Investor Presentaiton

Kenya used contract farming to find markets for local products & ensure fair pricing חויחוי • Context A growing but fragile potato ecosystem . Seed availability & quality a challenge for farmers Processors are unable to source sufficient quantities due to low yields Farmers have difficulty finding markets & fair prices for potatos What did Kenya do? Launched contract farming scheme through the National Potato Council¹ EAPC² acts as middle-man between farmers and potato processors EAPC² engages groups of farmers on a contractual basis to supply a set amount of potatoes by a specific date for a fixed price • All agreements require NPC1 approval to ensure price fairness Set price is maintained, even in the case of market fluctuations Farmers receive free high-quality seeds, fertilizers, and support services from EAPC² & in some cases directly from potato processors Emergence of direct out-grower schemes among potato processors • Some Kenyan potato processors introduced their own contract farming in to secure stable supplies - Similar to the EAPC² scheme, but cuts out the middle-man as well as the government supervision (likely offers a higher price) Key successes Easier access to industrial clients Kenya Farmers get access to markets & potato seed varieties required by processors Over 5 000 potato farmers have already signed up for the EAPC² contract farming scheme, and more than 22 000 are expected by 2020 Lower risks of farmer exploitation through NPC's¹ involvement Improved stability and higher revenues Farmers assured of stable sales and benefit from higher prices - Prices offered by processors per kg are twice higher than open-market prices (Sh45 vs Sh22) Learnings for Plateau State Introduce contract farming & a middle-man agency to monitor fair pricing Ensure adequate dissemination of info. on prices to enable fair pricing Leveraging technology to share information • Incentivizing sharing of information between farmers Encouraging & supporting contract farming schemes, which give visibility to farmers and to processors Provide a clear and fair contractual relationship between stakeholders by setting appropriate policies • Mechanisms to guarantee fair prices for farmers and processors 1. A Public-private organization focused on developing the potato sector 2. East African Potato Consortium Set up by the NPC with international partners (AGRA and Grow Africa) to handle contract farming Source: BCG Analysis 67 Copyright 2019 by Boston Consulting Group. All rights reserved. ש

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