The Digital Chain
(turning the value chain around)
Kenyan farmers are alleviated from poverty and produce sustainable products by using existing digital technology
a short video explaining THE DIGITAL CHAIN
young farmer testing the market for beans
The Yielder app gives reliable information on Potato farming
checking the prices while harvesting
Lead Applicant Organization Name
Agri Yielder ltd
Lead Applicant Organization Type
Small company (under 50 employees)
If part of a multi-stakeholder entity (i.e. team), provide the names of other organizations and types of stakeholders collaborating with you.
The Fork / Strike Two (https://thefork.online/)
CIAT / CGIAR: The International Center for Tropical Agriculture (https://ciat.cgiar.org/)
BoP Innovation Center Inc (http://www.bopinc.org/)
Sustainable Inclusive Business Africa (https://kepsa.or.ke/sustainable-inclusive-business-africa/)
Agrico East Africa (http://www.agrico.nl)
Website of Legally Registered Entity
How long have you / your team been working on this Vision?
Lead Applicant: In what city or town are you located?
Lead Applicant: In what country are you located?
Your Selected Place: what’s the name of the Place you’re developing a Vision for?
The team has developed a method (and a vision) that will be tested and implemented in Kenya in order to roll out to other countries
What country is your selected Place located in?
Describe your relationship to the place you’ve selected.
The Digital Chain Team is based in both the Netherlands and Kenya. The team leader is based here and all the team member are doing projects here. Kenya is a ideal testing ground due to the digital information infrastructure, the high penetration of smart phones and the big variety of soils, weather, crops, combined with the wide variety of farmers (from very big to very small) and the relative wide variety of consumers (from quite rich to very poor). This development and testing ground is ideal.
The Netherlands is the globe’s number two exporter of food as measured by value, and home to the Wageningen University & Research (WUR), widely regarded as the world’s top agricultural research institution. It is the driving force between the Food Valley - the Dutch agro-tech version of Silicon Valley - which exports innovative agriculture approaches around the globe. These approaches, combined with innovative information and reliable mobile money systems can be well tested in Kenya against different realities.
Describe the People and Place: Provide information that would be helpful for an outsider who has never been there and may have no context about this Place to better understand the area.
The population in Kenya has grown from 23mln people in 1990 to 51mln in 2018, representing an annual growth of 2.3% (Worldbank). Most of the key socio-economic indicators have increased, indicating rapid development particularly among the middle-class. This cohort has become a catalyst for change.
Unhealthy food habits are slowly moving towards a more healthy, and more conscious diet. However, the majority of the population is still consuming unhealthy. Kenya is experiencing an emerging diabetes epidemic, with prevalence of diabetes in the country at approximately 3.3%. This figure is projected to rise to 4.5% by (Kenya National Diabetes Strategy)
Climate and topography: The climate of Kenya varies by location, from mostly cool every day, to always warm/hot. The climate along the coast is tropical. This means rainfall and temperatures are higher throughout the year. Kenya is notable for its topographical variety. The low-lying, fertile coastal region, fringed with coral reefs and islands, is backed by a gradually rising coastal plain, a dry region covered with savanna and thornbush.
Household consumption as percentage of GDP has increased from 77% in 2010 to 82% in 2018 (Worldbank).
The rural population of Kenya is 74%.
The agriculture sector plays a vital role in the rural economy. Agriculture is key to Kenya's economy, contributing 26% of the Gross Domestic Product (GDP) and another 27% of GDP indirectly through linkages with other sectors. The sector employs more than 40% of the total population and more than 70% of Kenya's rural people. Agriculture in Kenya is large and complex, with a multitude of public, parastatal, non-governmental and private sectors.
The sector accounts for 65% of the export earnings, and provides the livelihood (employment, income and food security needs) for more than 80% of the Kenyan population and contributes to improving nutrition through production of safe, diverse and nutrient dense foods. The sector is also the main driver of the non-agricultural economy including manufacturing, providing inputs and markets for non-agricultural operations such as building/construction, transportation, tourism, education and other social services.
Given the importance of agriculture in rural areas of Kenya where poverty is prevalent, the sector's importance in poverty alleviation cannot be overstated. Strengthening and improving the performance of the agricultural sector and enabling the engagement of the poorest and most vulnerable in this process is therefore a prerequisite and a necessary condition for achieving recovery and growth in Kenya after recent years of drought an slow development (FAO).
Kenya is a leading producer of tea and coffee, as well as the third-leading exporter of fresh produce, such as cabbages, onions and mangoes. Small farms grow most of the corn and also produce potatoes, bananas, beans, peas and chillies (FAO).
What are the hopes of the people here? Better pay and less risk in agriculture, better systems for sharing wealth (less money in the corrupt value chains), transparency, access to markets and food that is traceable to its origin.
