Negotiating smallholders’ value chain inclusion : analysing the economic and political agency of small-scale farmers in Makueni and Bomet County, Kenya

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Negotiating smallholders’ value

chain inclusion

Analysing the economic and political agency of small -scale

farmers in Makueni and Bomet County, Kenya

Msc Thesis Human Geography 8/21/2017

Supervisor: Dr. Yves van Leynseele University of Amsterdam

Second reader: Dr. Joeri Scholtens Michael Iyob Ghebreab - 11261501 Local supervisor: Stefan Engels

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“If you want to go fast, go alone.

If you want to go far, go together”

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Abstract The Kenyan government’s vision to “transform Kenya’s agriculture into a profitable,

commercially-oriented and internationally and regionally competitive economic activity that provides high-quality, gainful employment to Kenyans,” points to a paradigm shift from subsistence agriculture to agriculture that is driven by business models which are profitable and commercially oriented. The challenge remains to develop effective and sustainable strategies and policies that enable food security, poverty alleviation and the empowerment of marginalized groups within (global) value chains (GVCs). With regard to the multiplicity of stakeholders and factors that influence GVCs, value chain analyses have to take the different power relations into account when including small-scale farmers in multi-small-scale arrangements. This thesis provides insights into the socio-economic context and conditions that influence entrepreneurial smallholders’ capacities to realize their economic interests and the way these farmers are exercising their agency in value chain collaborations to achieve their livelihood objectives.

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List of abbreviations

CDA County Department of Agriculture

DFID Department for International Development FAO Food Agricultural Organization

GDP Gross Domestic Product GVC Global Value Cain

Global G.A.P. Global Good Agricultural Practices

KMHP Kenya Market-Led Horticultural Programme MoA Ministry of Agriculture

MGR Merry-go-Round

MoCDM Ministry of Cooperative Development & Marketing NGO Non-Governmental Organization

PES Public Extension Services

SACCO Savings and Credit Cooperative Organisation SHG Self-Help-Group

SME Small and Medium sized enterprises SNV Netherlands Development Organization TBG Table-Banking-Group

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Maps

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1. Introduction

The agricultural sector is the backbone of Kenya’s economy, but low productivity, poor market facilities and market arrangements, high pre- and post-harvest losses and low value addition contributed to an under-developed agro-industry which hinders the full potential of agriculture in the country. The smallholder farming sub-sector accounts for 75% of Kenya’s total agricultural output and 70% of marketed agricultural produce (FAO, 2014). Given that this large percentage of agricultural output is from small-scale farmers, it should seem clear that the importance of the part this group plays – and should play - has to be acknowledged and incorporated in (agricultural) development policies. The government’s vision to ‘’transform Kenya’s agriculture into a profitable, commercially-oriented and internationally and regionally competitive economic activity that provides high-quality, gainful employment to Kenyans” (Republic of Kenya, 2010: 3), points to a paradigm shift from subsistence agriculture to agriculture that is driven by business models which are profitable and commercially oriented. Ros-Tonen et al. (2015) state that value chain collaboration (VCC) with the private sector has been promoted by governments, NGOs and action researchers as a way to increase farmers’ access to technology, inputs and markets, assuming that this would increase their income and overall food security (Ros-Tonen et al., 2015: 2).

Although the relationship between globalisation and rising inequality has been acknowledged in value chain studies (Kaplinksky, 2000), the challenge remains to develop effective and sustainable strategies and policies that enable food security, poverty alleviation and the empowerment of marginalized groups within global value chains. Following this line of thought, I have examined and compared two business cases that were developed by SNV’s HortIMPACT programme. HortIMPACT is a five-year programme that was implemented by SNV – a Dutch non-profit international development organization – in order to improve the horticultural sector in Kenya. This programme aims to create sustainable private sector trade relationships by including small- and medium sized entrepreneurial farmers (SMEs) in domestic and export markets. Furthermore, besides a value chain approach, the HortIMPACT programmes operates through a ‘capacity building’ approach by providing agricultural trainings that should improve food safety and reduce food losses (SNV, 2017).

However, answering questions regarding the empowerment of marginalized groups within value chains depends on their prevalence and composition, their resource revenues, their geographic location, information flows and on a wide variety of political, social and economic institutions that affect their economic mobility (Haggblade et al.,2012: 18). Considering the development policy of the Kenyan government which is to work with the private sector to make the agricultural sector ‘profitable and commercial oriented’, global value chains - and the development thereof – are considered instrumental for achieving the desired outcomes, such as poverty alleviation,

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entrepreneurship and decent labour conditions (Helmsing & Vellema, 2011: 2). However, with regard to the multiplicity of stakeholders and factors that influence them, this analysis will take the different power relations into account regarding the inclusion of small-scale farmers in multi-scale arrangements. I argue that in order to achieve inclusive and endogenous development, which should be the desired outcomes of developmental policies and strategies, there has to be a clear understanding of the livelihoods of smallholders and their objectives.

Just as Kilelu et al. (2014), I argue that the challenges and opportunities facing small-scale farmers must be addressed and that an adequate match between demand and supply of various stakeholders must be established within the context of smallholder agricultural development. In this thesis I will focus on the livelihood strategies of the entrepreneurial smallholders who are engaged in HortIMPACT’s business cases. By examining the challenges they faced prior to and during their participation in HortIMPACT`s inclusive development interventions, I will explore how small-scale farmers are meeting their goals, interests, objectives and needs. Additionally I will focus on how smallholders’ economic and political agency is being enhanced by collaborating with inclusive value chain projects. The aim of thesis is to explore how small-scale farmers are using their agency in relation to their value chain inclusion and their livelihood strategies. I will try to show to what extent the ‘assets and capabilities’ of farmers are being enhanced and how these are being used within and outside value chain collaborations, in order to achieve their livelihood objectives.

