Exploring the marketing environment for maize seed in Kenya: how competition and consumer preferences shape seed sector development

Abstract

During the past decade, sizable investments have been made to strengthen maize (Zea mays L.) seed production in Eastern and Southern Africa by private seed companies. However, efforts have generally overlooked downstream issues, such as how seed companies market their products and position their business in a competitive market. This paper assesses competition and customer preferences in Kenya at the retail level for varieties from the parastatal, private domestic and international companies. Data were collected from agro-dealer surveys (n = 80) and farmer intercept interviews (n = 377). Compared to the market leader, the parastatal Kenya Seed Company, private domestic and international companies provide greater value to farmers by selling varieties that are, on average, 10 years younger. However, these companies offer few late-maturing varieties, thus giving the parastatal a near monopoly in that market segment. Kenya Seed Company also excels at being present at all sales locations with their varieties. If private domestic companies focus more on smallholders with lower budgets (including travel budget), they should consider the most cost-effective ways to extend their networks to remote areas as well as compete with the lower prices of Kenya Seed Company. Modern breeding programs should explicitly consider these marketing challenges when designing strategies for seed production and engagement with seed companies.

Why farmers use so many different maize varieties in West Kenya

“…In contrast to Rutsaert and Donovan’s findings (2020) in the Embu-region, our findings and those of Rutsaert and Donovan for their site in West Kenya do not show that commercially oriented farmers purchase the more expensive seed from global seed companies. This is probably because in West Kenya the average farm size and its variation are small.…”

“…Seed companies’ understanding about seed use and preferences is considered to be a key-factor in advancing the commercial maize seed value chain in Kenya, and achieving higher turnover rates of improved maize varieties (Abate et al, 2017; Rutsaert and Donovan, 2020). Our data show that in West Kenya, the diverse use of seeds and varieties reflects the different roles that maize growing plays in people's livelihoods.…”

“…Efforts to accelerate variety turn-over in the use of maize seeds are considered necessary, given the aging of currently used improved maize varieties (Abate et al, 2017). This situation points to unaddressed challenges in seed supply in the country by private sector companies in their engagement with agro-dealers and farmers (Rutsaert and Donovan, 2020; Rutsaert et al, 2021; Sanchez et al, 2007). Other studies with a focus on West Kenya highlight the importance of and preference for local maize varieties for farmers (Anjichi et al, 2005; Mango and Hebinck, 2004; Kimanthi, 2019; Smale and Olwande, 2013), while parallel research cites the benefits of improved hybrid maize varieties and NGO-efforts strive to increase the use of these (Rutsaert et al, 2021; www.oneacrefund.org).…”

Demand-side challenges to increase sales of new maize hybrids in Kenya

“…Following that principle, a variety with better qualities and higher potential returns should have a higher intrinsic value and higher prices could be instrumental in communicating the increased value. However, recent evidence shows that smaller-scale, locally owned seed companies tended to set seed prices lower than those of well-known international seed companies [ 33 ]. This raises questions about the incentives and capacities of smaller seed companies to update their seed portfolio if related investments cannot be translated into higher returns.…”

“…Moreover, competition within the seed industry has been growing, spurred by the growing presence of multinational companies and the increasing capacity of locally owned companies. While farmers have a wide range of seed products to choose from, they have shown limited interest in experimenting with new seed products [ 33 , 34 ]. Insights on farmer decision making on the other hand remain scarce, as does reliable and timely market intelligence.…”