SUPPORTING SMALLHOLDER COMMERCIALISATION BY ENHANCING INTEGRATED COORDINATION IN AGRIFOOD VALUE CHAINS: EXPERIENCES WITH DAIRY HUBS IN KENYA

SUMMARY

Recent literature suggests that to make value chains in changing agrifood systems in sub-Saharan Africa more inclusive, intermediary institutions should foster coordination. The hub concept has been applied as such an intermediary institution that coordinates advisory services, input supply and smallholder access to markets. This study unravels hub coordination in smallholder dairy in Kenya, conceptualising the hub as a mix between a broker of relationships, a one-stop-shop for services and a cluster of producers and service providers, enabling horizontal coordination (between smallholders) and vertical coordination (between smallholders and value chain actors and service providers). Findings indicate that, in resolving challenges that limit smallholders’ integration in value chains, synergies emerged as the hub combined different types of horizontal and vertical coordination. This was done by simultaneously organising clusters of farmers and input and service providers (clustering role) and actively facilitating delivery (broker and one-stop-shop role), where the hub structure stimulated the matching of demand (better articulation) to supply (better organised access). However, tensions emerged in the combination of horizontal and vertical coordination as farmer organisations as hub operators had to balance a role as an honest broker between farmers with the intent of enhancing collective action and as a business-oriented entity which resulted in the exclusion of some farmers who cannot deliver the quantity and quality required to minimise coordination costs. Given these tensions and capacity problems of farmers’ organisations, complementary intermediary arrangements may be necessary to fulfil some coordination roles.