An analysis of the socio-economic context of the small-scale farmers who are participating in HortIMPACT’s business cases can develop a clear understanding of the dynamics of market access and the challenges that these farmers are facing concerning this access. I argue that such an analysis, could enable governments, (developmental) organizations and other stakeholders who are involved in value chain collaborations (VCCs) to develop appropriate strategies to support the smallholders’ livelihoods more effectively and sustainably. Furthermore, by looking at how the smallholders involved in this study are exercising their agency within and outside the value chain in which they have been included, this thesis looks ‘beyond the chain’ (Ros-Tonen et al., 2015) in which their agency is being placed contextually in both their vertical and horizontal relationships. The focus on horizontal is imperative in this analysis since the HortIMPACT programme exclusively work with organised famer groups, which Therefore, my aim is to provide insights into the socio-economic and political context and conditions that influence smallholders’ capacities to realize their interests and on how smallholders are exercising their agency in negotiating their value chain inclusion in order to improve their livelihoods.

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1.1. Chapter outline

This research is based on a comparative study between two farmers groups who were both engaged in different business cases. In this study I have used qualitative research methods in order to understand the perceptions and lived experiences of the smallholders who were engaged in the HortIMPACT programme and to contextualize the ability to exercise their agency in value chain collaborations. Before describing my findings, I will first provide a quick outline of this thesis.

In Chapter 2 I will provide the theoretical framework on which this research is based. In here I will describe relevant debates regarding value chain analyses, to contextualize the key concepts that I will use during this thesis. Chapter 4 consists of the research methodology and methods, wherein I will pose my research question and describe the core concepts of this analysis. Chapter 5 functions as the background context of the HortIMPACT programme. In this chapter I will explain what the

development perspective of the Kenyan government and the Netherlands is and how the HortIMPACT programme can be positioned within this view. Chapter 6 & 7 are two empirical chapters in which the findings of my case studies will be presented. This will be followed by a comparative analysis in Chapter 8. Chapter 9 will conclude my thesis and will contain some recommendations for further research.

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2. Theoretical Framework

2.1 Introduction

The integration of smallholders in (global) value chains is being considered as a form of economic empowerment by development theorists. The focus of this thesis lies therefore at the smallholder level in order to examine to what extent entrepreneurial smallholders are able to exercise their agency within as well as outside of value chain collaborations. In this thesis I argue that it is imperative to take the socio-economic and political context in which smallholders farm, live and interact into account in order to understand how economic and political power relations that are embedded within them influence and are influenced by smallholders. Therefore, in order to provide a clear understanding of the smallholders’ local contexts and how they are exercising their agency in value chain collaborations, I have conducted this research through a smallholder-lens.

2.2. Value chain inclusion: governance, upgrading and participation

The HortIMPACT programme pursues an inclusive value chain approach in developing its business cases. Its objective to facilitate and enhance trade relationships between smallholders and private sector businesses, clearly shows how this programme sees the private sector as an important developmental catalyst in improving the livelihoods of smallholders. According to Kaplinsky (2000) the question should therefore not be whether poor people should participate in the global economy, but how to do so in a manner which provides sustainable and equitable income growth. This mainstream perspective, however, is inclined to missing the smallholder lens and the local contexts in which smallholders are embedded. In value chain analyses the key elements that are addressed are the barriers to entry and rent, the distribution of corporate power and the cooperation between chain actors (Kaplinsky, 2000: 122-126).

A global value chain (GVC) approach solely gives a holistic view of the vertical relationships between chain actors, missing other relationships that affect smallholders’ value chain inclusion. Within the context of on-going globalisation processes and international competition, there has been a shift from ‘producer-driven’ commodity chains to ‘buyer-driven’ chains. When examining a GVC from a top-down perspective, the focus lies on the governance of the chain which shows how corporate power is being exercised by lead firms and organizations and how this power shapes the distribution of profits and risks among chain actor (Gereffi, 2014: 12). The bottom-up perspective of GVCs, which refers to upgrading, focuses on the strategies by economic stakeholders to maintain or improve their positions in the global economy (ibid.). Therefore, the importance of a value chain analysis is that it presents an understanding of the economic and power structures of the commodity chain in which smallholders are to exercise their agency.

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Additionally, a value chain analysis places a value chain within the context of service providers and of the participants that regulate the transactions between stakeholders (Helmsing & Vellema, 2011: 2). The inclusion of smallholders in value chains should therefore be conceptualized in the terms of their participation within the chain. However, there must be an integrative understanding of how forms of governance and regulation influence and are influenced by the development perspectives of smallholders when examining smallholder agency within inclusive development interventions. Tallontire et al. (2011) emphasize that it is important to get beyond the visible involvement of multiple chain actors in governance to also acknowledge the more invisible discursive forms of power. Value chain research should therefore look beyond the notion of ‘upgrading’ and must acknowledge the issue of the terms on which poor people participate in value chains (Bolwig et al., 2010: 174). The inclusion of smallholders may not necessarily mean that this will advantageous terms. Thus, it is fundamental to look at the costs and benefits of participation in a certain commodity chain. On the other hand, exclusion doesn’t have to be disadvantageous: e.g., when smallholders choose to stay at the margins from value chains due to the lack of leverage within a certain economic or social field (Bolwig et al.,: 2010: 174). Development policy makers must therefore look at issues such as risks and vulnerabilities in addition to aspects like income.

Helmsing & Vellema (2011) argue that the inclusion of vulnerable social groups in market-led development implies overcoming low productivity and the disadvantages of small scale farming and of market exclusion as well as addressing institutional and knowledge gaps. To address the challenges and opportunities facing smallholders, these authors state that learning in innovation processes is imperative. An approach that aims at tackling the institutional causes of limited technology uptake and persistent poverty among smallholders is the use of innovation platforms (IPs). These platforms should enable smallholders to articulate and negotiate their needs vis-à-vis more powerful chain actors and exchange knowledge and resources with different stakeholders (Ros-Tonen et al., 2015: 8; Cullen et al., 2014: 259).

Although these platforms are often promoted as an instrument to address power imbalances between farming communities and decision-makers, it is important to acknowledge the power dynamics between platform members, their competing interest and the difficulties identifying and aligning incentives for collective action (Cullen, et al., 2014: 260-261). Hence, in theory, IPs are supposed to enable stakeholders to express their demands and work collectively to achieve a common goal on equal terms. But in reality, the goals interests and perspectives of the member are likely to deviate and could even be contrasting. Therefore, it is important for IPs and other multi-stakeholder engagements to acknowledge the dominance of certain multi-stakeholders. The question then remains how well smallholders, who usually are the ones lacking power in decision-making processes, are represented in these collaborations and to what extent their needs are being met.

