VALUE CHAIN ANALYSIS: A CASE STUDY OF MANGOES IN KENYA Prepared by the Sugar and Beverages Group Raw Materials,

Tropical and Horticultural Products Service Commodities and Trade Division Food and Agriculture Organization of the United Nations 2 Table of Contents Page I. INTRODUCTION 3 II. MANGO PRODUCTION, MARKETING AND PROCESSING 4 III. FACTORS PREVENTING THE DEVELOPMENT OF THE MANGO SUPPLY CHAIN 9 IV. CONCLUSIONS AND RECOMMENDATIONS 10 3 I. INTRODUCTION This document reviews fruit production and yield trends, mango production, marke ting and processing of smallholders and traders along the mango value chain in Kenya. It also examines future development prospects. The horticultural sub-sector in Kenya comprises mainly fruits, vegetables and cu t flowers, and accounts for about 10 percent of urban food consumption and a much larger percen tage in rural areas. Vegetables dominate horticultural production, followed by fruits and cut flowers . In 2003, a total area of 373 000 hectares was dedicated to horticultural production, producing 4.35 milli on tonnes of horticultural products, valued at US$494.4 million. The contribution to Gross Domestic Product (GDP) was 3.5 percent and 14.5 percent to Agric ultural Gross Domestic Product1. However, the value of production was lower than that of 2002 and 2001 which were US$503.6 million and US$528.4 million, res pectively. The subsector also provides employment to a large number of Kenyans, currently estimated at 2 million, both direct and indirect jobs. Table 1: Percentage of cultivated area, volume of production and value of hortic ultural products (2003) % cultivated area %Volume of production % Value of Production Vegetables 59 55 57 Fruits 40 44.8 32 Cut flowers 1 0.2 11 Fruit and vegetables are also important sources of foreign exchange earnings, wh ich ranged between US$260 and US$350 million in recent years, ranking second to tea, and ac counting for 21 percent of total domestic exports in 2003. Mango has been the third most importa nt fruit in terms of area and total production over the last ten years with bananas (including plantains) and pineapples as number one and number two respectively in terms of production. Production trends are pr esented in Figures 1 and 2. The output of mangoes, avocados and passion fruits has increased rapidly, whi le output shares of bananas and pineapples have declined. Figure 1: Production of mangoes, avocado, passion fruit and papaya (1992-2003) -

50,000 100,000 150,000 200,000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Year Production (Tons) Mango Avocado Passion Pawpaw 1 In 2003, national GDP was estimated at US$14.2 billion, while Agricultural GDP was about US$3.4 billion. 4 Figure 2: Value of major fruits grown in Kenya as a percent of total value, 2002 - 2003 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Bananas Pineapples Mangoes Citrus Pawpaws Avocadoes Passion fruits Other fruits Fruit Share of Total Value Value 2002 Value 2003 Source: Based on statistics from HCDA/MOA. II. MANGO PRODUCTION, MARKETING AND PROCESSING Mango output in Kenya has increased steadily over the past decade as yields have improved to the current level of 10 tonnes per hectare (Figure 3). Figure 3: Yields (tonnes/ha.) of mango and passion fruits (1992-2003) 0.00 2.00 4.00 6.00

8.00 10.00 12.00 14.00 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Year Yield (Tons/Ha) Mango Passion In 2003, mango production was estimated at more than 183 000 tonnes (Table 2). E astern Province accounted for 54 percent, Coast Province for 22 percent and Nyanza Prov ince for 8 percent. 5 Table 2: Mango production 2002/2003 by province Hectares (Ha) Production (MT) PROVINCE 2002 2003 2002 2003 Central 650 749 5,224 6,577 Coast 8,240 7,920 42,946 41,145 Eastern 4,668 4,750 91,521 99,730 Western 966 986 8,913 9,248 Nyanza 1,258 1,850 16,806 13,837 Rift Valley 566 683 6,579 8,337 N/Eastern 325 330 4,515 4,612 Total 16,673 17,268 176,504 183,486 Source: Ministry of Agriculture Annual Reports, 2002/2003 Two types of mango are grown in Kenya, the local and the exotic or improved vari eties. The latter are usually grafted on local mangoes and are grown for the export market. Most l ocal varieties tend to have high fibre content, commonly referred to as stringy , and this characteristic make s them unpopular for fresh consumption. The local mango varieties are usually left to grow natura lly without much crop husbandry. Both local and exotic varieties are grown in Eastern Province. The local varieti es are Ngowe, Dodo, Boribo and Batawi. The exotic varieties include Apple, Kent, Keit, Tommy A tkins, Van Dyke, Haden, Sensation, Sabre, Sabine, Pafin, Maya, Kenston and Gesine. The districts with higher percentage of improved mango varieties are Thika, Embu, Mbeere, Meru Central, Makueni, Mach akos and Meru South, while Mwingi and Kitui have very small areas cultivated with improved var ieties. In Kitui for example, 1 287 hectares are under mango production , but less than 6 percent is cultivated with exotic varieties. Local varieties predominate in the production of Coast Province, namely, Ngowe (

