The agricultural market environment is and continues to be one of the most volatile markets to deal with. The main triggers of market volatility in Kenya are: farmer production culture, international markets, planting seasons, weather and climatic change.
Many smallholder farmers rely solely on rain-fed agriculture and face increased prices on inputs during the long rainy season of March-April.
In addition some agricultural products like onion and cereals do well and at a lower production cost in the immediate neighboring countries. This results in local companies preferring to import a product rather than buy locally.
On the other hand the Kenyan smallholder farmers have a culture of venturing into a socially hyped agribusiness. Currently there is a lot of agribusiness programs running on Tv stations and FM radio stations.
Most of these are commercials meant to generate viewership and advertisement without thorough background check. You will find farmers making a mistake to invest in a product just because they watched on TV or heard on radio how a certain farmer is making huge profit in a particular agribusiness enterprise. A wise farmer will invest only when they have done thorough market research.
How can farmers increase their control over Market uncertainties.
Fluctuating prices make it difficult for farmers to budget for the coming season. Therefore, a farmer will need to be strategic to cushion against production and price risk.
During the main March-April planting season there is an increased demand for farm inputs. Prices hike and incidences of fraudsters who sell fake inputs to meet the demand are high. It makes a lot of economic sense to buy inputs in January and February when demand is low and save some cash.
Secondly, there are incidences when farmers plant too much of one product. This is a good signal there might be a market flooding and a wise farmer will assess the market opportunity or plant a different crop altogether.
Thirdly, having a diversified business enterprise is another good strategy. In the case of intensive livestock production, for example, the farmer can also produce grain or fodder. When there is volatility of feed costs, those shocks can be better absorbed .