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As Cullen et al. emphasize that if “those who initiate innovation platform processes” – which are usually development organizations and/or government agencies – don’t take power dynamics “into account in the formulation and facilitation of IPs, there is a danger that platforms give the illusion of increased participation whilst simultaneously replicating and masking existing conditions” (Cullen et al., 2014: 272). Addressing the power relations in agro-food value chain means, therefore, acknowledging that the terms of participation and most of the corporate power are to a large extent controlled by ‘actors downstream’ – such as importers and retailers (Bolwig et al., 2010; Tallontire et al., 2011). Furthermore, when focusing on governance within the agricultural sector, the horizontal dimensions as well as the vertical dimensions of governance should be emphasized. This means that non-chain actors that may govern value chains have to be included in the analysis.

The relevance of including the horizontal dimension when examining how smallholders are exercising their agency, is based on the acknowledgement that developmental perspectives are founded in relationships with and between the power relations (social, economic, political or cultural) of non-chain actors or networks. Besides understanding the substantial constraints that smallholders face – such as lack of access to markets, credit, inputs, technology and information – and the power relations that exist within the chain, the power relations and inequalities in local relationships in which chain actors and their communities are situated should be analysed (Bolwig et al., 2010: 178).

Hence, while value chain analysis can be used as an analytical tool to explore how farms and firms in developing countries are integrated in markets (Bolwig et al., 2010: 173), the aim of thesis is to provide insights on how smallholders have organised themselves in farmer groups in order to exercise their agency within the vertical and horizontal dimensions of their value chain inclusion. By focussing on the socio-economic contexts of the smallholders who were involved in this study and the organisational structure of their farmer groups, I will provide some insights on how smallholders are coping with their substantial constraints and to what extent they are able to exercise their agency in negotiating their value chain inclusion.

2.4 Smallholder livelihoods

This thesis places smallholders’ livelihoods and their participation in VCCs at the center stage of this analysis. There is a body of literature on value chain inclusion that analyses the effect of and the relationship between the livelihood of small-scale farmers and issues such as poverty, the terms of value chain participation, vulnerability and risks and inequality. However more attention has to be paid to both the vertical chains that link local livelihoods to other economic chain actors and the horizontal dimension in which the impact and nature of value chain integration are locally negotiated (Bolwig et al., 2010: 178). It is within the dynamics between these two dimensions – vertical and

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horizontal – where smallholders define their livelihood strategies and are able to exercise their agency. The inclusion of smallholders in (global) value chains implies that the (economic, political and social) power relations within these dimensions that affect the ability and freedom of farmers to make choices regarding their market participation are taken into account. Therefore, a contextual reworking of any inclusive development policy needs to raise issues of (individual) choices and democratic freedoms (Agarwal, 2014: 1265), that varies from control over market relations to having a say in policy decision-making processes.

However, although value chain studies have acknowledged that the role of a livelihood approach in achieving food security, alleviating poverty and empowering farmers is imperative, the debate remains to what extent the aspiration and needs of the most marginalized groups in VCC are being considered in food systems and policies. The fact is that it is in the interest of smallholders to analyse the conditions under which they can exercise their agency to promote changes with regard to the terms on which they participate in VCC (Ros-tonen et al, 2015: 10). Apart from overcoming production constraints, achieving food security and (national) self-reliance also depends on what farmers choose to do (Argawal, 2014: 1265). This shows, for example, the discrepancy within food sovereignty discourses: small-scale production for local consumption are placed at the basis of food sovereignty thinking, while national food sufficiency doesn’t necessarily needs food sufficiency at the local level (Argawal, 2014: 1269). Soper (2016), therefore, sees the voices, preferences and

perspectives of smallholders as imperative for the formation of food policies. It will then become apparent to what extent smallholders can exercise their agency to negotiate their market relations, i.e. which for which markets they want to produce and their access to these markets; and their livelihood strategies and opportunities.

The Department for International Development’s (DFID) Sustainable Livelihood Guidance Sheets (1999) stated that within a livelihoods’ historical context, understanding how different livelihood assets are arranged and combined to formulate different livelihoods is imperative. The DFID distinguishes a check list of three key factors to examine livelihood strategies, namely sequencing, clustering and trade-offs (DFID, 1999). Bolwig et al. (2010) emphasize that understanding the consequences of value chain inclusion, repositioning or exclusion requires analyses to looks beyond the essence of value chain relations itself. They argue that the essence of smallholders’ economic, political and social power and leverage depends on the full range of

livelihood activities – which can be on-farm, off-farm or a combination thereof – and social relations on which they rely (Bolwig et al., 2000: 186).

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2.4.1. Livelihood strategies

The question now remains how to adequately analyse smallholders’ agency within value chain collaborations and smallholders’ livelihood strategies, without neglecting or undermining the social, political, economic and social context in which smallholders live, farm and interact. The DFID (1999) has developed a framework called the Sustainable Livelihood Framework which presents the main factors that affect people’s livelihoods and the relationships between them. This framework starts with the contextualization of (external) vulnerabilities which affect people’s livelihood and availability of assets. The DFID defines these assets as capitals and distinguishes them between human, physical, natural, financial and social capital. Additionally, this framework helps institutions, organizations, policies and legislations to shape livelihoods. According to the DFID, they have an effective impact on people, since they determine to a great extent access (to assets, livelihood strategies and sources of influence), the terms of exchange and returns to any given livelihood strategy (DFID, 1999). In other words, this framework gives a visualization of the different actors and factors that affect people’s livelihood (strategies) and the context wherein these interact.

Scoones (2009), however, argues that this framework still has its limitations regarding explaining social and political processes that affect people’s livelihood. Although he acknowledges that livelihood approaches are an ideal entry point for participatory approaches in development policies, he criticizes this approach for having “inherited organizational forms, disciplinary biases and funding structures constructed around other assumptions and ways of thinking” (Scoones, 2009: 172). Besides, the author argues, dominant concerns were mostly focused on rather instrumental poverty agenda, framed by economic, thus ignoring the politics and power dimensions of livelihood approaches. Therefore, a more pluralist vision is required to understand these dimensions.