70 percent), Boribo, Batawi and a few minor ones. The main exotic variety grown is Apple, whi ch is mainly cultivated in Lamu, Malindi and Kilifi districts. In the two P rovinces (Eastern and Coast), mango production is primarily rain fe d. Where water is available , new orchards under irrigation have been established for production o f exotic varieties for export. Pests are the main factor affecting yields. The mango weevil is a major concern and farmers are making an effort to use recommended control measures. For export production, the main difficulty for farmers is to comply with the standards required by the EUREPGAP Control Points and Compliance Criteria, which is required for all fruits and vegetables destined for the EC ma rket. In Eastern Province, only one crop of mango is produced per year, while in Coast Province there are two harvesting seasons. In the Malindi and Kilifi districts, the two harvest s yield an almost equal quantity. In Lamu 80 percent of the harvest is in April-July, while in the Tana River district, 70 percent of harvest is between October and February. The main exotic variety, Apple, is harv ested in early September, slightly later than other varieties. In the lower parts of Tana River District within the delta area especially aroun d Kipini, there is a distinct production seasonality emerging from the effects of floodwaters. Mangoe s in Kipini Division of Tana River District, Coast Province are harvested slightly earlier compared to o ther parts of the Province. In the whole of Coast Province, every district reported some mango harvesting fo r at least seven months in a year. In Kenya, generally, mango supply peaks between October and February (Fi gure 4). Seasonality has serious implications for mango processing. 6 Table 3: Mango production in selected districts in Eastern and Coast Provinces o f Kenya, 2003 District Hectares (Ha) Production (tonnes) Machakos 1 352 16 088 Makueni 490 4 900 Meru Central 600 5 400 Meru South 192 1 490 Embu 700 3 000 Mbeere 300 2 350 Mwingi 340 2 850 Kitui 1 287 12 870 Tana River 1 300 12 000 Malindi 1 253 8 806 Kilifi 1 295 9 667Lamu 7 000 Figure 4: Mango s upply seasonality in 2003 0 100,000 200,000 300,000 400,000 500,000

600,000 700,000 jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Month Quantity in tonnes Most of the mangoes produced are consumed within the same production area, or so ld in urban markets of Kenya. There are two main market destinations for fresh mangoes, the local and export markets. Exports of fresh mangoes comprise a small proportion of national produc tion. 7 Chart 1: Mango distribution channel in Kenya In 2003, for instance, total mango export was slightly above 1 percent of total production. Most of the mangoes were bought from the farms by middlemen who transported them either to the local markets or sold them to exporting companies. The exotic varieties fetched better farm ga te prices, ranging from Kenya shillings (Kshs) 3 to 20 per piece, depending on the size, quality, season , buyer and the destination market. Only high quality fruits of exotic varieties are sold in the export markets. The districts that export substantial quantities of mangoes include Machakos, Meru Central, Meru South and Makueni. Some of the exporting companies buy mangoes directly from the farms and package them for export. The export market offers better prices than the local market. In cases where the exporting companies buy directly from the farms, farmers sell at better prices than when t hey sell their products to middlemen. The prices offered also depend on the mango season. Figure 5 shows the various local, regional and international marketing channels for mangoes in Kenya, emphasizing the actors involved in the process. The export market is serv ed by a few large private sector farms. There are about 22 mango exporters in Kenya. Independent smallhold ers produce the bulk of the mangoes for domestic markets. The brokers assemble the mangoes from producer s and then supply the main open markets. Once consignments are delivered to the markets, wholesalers b uy and sell to retailers who then sell to consumers in kiosks, other retail markets, green groceries and roadside markets. Processors often acquire the mangoes directly from the producers. At the high end of the market are two main supermarkets Nakumatt and Uchumi ll high quality mangoes to the upper income consumers. This outlet, however, only a ccounts for less than 5 percent of the mango distributed in Kenya. The open market accounts for 56 perce nt in urban centres and more than 70 percent in rural areas, while kiosks account for 36 percent of mang o sales. Total production (2003) 183 486 tonnes Consumed on farm level 91 700 tonnes (50 percent) Sold for local consumption