What is the estimated population (current 2020) in your Place?
Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.
Within the current food system, the input providers like brokers, transporters, markets and retailers have a tradition of not being transparent, resulting in a unfair pricing for farmers, low quality information to consumers and low quality of food and very high post-harvest losses. The limited awareness of the consumers makes them an uncritical consuming (and paying) mass. There is hardly any traceability in food, post-harvest losses are at very high levels, and there is no control about the use of pesticides and fertilizers. The main challenges for change include:
- A disruptive system change will not be accepted overnight and the gradual implementation will go relatively slow (farmers are risk avoiding whereas changes by definition include a risk factor).
- Several supply chain actors are at the risk of having their influence reduced (brokers, retailers and buyers) and will go to any length to avoid that.
- The large processors, aggregators and retailers will be able to anticipate the long-term benefits. However, the smaller actors in the value chain will be focused on the possible short term reduction of their turnover.
- Consumers are not aware of their buying power, or how to use this to drive demand.
Funding is required in order to realize these changes, while benefits will materialize elsewhere. The biggest challenges however are the need for more food and the consequent reduced focus on the quality of food, and its production methods. The demand for more food could be compensated by the reduction of harvest and post-harvest losses. The link between job creation and food production is a possible hurdle for a more effective way of food production.
Apart from potential challenges in the political landscape, the road towards 2050 is expected to be relatively smooth. The agri business will continue to become more professional, despite a government that is more concerned with short term tax revenues, rather than a long-term vision on the quality of the economy and food production.
The marginal changes in the behaviour or farmers and the market, the risk avoiding government and the low awareness of environmental sustainability factors in agriculture with farmers and consumers, should be directed towards a more sustainable direction by providing alternatives that are proven to be successful.
Address the Challenges: Describe how your Vision will address the challenges described in the previous question.
The use of big data, block chain and digital information is hard to ignore and will be embraced more sooner than later by supply chain actors. The Kenyan consumer market is growing in both volume and value and there is place for an alternative set-up next to the existing value chains. There is a political willingness to boost some produce groups that have deteriorated over the last decennia (cereal, coffee, rice, tea) and there are examples of improvements in commodities that have been successful (cereal).
Accessibility of smart phones and interpreted digital information is essential in this constellation – while the penetration rate of smart phones is fairly high Kenya with a large number of apps for farmers that are well used. Mobile phone penetration in Kenya is 95.1 percent (Communications Authority of Kenya).It is possible to create a system where all the players are included and all the players can see a benefit, because of the growing consumer market (value and volume), the possibilities to enhance exports, and the growing health conscious market and the growing awareness to produce and consume sustainable.
The steep growth of various 'green', 'organic', 'conscious' products and the success of these products indicated that there is room for change. However, the difference between the modern city and the rural areas is huge in information, awareness, availability and demand.
Change should come from all sides: better information for farmers, availability of better inputs, a more transparent value chain, easier access to money, bigger scale of farms (less focus on small-holders and more on mid-size farms), better availability of organic options for inputs, consumer awareness. Currently there are many NGOs and knowledge centers working on those changes and although the impact is visible, it has only limited effect.
High Level Vision: With these challenges addressed, now provide a high level description of how the Place and the lives of its People will be different than they are now.
The Jomo Kenyatta University of Agriculture and Technology (JKUAT) provides every day lunch for about 6000 students. These lunches include a considerable share of potatoes. The amount of potatoes needed in any given month a year is something that can be easily predicted. Let’s assume the procurement department of the JKUAT can go online, and auction the potato demand a few months ahead. By doing so, potato farmers that are linked to the auction system can pre-finance their input (seeds, fertilizer) for the potatoes, and can grow these at a much lower risk than they currently do. Through the auction, they are informed not only about the quantity of the potatoes, but also about the type – whether the potatoes are for mash, wedges, fries, or anything else.
Six months before a farmer will harvest his potatoes, (s)he will go online to the auction site and will check the demand; (s)he can offer a price for her/his harvest, before (s)he buys the seed potatoes.
Since (s)he has already sold the harvest, there is no need for expensive loans for the inputs (seed potatoes, fertilizer and pesticides). All costs incurred can be calculated in detail beforehand while a readily available crop insurance covers the weather risk.
The auction data will provide insights into supply and demand. The next step will be to determine the best possible condition for soil and temperature for each crop, and will include advise to the farmer on the most sustainable way of farming.
Price fluctuation of potatoes will be further reduced by installing proper storage facilities that are aligned with the demand driven supply chain.
Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?
The main idea behind our proposal is to develop an alternative for the current value chain responsibilities. If the farmer (producer) and the end consumer can be connected in a transparent way, and if the value chain is designed in such a way that they will service the farmer and the consumer, then farmers can produce from a demand driven perspective.
