An online livestock exchange platform is allowing producers earn up to 20 percent more than they would in traditional markets, while connecting buyers with the best breeds and shortening the value chain which has been blamed for exorbitant livestock prices in the Kenyan market.
The livestock sector estimated to be worth $800 million, and contributing 12 per cent to the national purse, has been struggling with market consistencies.
While livestock producers have always complained of poor prices that do not match the expenses that goes into tending to the animals, buyers complain of unstructured markets, having to travel long distances in search of the livestock to buy, or gaping price inconsistencies between different markets.
Middlemen have borne the brunt, often accused of buying less from farmers and selling exorbitantly to buyers.
But the online platform, dubbed Mifugo Trade, has sought to eliminate the hiccups along the value chain by gathering all the information that the buyer may need on a particular breed and posting it as buyers place bids.
The platform employs a network of mobile assessing agents who have been trained and equipped with smart phones.
The agents evaluate the animals to be sold, take photos of the animals and any relevant information which they then upload onto the platform. Once buyers identify the livestock they are interested in, Mifugo.Trade oversees the entire process including helping the buyers arrange transportation and facilitating payment.
“Mifugo.trade makes a 4.5percent commission on each completed sale.
This is in stark contrast to the current system, where brokers do not take commissions and are therefore incentivized to minimize prices for producers, in order to maximize their profits,” said Mr. Taylor Tully, the Founder and CEO of Mifugo.Trade.
However, these areas also suffer from some of the highest poverty rates, approaching close to 65percent ,” said Tully.
The platform is great news to especially the over six million Kenyan pastoralists who derive their livelihoods from the livestock industry but who have grappled with direct access to terminal markets due to poor infrastructure.
With little or no choice, the pastoralists have been forced to rely on inefficient network of local markets and middlemen.
“For example, a cow on its way to Nairobi will typically change hands about three to five times before it reaches the market.
This long chain of middlemen generates substantial transaction costs which are passed onto producers through low prices for their livestock. These low prices reduce income and negatively impact pastoral livelihoods,” added Tully
The alternative is reliance on a large network of informal traders like brokers, which eats into the buyer’s income and valuable time.
“Mifugo.trade offers producers an alternative model with a number of advantages, from direct access to buyers, to competitive bidding and a transparent process.
This makes selling livestock easier and less risky for the producer, while also helping to maximize livestock prices and profits.
‘Through our trials with users we found we can increase livestock prices by up to 20 per cent,” he said.