which se

89 560 tonnes (49 percent) Exported 2 226 tonnes (1 percent) 8 Figure 5: Domestic, regional and international marketing channels for mangoes in Kenya In 2003, fruits earned some Kshs 1.9 billion (US$24.98 million), representing cl ose to 7 percent of the total value of horticultural exports from Kenya. Mango exports accounted for 14.4 percent of the value of fruit export earnings (Figure 6). Mango exports from Kenya are declining despite the expansion in demand for fresh fruits in Europe and the Near East. Mangoes from Kenya cannot compete effectively because of unreliable supplies, arising from pest infestation and crop mismanagement, as well as inade quate infrastructure, which raise the costs and the risks of shipping products abroad. Farmers and traders in Tanzania, Uganda, Ethiopia etc. Regional Fresh markets Rural-Urban Wholesalers and Brokers Smallholder Farmers Rural Retail Centers Open Air Retail Markets Urban Kenya Kiosks (mid-class Green Grocers) High-end Green Grocers Supermarkets Hotels International markets (EU) Rural Assemblers & Purchasing Agents International Exporters (Fresh and Processed) Local Processors Rural Consumers Kenyan Urban Consumers International Consum

9 Figure 6: Value of fruit export earnings Fruits-Share in Value of Exports (2003) Macadamia 0.4% Pineapples 1.8% Mangoes 14.4% Passion fruits 20.8% Avocado 47.1% Others 15.5% Source: Based on data from MOA/HCDA. Mango processing in Kenya has not expanded, and only a negligible share of total production is currently processed. Only one relatively large-size mango processing firm based in Coast Province processes local products. Other local juice and jam makers import mangoes in the form of concentrates mainly from Mauritius, Egypt and South Africa. In principle, therefore, there is potential for increasing the processing of local products. Local production, however, is of low quality. Nine ty-five percent of mango produced in Kenya is made up of indigenous varieties. These, as already mentione d, are rich in fibre, and of little market value and are either consumed within the households or sold at very low prices in the village markets. Table 4: Export Share of Mango Production in Kenya Year Area (ha) Total Production (tons) Total Value ( 000 Kshs) Export Volume (tons) Export Value ( 000 Kshs) percent Export Volume percent Export Value 1992 11 839 90 160 396 959 1 745.17 56 369 2 14 1993 2 357 97 426 671 418 2 348.91 93 956 2 14 1994 2 028 88 129 823 314 2 850.38 131 117 3 16 1995 0 865 89 258 989 309 2 277.17 104 750 3 11 1996 1 143 88 076 846 489 4 245.47 195 291 5 23 1997 3 208 66 707 855 557 2 524.84 195 570 4 23 1998 5 288 150 812 1 550 299 2 505.35 162 848 2 11 1999 15 647 162 322 1 576 933 3 994.76 311 591 2 20

