumer and to have a competitive final price the small scale farmer bears the losses. The country buyers took an additional part of this margin, and were not above squeezing prices to the extent that the subsistence farmers at the bottom of this chain were often forced to sustain losses. In the long term this was clearly not sustainable, as evidenced by rising poverty levels.

The main activities of KACE include linking farmers and mainstream buyers by collecting information on the prices in different markets of various commodities on a daily basis from market vendors then availing them to the farmers in real time. Modern information communication technology (ICT) makes this possible through mobile phone handsets and personal computers. Trades are made through competitive bids and offers, once a buyer and a seller agree to trade, KACE acts as a clearing house and arranges the financial and logistical aspects of the sale thus giving the farmers options as well as bargaining power. KACE’s services include: a mobile phone short message service (SMS), interactive voice response (IVR) service, daily radio bulletins, a live radio auction service and online computer services.

Author: Winifred Karugu. Lead organization: MSME. Sector: Agriculture, ICT. Inclusion of the poor: Consumer. Theme(s): Environmental impact, Climate Change, Public‐Private Partnerships. Country: Kenya.

Keywords: agriculture, commodities, agricultural, commodity, exchange, kenya, KACE, market, smallscale, farmers, consumer, environmental, impact, climate, change, public, private, partnerships