To enrich livelihoods perspectives from different angles, Scoones (2009) identifies four challenges in order to be responsive to new contexts such as value chain inclusion. Firstly, he emphasizes the need to articulate perspectives with concerns of the process to which livelihood knowledge is negotiated and used. Secondly, including political processes means that socio-economic, political and historical developments as well as class, gender and capitalist relations should be taken into account. Thirdly, analyses will have to examine networks, flows and chains across different scales, but remain rooted in place and context. Finally, in order to identify sustainable future strategies, the dynamics of different contexts must be taken into account (2009: 183-190). This means that different ties, different types of interventions are required if livelihood options are to be enhanced.

Although the DFID framework serves as a functional entry point for actor-oriented approaches, it lacks the inclusion of broader political and power dimensions. Considering that this framework is widely being used to determine smallholders’ livelihood strategies in value chain

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analysis, a holistic examination of their political and economic agency can only be enhanced when these dimensions are included. Therefore, smallholder livelihood strategies should be contextualized in terms of their economic and market-oriented as well as their socio-cultural and political constraints, opportunities, aspirations and activities.

2.3. Smallholder agency

As was mentioned in the sections above, in order to discuss smallholder agency, it is necessary to contextualize the role of small-scale farmers within their socio-economic conditions and the power relations that exist within them. Thamanga-Chitja & Morojele (2014) criticize the knowledge gap that exists within academic literature regarding smallholder farming, because it lacks the inclusion of the context and conditions of the people involved in small-scale farming, and how these contexts impact their agency in sustained participation and market access (Thamanga-Chitja & Morojele, 2014: 147). Thus, these authors argue, when engaging in an agency-oriented approach for examining small-scale farmers in VCCs, the understanding of the socio-economic, cultural and political contexts of smallholder is imperative.

Ros-Tonen et al. (2015) explain that by focusing on smallholder agency, a better understanding can be provided of why smallholders differ in their engagement (or capacity to engage) in value chain collaborations with the private sector and how this affects processes of inclusion and exclusion (Ros-Tonen et al., 2015: 4). Because the influences of the inclusion of smallholders in (global) value chains depends on the terms of their participation in inclusion processes and the degree of adjustment of ‘value chain logics’ with the capacities of stakeholders and institutions (Helmsing & Vellema, 2011: 15), a focus on smallholders’ capacity to act independently and make their own choices with regard to their livelihoods is imperative.

2.3.1. Economic and political agency

Thompson (2015) argues that to examine to what extent smallholders are maintaining or achieving agency within their livelihoods, the focus should be on how they exercise economic and political agency and which constrains they face while doing so (Thompson, 2015: 343). Although in recent literature on value chain inclusion the enhancement of smallholders’ agency is widely promoted and discussed, the definition usually refers – to a certain extent – to smallholders’ economic agency, where the emphasis lies on the economic empowerment of smallholders with regard to the ability to position themselves in a market (Bihunirwa, 2012: 1). Thompson (2015) states that economic agency refers to the freedom to “simultaneously structure, manage and assume responsibility for one’s livelihood with a significant degree of independence from other economic

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agents” (Thompson, 2015: 343). This means that although smallholders may be financially poor and/or limited in their capabilities, they can possess economic agency in terms of the means of livelihood they do have under their own initiative and control (ibid.).

However, smallholders’ political agency refers to the extent to which smallholders are able to exert pressure on the centres of power in their society, which can be political as well as corporate power (Thompson, 2015: 343). It is precisely this form of agency that is often neglected in value chain research. For farmers who are engaging in vertical and horizontal relationships, their choices can be structurally constrained by the economic, political and social limitation in which they are exercised (Argawal, 2014: 1256). Thompson (2015) argues that it is this conceptualization of agency that relates to smallholders’ political voice and that would be insured by strengthening the ability of smallholders to play a significant role in shaping the institutions and government under which they live (Thompson, 2015: 345). This thesis, therefore, aims to provide a more holistic analysis in which the political agency of smallholders in included, considering the interrelated dynamics between these two forms of agency.

2.3.2 Social capital, farmer groups and agency

Because the HortIMPACT programme exclusively works with organised farmer groups, it was imperative to include the horizontal dimension of VCC in this study on smallholders’ ability to exercise their agency in negotiating their value chain inclusion. Soper (2016) state that smallholders “are defined not by the products they produce, or their market destination, but by the social basis of production” (2016: 540). Thus, when examining the political and economic agency of smallholders, one must look beyond the individual and place smallholders not just within the context of their vertical relationship with chain actors but also in the horizontal landscape in which they live, farm and interact (Ros-Tonen et al., 2015: 15). Helmsing & Vellema (2011) argue that there is a need for an integrative understanding of how contemporary forms of governance and regulation condition and are conditioned by the development perspectives of particular social groups (Helmsing & Vellema, 2011: 3). This understanding should, therefore, be placed in the socio-economic context of smallholders in order to explain the development outcomes of their integration in (global) value chains.

It is here where the relationship between social capital and smallholder agency becomes apparent. Midgley & Livermore (1998) showed in their study how local economic development can be promoted by the enhancement of social capital. They argue that economic development is more likely to occur in social systems with strong social networks, well developed associations, and a high degree of civic engagement (Midgley & Livermore, 1998: 31). Others researching the relationship between social capital and smallholder agency showed, for example, a positive correlation between

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social capital and improved community access to important assets (Bebbington & Perreault, 1999) or an increase in trust between farmers and their neighbours which improved their social safety net (Gallahar et al., 2013). However, these social networks don’t necessarily have to be economic actors but could also be members of their communities. Additionally, Helmsing & Vellema (2011) point out that these networks could also have a local political dimension, in which political actors can be instrumental not just in “steering the nature of development”, but also in deciding the distribution of its benefits (Helmsing & Vellema, 2011: 11). It is in this dimension where smallholders or smallholder networks can and should exercise their political agency to achieve their livelihood objectives. However, a social capital framework has its limitations.

