Abstract

Agricultural markets in Kenya and indeed in Africa do not work efficiently for poor smallholder farmers. Following the market liberalization reforms undertaken by the Government in Kenya in the late 1980s and early 1990s, agricultural markets are characterized by the following constraints among others: long chains of transaction between the farmer and the consumer; poor access to appropriate and timely market information; small volumes of products of highly varied quality offered by individual smallholder farmers; and poorly structured and inefficient markets. The lack of market information represents a significant impediment to market access especially for smallholder poor farmers: it substantially increases transaction costs and reduces market efficiency. For any one commodity, the marketing chain consists of multiple middlemen, each taking a margin at every stage of the chain, and price variations in space and time are often large and erratic. Kenya Agricultural Commodity Exchange Limited (KACE) developed a market information and linkage system (MILS) to increase the efficiency of agricultural markets, targeting smallholder farmers and other small-scale agribusinesses in Kenya. The MILS involves harnessing modern information and communication technologies (ICTs) to empower farmers with low-cost reliable and timely market information to enhance the bargaining power of the farmer for a better price in the market place and link the farmer to input and output markets more efficiently and profitably. The components of the KACE MILS are:

• Market Resource Centres (MRCs) which are located in rural market centers, and users visit them to receive the marketing services.
• Mobile Phone Short Messaging Service (SMS) which uses mobile telephony to provide the marketing services (i.e. commodity price information, offers and bids).
• Interactive Voice Response (IVR) service which provides marketing information through voice mail, by the user dialing the phone number: 0900881188.
• Internet based database system which provides the marketing services through emails to subscribers in a database.
• Radio, where marketing information is provided through an interactive rural FM radio program branded Soko Hewani (the Supermarket on Air). KACE commodity price information is also provided through the national public radio, the Kenya Broadcasting Corporation (KBC).

• Internet based database system, where information is disseminated through the internet based electronic database and website: www.kacekenya.co.ke
• The KACE Headquarter Central Hub in Nairobi, which manages and coordinates the MILS.

A recent study of the impact of the KACE MILS concluded that the proportion of farmers and traders that say their income has improved is very high (75% farmers and 60% commodity traders). Furthermore, the study concluded that market integration improved for two commodities studied (maize and beans).