SDM Case Study: Goshen, Kenya

Mangoes are the second most produced fruit in Kenya, while pineapples rank third. Despite the potential for profitability, several challenges are preventing maximum value from being obtained. Post-harvest/production losses can range up to 25-40% in both value chains. Factors contributing to these losses include fruit fly infestation, lack of market access and poor (cold) chain infrastructure. Most of the fruits produced are traded through middlemen (80-95%) and are consumed locally, with minimal value addition undertaken (<10%). As a result, export markets remain untapped.

Goshen Farm Exporters Ltd is a processor, and an exporter of Kenyan dried fruits from contracted growers. The company has cut a niche for itself by focusing on value addition of tropical fruits into dried healthy fruit snacks.  The company seeks to build a value chain that reliably supplies safe and quality produce for its expanding processing capacity. Expansion of processing capacity was driven by increased local and global market demand for organic dried tropical fruit products.

Goshen and IDH have partnered to support Goshen to optimize its sourcing and service delivery model. The key activities envisioned include; reducing the cost of extension through working with independent agents, adequate farmer segmentation and tailored servicing, increasing quantity of high-quality production at farm level by providing inputs on credit, and investing in cold chain infrastructure. To inform how these activities should be implemented this Service Delivery Model analysis assessed the business case for both smallholder farmers in different regions with different farming practices and different crops, and the business case for Goshen. Some of the key insights include:

  1. Training forms a crucial element of the service delivery, to prevent farmers from making losses in the biannual dip years that the mango trees bear less fruits
  2. Conventional mango farmers have higher yields than organic mango farmers, but lower net incomes during dip years due to high production costs. Additionally, tree age will impact farm performance more significantly for conventional farmers the coming years, than for their organic counterparts
  3. There is a business case for Goshen to invest in refrigerated trucks, since transport cost can be decreased by 150% and Goshen can recoup the investment within a year.
  4. Pineapple sales channels are loss making. Adequate sales forecasting and financial data collection over time will be crucial to inform which sales channels Goshen should focus on or move away from.
  5. Farmer data collection per segments and analysis by the SDM operator will be fundamental to adequately serve smallholders and decrease SDM cost.

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