Bebbington & Perreault (1999) point out that these networks that are based on shared interests or objectives accompanied with repeated interaction through participation in these networks, which means that “actors *can+ get caught up in sets of rules, norms and bodies of mutual information that both assist certain sort of action and limit others” (Bebbington & Perreault, 1999: 398). Therefore, the emphasis must lie on democratic mechanisms, such as participation and ‘voice giving’ procedures, that integrate the different goals, interests and aspirations of multiple actors through representative devices (Helmsing & Vellema, 2011: 8). I will show in this thesis how smallholders have formed smallholder networks – in the form of farmer groups – and how these networks have affected their ability to exercise agency.

Andersson & Gabrielsson’s (2012) study on smallholder farmer groups in Kenya and Uganda, suggests that collective action strengthens both “individual and collective incentives and capacities to invest in food production and natural resource management” (Andersson & Gabrielsson, 2012: 247). These authors argues, that this strengthening is explained by the formation of a farmer group which is based on a “shared concern, set of problems,” and in which smallholders “deepen their knowledge and expertise in this area by interaction on an ongoing basis” (ibid.). Argawal (2014) therefore argues that the choices smallholders make when engaging in inclusive value chains are subject to the challenges and constraints they face, and to the alternatives before them (Argawal, 2014: 1265). The capabilities of smallholders to make choices that will affect their livelihood positively, will strongly depend on their political and economic agency. It is therefore important to identify those constraints – technical, informational, economic, institutional and political – and to reflect on alternatives which will suit their livelihood strategies (ibid.).

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2.4. Chapter conclusion

In mainstream value chain analyses, a value chain is placed within the context of service providers and of the participants that regulate the transactions between stakeholders (Helmsing & Vellema, 2011:2). However, as Bolwig argues, value chain research should look beyond the notion of ‘upgrad ing’ and must acknowledge the issue of the terms on which smallholders participate in value chains (Bolwig et al, 2010:174). These terms of participation and most of the cooperative power are, however, to a large extent controlled by ‘actors downstream’, which means that more attention should be paid to both the vertical chains that link local livelihoods to other economic chain actors and the horizontal dimension in which the impact and nature of value chain inclusion are locally negotiated (Bolwig et al., 2010: 178).

The DFID’s Sustainable Livelihood Approach (1999) presents the main factors that affect people’s livelihoods and the relationships between them. It contextualizes (external) vulnerabilities which affect people’s livelihood and availability of assets, which they define as capitals and distinguish between human, physical, natural, financial and social capital. Although this framework helps institutions, organizations, policies and legislations to shape livelihoods, it lacks the inclusion of broader political and power dimensions. It is within these dimensions in which smallholders farm, live and interact.

Thamanga-Chitja & Morojele (2014) therefore criticize the knowledge gap that exists within academic literature regarding smallholder farming, because it lacks the inclusion of the context and conditions of the people involved in small-scale farming, and how these contexts impact their agency in sustained participation and market access (Thamanga-Chitja & Morojele, 2014: 147). Following Ros-Tonen et al. (2015), the focus of this thesis will be on smallholder agency in order to provide a better understanding of why smallholders differ in their engagement (or capacity to engage) in value chain collaborations with the private sector and how this affects processes of inclusion and exclusion. As these authors, I argue that it is in the interest of smallholders to analyse the conditions under which they can exercise their agency to promote changes with regard to the terms on which they can participate in VCC.

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3. Research Methodology & Methods

The focus of this thesis lies on smallholder agency in order to provide a better understanding of why smallholders differ in their engagement (or capacity to engage) in value chain collaborations with the private sector. In order to analyse the conditions under which smallholders can exercise their agency in negotiating their value inclusion, this research will be based on a comparative study within the HortIMPACT programme in which I have focused on the objectives and implementation of two of its business cases. The aim of this research is to understand how the engagement with value chain collaboration is influencing (and is influenced by) smallholders’ ability to improve their livelihoods. By examining two different business cases within the socio-economic conditions of two different farmer groups, this thesis will examine how the inclusion of smallholders in value chains is related to their ability to exercise agency in these collaborations.

3.1 Research question

My research question is as follows:

To what extent does the HortIMPACT programme address smallholders’ livelihood needs and demands regarding their agricultural activities and how do smallholders exercise their agency in negotiating their value chain inclusion through farmer group participation?

In order to answer the above mentioned research question, I will answer the following sub-questions: - What are the farmers’ constraints and benefits regarding their agricultural activities and

what are the terms of participation for their value chain inclusion?

- How were the business cases developed and who were the key players in these business cases? - How are smallholders organized and how does the level of farmer organisation relate to their

political and economic agency?

- How does the Hortimpact programme address smallholders’ needs and demands regarding their agricultural activities?

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3.2. Definitions of Core Concepts

To address the problem statement outlined above I will use the three core concepts value chain inclusion, agency and livelihood. The aim of this research is to show how these concepts are interrelated within the context of small-scale farmers involved in inclusive value chain interventions.1

3.2.1. Value chain inclusion

According to Kaplinksy (2000), a value chain “describes the full range of activities which are required to bring a product or service from conception, through the intermediary phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final consumers, and final disposal after use” (121). Haggblade et al. (2012) state that value chains provide a valuable visual framework for understanding the “structural connective tissue” linking small farmers with input suppliers, processors, traders and final customers (2). These authors assert that in order for smallholders to maintain production incentives, permit household specialization and enable movement to high-value products and to value-added activities, improved market access are necessary (ibid.). Thus, value chain inclusion is considered to be fundamental for small-scale farmers.

However, a value chain is a dynamic framework that operates within an institutional environment where the interactions between different actors are defined by a certain governance structure. This structure influences the distribution of benefits and, “in turn, reflects the distribution of power and control within the value chain” (7). These can be actors who function within a vertical supply chain, such as private and public actors, as well as non-chain actors within the horizontal dimension. These include the range of actors that may govern value chains and related standards beyond buyers and suppliers such as civil society organizations, donors, workers and their representatives (Tallontire et al., 2011: 428). As Ros-Tonen et al (2015) state, “Smallholders operate at the interface of vertical relationships with chain actors (buyers, processors, exporters) and horizontal interactions within the landscape in which they live and farm” (15).