By using big data, block chain and digital information such a system could be designed. The Digital Chain Team is not only planning to design such value chains (in various crops), but will also test its usability, learn from the failures, and design a scalable model to be used in Kenya and beyond. Key elements in this proposal include: fair prices for farmers, rewards for better quality, good information for consumers, traceability of food, reduction of post-harvest losses, reduction of inputs like pesticides and fertilizer; a more sustainable and circular agri-economy.
In this proposal there are 2 main target groups: (1) the farmer, and (2) the consumer.
The current situation: a farmer farms and sells once a produce is harvested; it will sell at the highest price, but it is a buyers’ market. When (s)he is harvesting his / her neighbor is doing the same; seasonal products have seasonal prices and the farmer will only receive a fraction of the price the end-consumer pays. The farmer does not have information where the broker sells and at what price. There is no information about markets, so a farmer does not know where and how he can improve his farming practices. There is a dangerously high use of pesticides and fertilizers, most of which are not delivering the expected results. A buyer buys what is available in the market at strongly fluctuated prices. The consumer depends on what the market, the processor, aggregator and the broker are offering and at a non-transparent price. There is no transparency about prices, producers/production locations, there are no food safety tests. Consumers don't know what they eat and farmers don't know what they should grow.
The proposed situation: the Digital Chain project wants to turn the value chain around. A farmer will know what to produce and what to sell at which price even before planting his spade in the ground. The proposed auction system will lead to a transparent thriving on-line market before the planting. The buyer (this can be an institutional buyer like hospitals, universities, prisons, schools or training centres) will offer a demand in the auction and farmers can sign up to produce against a pre-agreed upon price. The institutional clients (and retailers) know their demand months in advance and can react accordingly.
Through the digital information stream the parties are connected and become partners. The financial flows will be more direct from the end buyer to the farmer, thereby surpassing all parties in between, and providing more transparency.
Through block chain and big data, the behaviour of institutional clients becomes more predictable, and combined with soil, weather and humidity information the farmers can be advised on what to grow when and where. This can be done on micro level, knowing what kind of potatoes are good for fries, mash, wedges or crisps combined with what soil and climate is good for which kind of potato. Once the detailed demand is known, it can be connected to the production, to financial streams and to other services required.
The role of the transports, storage, processors, aggregators (and possibly retailers) is much more service oriented; providing services to the farmers and the buyers upon their demand. Their added value role will continue to exist, but will be much more demand driven.
Within this system, the challenge that the Digital Chain Team took up is: how to re-design the value chain in detail, how to gain trust from all actors, and how to scale up, even beyond the Kenyan borders.
In our vision the helm is back in the hand of the end consumers (institutional kitchens) and the producers. The motivator is: fair prices for farmers and consumers and making a sound economic system. Reduction of (post-harvest) losses, increased food safety, increase food quality, all resulting in a sustainable, circular and inclusive system. Reduced use of pesticides and fertilizers and wider introduction of organic alternatives. Farmers need (digital) technology and interpreted data to be able to make their choices and payments, insurance and other services through mobile technologies. The buyer’s behaviour is predictable and can be made transparent. The end consumers can be informed about choices they have; not only about what crops, but also about qualities, and environmental aspects. Building a sustainable circular value chain involves these environmental elements as well. The quality of food and the wider choices can contribute to wiser consumption patterns and better diets. In order to reach this the policies should be in place (and the possibilities are given through the counties in Kenya and the National agenda too).
In this system we are primarily focusing on the mid-size farmers first; small holder can follow eventually.
The team members in the Digital Chain are all representatives of the elements in the chain that we need to make this successful. Agrico East Africa (Corien Herwijer) is a supplier of seed potatoes to farmers with detailed market knowledge. BoP-Innovation Center (Gerwin Jansen) is a NGO specializing in mobilization of change programs.CGIAR/ CIAT represented by Ravic Nijbroek, they bring the research, academic knowledge and lots of experience in innovative trajectories on board, we can tap into their knowledge. The New Fork (Kirsten Coppolse) is a block chain specialist focussing on food production. The FairChain (Ronald Lanjouw) is a NGO specializing in optimization of value chains through digital solutions) with a very strong emphasis on the sustainability. Sustainable Inclusive Business (Ebenezer Amadi) is a Netherlands-Kenyan initiative to improve organizations and to promote the circular and sustainable thinking and acting. Yielder (Alexander Valeton) is a Kenya based information, communication and learning platform for the agri value chains in East Africa. Daan van der Wekken is independent project manager with 20 year of experience in driving collaborative sustainability projects for the global consumer goods sector.
We have chosen to set up in the potato value chain because the growth potential is huge, it is high on the agenda of the Kenyan government and because of the good potential effects of cold storage this is interesting to develop a test case, that can be copies and fine-tuned in other crops.
How did you hear about the Food System Vision Prize?