A Survey of the Extent of Vertical Integration in Asian Vegetables Exporting Businesses in Kenya

Abstract

The Kenya horticultural sector has an annual growth rate of between 15-20% and the industry is the fastest growing agricultural sub sector in Kenya contributing close to 13% GDP. Despite the recent overall decline in growth of the Agricultural sector in Kenya, the horticultural sector has continued to show a positive performance with regard to productivity, marketing and employment. Total direct and in direct employment is about 2 million. With the introduction of stringent quality standards by the EU which happens to be the major market, the exporters have been setting up their own farms in order to guarantee the standards. However, they still have to rely on the small-scale farmers who most often than not farm in less than an acre plot and contribute to 80% of the total horticultural produce for export. Unfortunately, the relationship between the exporters and the farmers is wanting due to; exploitation where by the farmers are offered low prices, opportunistic middlemen who encourage farmers to side-sell and inaccessibility to approved inputs as well as inadequate technical knowledge by the farmers to produce the right quality and quantity. Despite these challenges, the sector has grown due to development of innovate and sustainable vertical relationships. - This study therefore examined the different structures and vertical relationships that exist amongst the Kenya Companies exporting vegetables of Asian origin in order to explain the extent of the integration. It analyzes them and concludes by outlining the factors that influence the extent of the Integration.The research also evokes further topics for research related to this area of study.