Value Addition in the Coffee Industry in Kenya: Lessons from the Cut Flower Sector

"The cut flower industry in Kenya is characterised by a number of features which result in the relatively large proportion of value added accruing to farmers. The vertically integrated value chain enables the sector to adjust and respond quickly to changing consumer preferences and international competition. The sector has invested heavily in new technologies (e.g. in greenhouses, machinery, irrigation systems and robust cold storage facilities), which enhances value addition in the sector. The regulatory system plays a facilitative and largely supportive role, with the HCDA playing a very limited interventionist role in the value chain. The associations in cut flowers are not only strong lobbies but have developed self-regulating mechanisms like an industry ‘Codes of Practice’ that are benchmarked to international codes. The Fresh Produce Exporters Association and the Kenya Flower Council work closely with government in promoting an enabling environment conducive for development of the sector. These developments in the cut flower sector contrast sharply with features that characterise the coffee value chain. The coffee sector in Kenya is excessively regulated, limiting the participation of small-scale farmers to just the farm level. Restrictive regulation has, over time, allowed opportunistic licensed marketing agents and the regulatory authority to take advantage of the smallholder farmer and maximise legally imposed fees that stagnate the industry. Inefficient operations by cooperatives have also played an essential role in the diminishing returns for farmers."