Another dimension within value chain inclusion is upgrading. Upgrading refers upgrading to the strategies by economic stakeholders to maintain or improve their positions in the value chain. This dimension is highly dependent on the participation of smallholders. Furthermore, poor households must find niches in which they can compete effectively which requires these households to decide “which market segments to target, how much to specialize and what type of technology to adopt in order to meet required quantity and quality requirements (6). Therefore, the focus on the inclusion of smallholders in value chains should therefore be conceptualized in the terms of their participation. When considering smallholders’ inclusion in value chains there has to be looked at the

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costs and benefits of this participation, since inclusion can be advantageous for some smallholders but disadvantageous for others (Bolwig, 2010: 174). Therefore, issues of risk and vulnerability must be highly regarded in addition to aspects like income, unequal distribution of market power (i.e. the ability to set prices, quality standards and minimum delivery quantities), political power and information when examining the agency of smallholders in value chain collaboration.

3.2.2. Smallholder Agency

In order to analyse to what extent smallholders are able and willing to participate in a certain value chain, it is imperative examine how smallholders exercise their agency. Agency encompasses the set of skills, conditions, operational means that allow people to have a voice and some measure of control over the circumstances in which they live and work (Thompson, 2015: 343). In other words, it refers to the capacity of smallholders to act independently and make their own choices with regarding their livelihoods. Considering the commercializing agricultural sector in Kenya, I will follow Thompson’s (2015) analysis of agency in which he focuses on political agency and economic agency .

Political agency refers to the extent to which smallholders are able to exert pressure on the centers of power in their society, which can be political as well as corporate power (Thompson, 2015: 343). Analyzing this dimension requires examining the structural economic, political and social constraints and opportunities in which smallholders exercise their political agency. Therefore, in this research I will explore how smallholders are exerting pressure and/or are enabled to do so regarding policy formulation and decision-making processes. During this study I have taken notice that the County Department of Agriculture (CDA), plays a significant role in the agricultural activities of smallholders. This analysis will therefore provide insights on how farmers engage with this department en how this engagement relates to their political agency.

Economic agency, on the other hand, refers to the freedom to simultaneously structure, manage and assume responsibility for one’s livelihood with a significant degree of independence from other economic agents. Thus smallholders possess economic agency in terms of the assets they do have under their own initiative and control.

When analysing smallholder agency, the focus should be on smallholders’ livelihood trajectories in which their diverse livelihood interests are considered. It is fundamental to look beyond the individual and to place smallholders within the context of their vertical relationship with chain actors as well as their horizontal interactions within the landscape in which they live, farm and interact (Ros-Tonen et al., 2015: 15). I will, therefore, examine the democratic mechanisms in

which different judgments, goals, interests and aspirations of multiple actors are integrated

through representative devices (Helmsing & Vellema, 2011: 8).

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3.2.3. Smallholder livelihood

For this research I will follow up on Ian Scoones’ (1998) definition of livelihood as used in his IDS Working Paper 72, namely “the capabilities, assets and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stresses and shocks maintain or enhance its capabilities and assets, while not undermining the natural resource base.”2 Furthermore, I will use the DFID’s Sustainable Livelihood Guidance Sheets (1998) as entry point for this approach. This approach seeks, according to the DFID, to gain an accurate and realistic understanding of people’s strengths – assets – and their efforts to apply these into positive outcomes – livelihood strategies. This livelihood framework distinguishes the five assets, also referred to as capitals, which lie at the core of this framework, namely: human, physical, natural, financial and social capital. However, because the HortIMPACT programme exclusively works with farmer groups, this research will mainly focus on the social capital of smallholders. However, this does not mean that the other capitals will not be taken into account in this study. The DFID (1999) defined ‘social capital’ as follows:

 Social capital refers to the social resources upon which people draw in pursuit of their livelihood objectives. These are developed through: (vertical or horizontal) networks and connectedness that increase people’s trust and ability to work together and expand their access to wider institutions, such as political or civic bodies; membership of more formalized groups; and/or relationships of trust, reciprocity and exchanges that facilitates co-operation, reduce transaction costs and may provide the basis for informal safety nets amongst the poor.

I will follow the DFID’s (1999) checklist of five key factors in order to find out what smallholders do to achieve positive livelihood outcomes. Sequencing refers to finding out what the starting point is for successfully establishing a particular livelihood strategy and whether one type of asset is essential. Clustering, invokes whether there is a clustering of particular assets associated with particular livelihood strategies. The last factor related to the pursuit of a particular portfolio of strategies entails finding out what the trade-offs are faced by different smallholders with access to different assets.

Although I will use the DFID’s framework as entry point for this livelihood approach, this research will follow up on Scoones’ (2009) critique regarding the limitations of this framework. Therefore, I will add perspectives with concerns of the process to which livelihoods knowledge is

2

Definition was first used by Chambers & Conway (1992): Chamber, R. and Conway, G., 1992, ‘Sustainable rural livelihoods: practical concepts for the 21st century’, IDS Discussion Paper 296, Brighton: IDS

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negotiated and used; include political processes which influence and are influenced by smallholders’ livelihoods (strategies); take networks, flows and chains across different scale into account; and identify the dynamics of different contexts to show whether different livelihood options are enhanced.

Thus, a smallholders’ livelihood strategy can be regarded as the combined activities of people to meet their various livelihood objectives. It is important to emphasize that the above mentioned assets are dynamic and should be placed in wider social and institutional dimensions. Examining the different livelihood strategies of entrepreneurial smallholders means that one must take into account the socio-economic and political context of the people concerned and how these influence and are influenced by the combinations of assets, different livelihood strategies (and their outcomes.

