By Laura Jelagat
Agricultural co-operatives have historically been the cornerstone for Kenyan rural economy. By and large, they support smallholder farmers to access inputs and markets , besides negotiating fair prices on their behalf. However, many of these institutions are at a turning point in an era characterized by globalization and digital transformation.
The legacy of the co-operative movement:
The co-operative movement in Kenya started during the colonial era and has since evolved into a vibrant and transformative socio-economic vehicle. Co-operatives flourished in industries like coffee, cotton, tea, dairy and horticulture after the Co-operative Society Act was enacted in 1966. These co-operatives were not just business entities; they were vehicles of economic empowerment. According to a 2023 report by the State department for Co-operatives , there are currently over 22,000 registered cooperative societies in Kenya, with over 14 million members. These organizations’ microeconomic importance is highlighted by the fact that they are estimated to contributed close to 45% of the Gross Domestic Product ( GDP). Nevertheless, due to outdated structures, many agricultural cooperatives are unable to compete with private agribusiness companies that are tech-driven, agile and more efficient.
Global challenges
The world’s agricultural trade has undergone significant changes in the recent past. The modern consumer in the global arena expects to know the precise origin of various products in the market – for instance avocadoes, coffee and tea. Strict quality requirements, sustainability certifications and accurate logistics control export markets.A lot of Kenyan cooperatives find it difficult to meet these standards. Some donot have reliable quality control. Additionally, they grapple with challenges like weak governance structures, poor record keeping and late payments.
According to Dr.LydiaKibe, a University of Nairobi agricultural economist: “The cooperative model has enormous potential for economic transformation, but it needs to develop into a framework based on professionalism, transparency, and the adoption of new technologies, moving beyond social solidarity.”
Emerging success models.
Despite these hurdles, numerous cooperatives are proving that innovation and value addition can enhance transformation. For example, the Githunguri Dairy Farmers Co-operative Society, has successfully broadened its operations and can now effectively compete with commercial processors. By the same token, the New Kenya Planters Co- operative Union has embraced technology in order to enhance coffee value, giving smallholders farmers direct access to foreign buyers. Moreover, a big number of producer co-operatives in Eastern and Central Kenya
have established value addition facilities for processing goods like roasted nuts and avocado oil, hence generating higher revenue for their members in both the domestic and export market. This has also generated more jobs for various players in the respective value chains.
Technology as a game changer
The most important factor facilitating cooperative modernization is technological innovation. Platforms like Farm Drive, Digi Farm and Twiga Foods are transforming a good number of agricultural value chains. Mobile applications for member registration, digital payments and real-time information sharing have been implemented by many forward thinking savings and credit co-operatives, as well as producer co-operatives. Digital platforms improve traceability, which is a key requirement in the export market. Co-operatives can gain the trust of foreign buyers by tagging farmers’ produce to ensure quality and compliance.
In Kirinyaga county,for example, a major rice farmers’ cooperative has implemented an SMS-based system to inform members about harvest collection , prices and payouts. The outcome has been enhanced members’ satisfaction and transparency.
Governance and inclusion.
The foundation of sustainable performance by co-operatives in the long run is sound governance. The progress of many players in the co-operative movement has historically been hampered by enduring challenges like weak governance structures and leadership with no vision. Restoring trust among members and investors requires oversight procedures, such as term limits for board members and digital record keeping. Most importantly is the involvement of women and young people in the cooperative ecosystem. Given that Kenyan farmers are over sixty years old on average, innovation and succession planning are urgent issues. In that regard, the Ministry of Co-operatives and MSMEs Development has rolled out youth focused initiatives with the goal of incorporating entrepreneurship and digital skills into the co-operative framework. This initiative has taken into cognizant that young members empowerment is crucial for digital transformation and long-term sustainability of co-operatives.
Policy and institutional support.
The importance of cooperative in Kenya economic policy has been emphasized by the government, especially under the Vision 2030 and the Bottom-up Economic Transformation Agenda (BETA) economic blueprints. Institutional capacity and innovation within the sector could be strengthened through Public Private Partnerships (PPs), capacity-building programmes, and improved research collaboration with universities.
The road ahead
In Kenya’s economic and social landscape, agricultural cooperatives play a crucial role. In that respect, in order for them to stay competitive in the global market, they need to take a more entrepreneurial approach, based on digital transformation and value addition. Going forward, Kenya’s agricultural cooperatives should position themselves as cutting –edge agribusiness firms that can compete effectively on a global scale, while generating more revenue for their members.