2000 15 027 112 608 5 308 876 2 686.85 118 287 2 22 2001 16 542 179 638 5 366 815 3 166.18 485 353 2 9 2002 16 673 176 504 1 078 928 7 081.00 341 371 4 32 2003 17 268 183 486 1 108 435 2 226.55 273 612 1 25 III. FACTORS PREVENTING THE DEVELOPMENT OF THE MANGO SUPPLY CHAIN The major constraints which are currently hindering the development of the mango supply chain can be categorized according to the four basic stages in the su8pply chain: the farm level, the marketing stage, the processing stage and the export stage. 10 At the farm-level, key constraints faced by farmers are the lack of clean planti ng material, inadequate technology, the length of the production cycle and inadequate post-ha rvest handling facilities. Concerning planting material, there is a generalized shortage of grafted seedlin gs. Hence, farmers tend to use inferior, low yielding seedlings. Farmers do not have knowledge on i mproved production technology, and there is little or no use of fertilizers and pesticides. Pests mai nly the mango seed weevil and fruit fly and diseases mainly anthracnose and powdery mildew are also major p ms . Some fruit trees are so tall and big such that spraying is only not viable but also i mpossible. Farmers often lack motorized pumps for effective pest and disease control. Coupled with this, is po or crop management practice, which leads to flower and fruit fall. Where mango is harvested only once a year, as in the case of Eastern Province, m ango farmers have diversified to other crops, including passion fruits, melons and seedling p roduction, to smooth their income pattern throughout the year. At harvest time, there is often an oversuppl y which leads to low prices and product losses. Farmers suffer from poor post-harvest handling techniques, leading to significan t losses, which affect returns to the farmer and traders. Furthermore, farmers do not have good storage facilities available at the farm level, and this forces them to sell their product immediately after harvest. No collective bargaining takes place on the price, and each farmer interacts individually with the trader and other buyers, often receiving prices well below reigning market prices. At the marketing stage, a major constraint is the poorly developed transport inf rastructure, such as the bad road conditions that serve production areas which further contribute to post-harvest losses and a deterioration of quality leading to low selling prices. In many districts, trans port and shipping costs are in fact prohibitive, both within and outside the country. Supply is not well organized with collection, grading and packing facilities and , therefore, farmers are not able to separate higher quality fruits to be remunerated accordingly. Mo reover, farmers often lack the necessary information on alternative marketing possibilities and on alternat ive product uses, such as drying, and other options for value addition. Traders themselves often suffer fr om poor access to credit,

which makes it difficult for them to finance their operations. In regard to exports, inadequate post-harvest/husbandry control, wrong varieties for sea freight, inadequate sea freight facilities and high air freight costs are among the major constraints. Moreover, the need to comply with the EUREGAP and traceability standards, which are necessary to enter the EC market, constitute a further problem. Exporters themselves often suffer from pri ce instability in international markets and from stiff competition from other countries like India , Pakistan, Brazil, Mexico and Costa Rica. These competitors offer higher quality varieties at lower prices , due mainly to lower shipping costs. Finally, concerning processing, major constraints are the insufficient plant cap acity and organization of supplies. Currently, less than 1 percent of mangoes produced in Kenya are processed. The better quality fruits are exported, and processors are left with fruits of the l owest quality. Seasonal production is only enough to supply factories for seven months of the year. On the consumption side, the price of natural mango juice is too expensive for d omestic consumers, who mostly consume cheaper products and indigenous varieties. Relativ ely cheaper imported mango juices are available from Mauritius, South Africa and Egypt. These countri es enjoy preferential tariffs under the regional trade agreement, COMESA. Further competition comes fr om locally manufactured, chemically sweetened mango flavoured soft drinks. IV. CONCLUSIONS AND RECOMMENDATIONS Despite the existence of considerable potential and a steady growth in yields ov er the last decade, the development of the Kenyan mango supply chain appears to be hindered by a num ber of structural 11 problems. This has a negative effect on the country, both in terms of foregone p otential income and employment opportunities and in terms of reduced availability of locally produce d high quality fruits and natural juices. Stakeholders in the industry could look at ways to improve exports of fresh frui t through better quality control and management of the value chain. Given that a sizeable quantit y of fruits does not normally meet export standards, other utilization must be examined. In the immed iate future, the development of processed products seems to offer the best market opportunities t o this end, particularly for export, given that shipping and handling costs are lower for processed produ cts. In the longer term, capacity building of farmers on crop husbandry, technologica l application and overall farm management are key to the development of the chain. Improvement in extension provided to mango farmers is required. The need to improve plant breeding is required partic ularly for hybrid and improved varieties. In some areas, better quality could be achieved by adapting existing varieties, but developing new locally-adapted varieties in the long run should be explored.

Defining the needs and implementing priorities of infrastructural development mu st be carried out to support the sub-sector. In the area of physical infrastructures, particular e mphasis should be given to storage facilities and to transportation. Concerning institutional infrastructur es, the development of adequate credit facilities and other services required by the supply chain and s etting up collective farmers bodies, responsible for marketing and for the interaction with other stakeholder s in the chain, must be examined.