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3.3. Conceptual model

V al u e C h ai n C o lla b o ra ti o n Val ue ch ain in cl us io n CDA Economic Political Assets Strategies UPGRADING

Farmer group

Livelihood Outcomes Livelihood Objectives Challenges & Constraints Demands & Opportunities HI

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3.4 Data Collection

For this research I have conducted a comparative case study in which I am concerned with the complexity and particular nature of the role of small-scale farmers within inclusive value chain interventions. I have used a qualitative approach in order to understand the political, economic and social world of entrepreneurial small-scale farmers by examining their interpretation of their world as a result of the interactions between them and other (non-) chain actors and factors. This kind of research reflects people’s experiences of daily life and by studying these data I was be able to understand aspects of their social world, in this case study their agricultural activities. It can therefore be stated that this research has constructionism and interpretivism as its philosophical underpinnings (Bryman, 2012) Additionally, I have used a fixed mixed methods design in which the use of qualitative and quantitative methods is predetermined and planned at the start of the research process (Creswell & Plano-Clark, 2011: 45).

I have mainly relied on qualitative research methods. Spread out over two weeks, I have immersed myself in two groups of small-scale farmers where I have listened, observed and collected data through interviews and conversations with and between group members. This approach is referred to as participant observation (Bryman, 2012). However before conducting my interviews, I first collected data using preliminary questionnaires. These questionnaires were used to gather quantifiable and qualitative data regarding the farming activities, smallholders’ perceptions on the level of social cohesion and factors that affected their income. This has provided useful data with regard to assets and perceptions of smallholders.

Additionally, most of the smallholders who filled in the surveys were willing to participate in the interviews which lead to an operable sample size. After the surveys, I conducted semi-structured and in-depth interviews. The unstructured nature of semi-structured interviews provided insights into how smallholders perceive their social world. This form of interviewing gave participants the space to explain their experiences, opinions and thoughts regarding their livelihoods and their relationship with their political, social and economic environment. After conducting semi-structured interviews in the first two weeks during my fieldwork, I have interview three members of the HortIMPACT team – Stefan Engels, who is the team leader, Gillian Kandenyi – who was the supervisor of the ‘GAEA’ business case, and Doreen – who was a supervisor of ‘The Ketchup Project’. I have used this data to get a more thorough understanding of the way smallholders are exercising their agencies. Besides collecting primary data, I have also analysed existing rapports and documents related to the HortIMPACT programme in general, and documents regarding the specific business cases – if they are available and/or accessible.

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3.5 Research Design and Units of Analysis

As I’ve mentioned above, I have conducted a comparative case study research to examine the complexity and nature of the role of small-scale farmers. Following the exponents of case study designs, I have heavily relied on qualitative methods in order to generate an intensive, detailed examination of smallholder livelihoods. However, I have chosen to add a quantitative supplemental strand to enhance the design by formulating a preliminary survey. Therefore, this approach can be considered as an embedded design (Creswell & Plano-Clark, 2011, 72).

The units of analysis for this research were the entrepreneurial small-scale farmers who are involved in the HortIMPACT programme’s business cases, which implied that my ‘units’ varied in their socio-economic context, but also in their assets, means in production and accesses to certain services or channels. With consideration of the different scales that existed within this collaboration I solely focussed on the livelihood strategies of these small-scale farmers and their ability to exercise their agency in their vertical and horizontal dimension. The project that I observed was however implemented in five different areas, namely in Kwakhay (Makueni County) and in Chepkitwal, Kongotik and Saoset (Bomet County). Because my second fieldwork concerned farmers who were living in these three neighbouring villages, I decided to visit five famers in each village.

Because these smallholders were engaged in the HortIMPACT programme, I did not have to seek my participants on a random basis. Therefore I have used purposive sampling so that this sample would be relevant to the research questions that I posed in section 3.1. (Bryman, 2012). Because I studied the vertical relationships as well as the horizontal relationships in which smallholders were engaged, I have furthermore made use of snowball sampling so that participants from my initial sample could propose other participants who would be relevant for the research (Bryman, 2012,: 424).

3.6. Ethical Considerations and Limitations of Research

The limits of this research are based on a variety of factors. Firstly, because this is a qualitative research, questions regarding reliability, validity and generalizability have come up (Bryman, 2012: 389). External reliability was hard to achieve, because it will be impossible to replicate the conditions and social setting in which this research was conducted. Furthermore, because this was a comparative case study with a relatively small sample size, these findings cannot be generalized across social settings, therefore inhibiting external validiation

Other practical limitations that I faced during my field work were related to language, time and positionality. Firstly, because I did not speak the native language, I needed a translator in some instances in order to communicate with the smallholders who did not speak English. This meant that

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some conversations got lost or distorted in translation due to misunderstandings. Secondly, time constraints limited the possibility to understand the historical, cultural social, economic, and political complexities of inclusive value chain intervention and the relationship on smallholders’ everyday life. And thirdly, because of the unstructured nature of qualitative data, the interpretation hereof will probably be influenced by my own subjective learning. (Bryman, 2012: 405)

Ethical considerations with regard to this research encompassed a variety of issues. With regard to my positionality as a researcher and as a student, I have noticed that my presence created expectations with some respondents. Although I tried to stress that I did not work for the HortIMPACT programme and explained that I was a student from Amsterdam who was doing his Master fieldwork, some respondents asked me how this research would help them. This made me question my presence, my research and invisible power relation that arose between ‘them’ as respondents and ‘myself’ as a researcher.

However, following (Bryman, 2012) I only engaged in interviews and carried out surveys with respondents who had given me their consent to engage in this research. Additionally, in order to respect the participants’ privacy of my respondents, some of their names have been kept anonymous

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4. Positioning HortIMPACT as a developmental intervention

In this chapter, I will provide some insights on the contextual background where the HortIMPACT programme can be placed in. furthermore, this chapter will describe how the HortIMPACT programme develops its business cases following a clear value chain approach. This approach is embedded in view of the Kenyan as well as the Dutch government that the private sector is key in Kenya’s agricultural development. The first section will briefly describe the contextual background of the Netherlands’ new development policy. In the second section I will explain what the HortIMPACT programme is and what its objectives are. In the third section I will explain how the HortIMPACT programme is focussed on a specific ‘type’ of farmer, namely ‘entrepreneurial farmers’. And lastly, I will briefly describe the two business cases that I have studied and which will be further described in detail in the next two chapters.

