CEO Perspective: Mucai Kunyiha, Group CEO, CKL Africa Interview.

What is the state of Kenya’s agriculture sector??

There are two main enablers to Africa’s journey towards leadership in agriculture sector productivity. These are good husbandry and proper use of inputs. At CKL, our primary focus is on inputs, that are still used relatively sparingly in Kenya, even though the country’s economy is driven by agriculture.??

The main deterrent to better use of inputs is lack of understanding. As an analogy, I may give you a laptop, but if you do not know how to operate it, the investment in the laptop is a waste.?In our context, even when people are using inputs, they do not apply the best and most advanced scientific approaches towards the application of these inputs.??

The result is that we miss opportunities. In some cases, those missed opportunities are highly quantifiable, and in others – immeasurable. For example, Kenya’s average maize production is 8-10 bags/acre, when we know that the proper use of inputs can raise this to 40 bags per acre. This is measurable, well-researched, and achievable.??

Something that cannot be quantified as easily is nutrition outcomes.

Our current system rarely measures the nutritional quality of agricultural outputs, so farmers are not incentivised to invest into achieving better outcomes.

The country-wide impact on malnutrition is immense and immeasurable.?

Considering the benefits, why are inputs still underutilised???

In short, the answer is lack of information, measurement, and a scientific approach to agriculture. In a small-scale farming operation, which describes the vast majority of Kenya’s agriculture sector, even the basic operational data is not recorded. This means that farmers often have no clear understanding of how or what affects productivity. They may not have the right weather information and corresponding farming knowledge to plant at the right time. When farmers decide on their investment, they may not be confident if and at what price they will be able to sell the produce. Finally, farmers may not know when to sell to get the best price.??

The result of all these gaps in information is insecurity. Farmers are not sure the investment in inputs will increase their yield.

They are not confident in the relationship between per acre yield and their profits. They do not even know if they will be able to sell their harvest. With all this uncertainty, why would they significantly increase their upfront costs by applying inputs???

The solution often comes in the form of digitisation, sometimes – for basic information sharing, other times – through providing operations support and basic analytics.??

What is an example of such digital solutions???

We have developed a solution for our own distributors that exemplifies the kind of thinking needed to digitally support the agriculture sector.??

To put this in context, eight years ago we shifted to a new information management system, that allowed us to collect more data as well as work with connected devices. Since our sales and distribution value chain is large, we found ourselves with a big database of distributors and retailers, many of whom are small-scale. In order to help our distributors to better manage their businesses, we needed to get an understanding of the market and where our products go.??

We equipped the sales representatives with a mobile app with geo-location which allows them to input sales data on the go. We then collate the data and give visibility to each distributor over all their customers and sales team.

From here, the distributors can make use of analytics for their decision-making. They can evaluate the success of their routes, the performance of their sales representatives, and the behaviour of various shops that receive supplies through the same van sales channel.?

Since the initial solution was successful, we are adding functionality, which allows shops to pre-order through the system. This way, distributors can better plan how much and which products to load on specific routes.???

What are some challenges with implementing digital solutions??

Change management is never easy but it is especially difficult to digitise in our sector. For one, digitisation brings transparency and many small ventures operate in grey areas and prefer to stay off the radar for fear of additional taxation and bureaucratic burden. Then, many rural farmers see digital solutions as prohibitively expensive, whether because of the cost of device purchase, data bundles, or mobile money transfers.??

Digitisation can help create efficiencies, and e-retail would be a fantastic solution for cost-conscious customers, but – at least in our experience – we have not been able to make it work.

A key factor in this is that farmers in rural areas value the social connection and farming advice they can receive at the agro-pharmacy and are happy to make the physical trip to the store.??

How do you envision the digital future of the inputs’ sub-sector???

There are some clear trends. For one, I believe online retail is here to stay, and we will have to find a way to crack it. Mobile money has also already had a big impact on payment systems and is getting more and more sophisticated.

The composition of the agriculture sector, namely heavily based on small and medium-sized business, means that analytics will be key to bringing efficiency and keeping products competitive.?

Finally, as input manufacturers, we need to worry about the efficiency and quality of our own production. This is why in 2019 we invested in our KES 700 million factory in Tatu City. This feed plant is based on centrally-controlled Swiss technology, which brings quality assurance, lower labour input, faster production, and – importantly – a good record of all facets of the manufacturing.??

We are at the early stages of Kenya’s agriculture-sector digitisation, so even if we may not know what shape that journey will take, digital solutions are definitely in the country’s future.?

This article was first published on Xetova's Website: https://xetova.com/ceo-perspective-mucai-kunyiha-group-ceo-kzanaka/