4.1. From Aid to Trade

The Kenyan government’s vision to “transform Kenya’s agriculture into a profitable, commercially-oriented and internationally and regionally competitive economic activity that provides high-quality, gainful employment to Kenyans” , points to a paradigm shift from subsistence agriculture to agriculture that is driven by business models which are profitable and commercially oriented. It is within this paradigm shift where we should place SNV’s HortIMPACT programme, also named the Kenya Market-Led Horticultural Programme (KMHP). This programme was developed by the Netherlands Embassy of Kenya as a part of the new agenda of the Netherlands for foreign aid and trade, titled: ‘A world to gain’. This chapter will explore the context of this new agenda, the role HortIMPACT plays as an intermediary between different stakeholders and it will describe the format of their interventions through HortIMPACT’s business cases.

This new agenda was drawn up by the Dutch government in 2012 in which they described the basis for future bilateral relationships, varied from aid relationships to trade relationships. Because Kenya will achieve a middle-income status, the Netherlands is phasing down its aid to the country and is establishing a mature trade relationship with Kenya. Therefore, the Netherlands wants to change the donor-recipient relationship in this transitional phase into a relationship that is based on trade that will be mutually beneficial (A World to Gain, 2013). This agenda also states that in order to build a trade relationship, the first step is opening up markets for all actors within value chains and to promote private sector development. In this way, entrepreneurs in low-and middle-income countries will be able to sell their products on European and Dutch markets (ibid.). Because the HortIMPACT project is fully funded by the Dutch embassy in Kenya, this new approach can be considered as the contextual thread of the programme.

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The HortIMPACT programme aims to promote international trade relations and the inclusion of small- and medium sized entrepreneurial farmers (SMEs) in domestic and international horticultural value chains. This study is focused on the latter. HortIMPACT’s interventions are based on multi-stakeholder collaborations which can be seen as a Public Private Partnership (PPP) approach. This approach entails that (foreign) private firms, the government and NGOs work together to promote their commercial interests in the investment in developmental programmes. In terms of improving smallholder livelihoods, this project foresees that the linking of smallholders to Kenyan and Dutch agri-businesses promotes the improvement of production and helps to build inclusive market growth through innovative solutions and technologies from the private sector (SNV, 2017). In other words, the HortIMPACT programme brokers domestic and export market linkages, and builds business networks for SMEs by linking them to private sector agri-businesses.

Subsequently, the question that arises is to what extent the promotion of this value chain collaboration (VCC) with the private sector is increasing farmers’ access to technology, inputs and markets and if it, in turn, increases their income and food security. In order to establish these trade relationships between Kenyan and the Dutch agri-businesses, Stefan Engels, the project leader of the HortIMPACT programme, sees that the private sector has a large role to play in agricultural development.

4.1.1. HortIMPACT’s alignment with Kenya’s Vision 2030

The agricultural sector is key to Kenya’s development, contributing 26 per cent of the Gross Domestic Product (GDP) and another 27 per cent indirectly through linkages with other sectors (FAO, 2014). Furthermore, the sector accounts for 65 per cent of the export earnings and provides the livelihood for more than 80 per cent of the Kenyan population (ibid.). The Kenyan government has developed a blueprint for Kenya’s development, titled ‘Vision 2030’, in which they aim to transform Kenya into a middle-income country. With regard to agricultural development, Vision 2030 addresses the major challenges that have to do with productivity, land use, market access and value addition of products. The Kenyan government aims to increase the volume and value of productivity of smallholders and to find new ways to improve efficiency at farm level. Increasing market access through value addition by processing, packaging and branding the volume of agricultural produce is seen as one of the goals of Kenya’s agricultural development policies. (Vision 2030).

Because the smallholder sub-sector accounts for 75 per cent of Kenya’s total agricultural output and 70 per cent of marketed agricultural produce (FAO, 2014), it is evident that Kenya still relies on a smallholder model. Through cooperation with national and county government agencies, HortIMPACT aims to formulate and implement policies that support the inclusion of SMEs, and

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stimulate market growth. However, although HortIMPACT is lining their interventions with the objectives of the Kenyan government, they are not waiting for them to do it. As Stefan Engels puts it: “We try to find the right middle way to be in line with the country's priorities and to make sure that they know what we are doing, but our implementation is mostly directly with private sector companies and with farmer groups and not with, necessarily, the involvement of the government.”3

4.2. The HortIMPACT programme

HortIMPACT is a five-year programme that was implemented by SNV, a Dutch non-profit international development organization, in order to improve the horticultural sector in Kenya. This programme is funded by the Netherlands Embassy in Kenya and was initiated in January 2015. In this project, HortIMPACT works mostly with Dutch and Kenyan companies in order to achieve their three main objectives, namely: (1) the inclusion of small- and medium sized entrepreneurial farmers (SMEs) in domestic and export markets; (2) the improvement of food safety through integrated crop management practices; and (3) the reduction of food losses and improved efficiency in supply chains (SNV, 2017). The programme has an overall target over the five years to develop fifteen projects which are called ‘business cases’.

Before a business case is initiated, there are certain criteria set to business participation and farmer beneficiation. Each business case involves an applicant and a private sector company that has a product or a service that SNV and the county government deem is a necessary improvement for the horticulture sector. Firstly, HortIMPACT looks at the ability of the applicant’s proposal to address the key objectives of the programme. After this has been established, the applicant has to meet 50% of the costs in order to promote the sustainability of the business case. Gillian Kadenyi explained why the sharing of costs is an important aspect for implementing a business case:

We have learned that if we fund a hundred percent, then the partners will not be fully committed to the project. Our policy is to move away from aid and to facilitate trade partnerships, which means that we want to promote both Kenyan and Dutch businesses. We try to see whether this is in terms of technology or expertise, or in terms of business.4

HortIMPACT’s aim is to create sustainable partnerships between different stakeholders in a value chain. The programme collaborates with Dutch NGOs and several Dutch or Kenyan private businesses in order to train small- and medium-scale farmers to increase food quality, food safety and productivity. The NGOs that are collaborating with the HortIMPACT programme are Hivos,

3

Stefan Engels, personal communication, .. , 2017 4_{Gillian Kadenyi, personal communication, …, 2017}

Negotiating smallholders’ value chain inclusion : analysing the economic and political agency of small-scale farmers in Makueni and Bomet County, Kenya