Transport: Overcoming logistical challenges

Transport is one of the weakest links in agricultural value chains, although efforts to help farmers get their produce to market are finally gaining momentum. Despite inadequate regulations and significant taxation, trade and transport information is reaching even the smallest producers through widespread ICT use.

Reducing cargo transport times will benefit perishable goods exporters from Eastern Africa © The World Bank Group

Transportation is a significant challenge – but also an untapped opportunity – for agricultual supply chains in Africa. Poor interior roads, regulatory failings, unsuitable vehicles and security concerns are among the constraints that farmers’ face in order to get produce safely and quickly to market, and that inflate haulage costs and limit export opportunities.
Freight logistic costs per km are over 50% higher in Eastern Africa than Europe or the US, states Frank Matsaert, CEO of TradeMark East Africa (TMEA), a non-profit focused on trade issues. He blames a logistics gap caused by a lack of infrastructure, technology and expertise in everything from road networks to payment systems and warehousing facilities.
Transit times are high. The 1,600 km journey from Mombasa to Kigali takes about 422 hours (nearly 18 days) compared with 1 day for similar distances in Europe, according to TMEA. “Trucks must stop at two border posts and are likely to encounter 45 road blocks, each of which involves delays and costs, as well as potentially damaging the goods being transited,” says Matsaert.

Although hard data from the rest of Africa are difficult to come by, freight costs and transit times are challenging across the continent, especially in Western Africa. The outlook, however, is improving. Initiatives by farmer associations, governments, private companies and development agencies are helping upgrade infrastructure, transform logistics with low-cost ICT solutions, and develop ways to preserve produce on the road. Transport and logistics also represent big opportunities for the private sector. “From mobile phone solutions and training programmes to fruit-preserving vehicles, this is a land beaming with profitable opportunities for the willing,” enthuses Louis Matheka, sales manager at Mangos from Kenya (MFK).

Logistics

One area where progress in transport has been rapid is logistics. This is driven by ICTs, which have the potential to play a ‘transformative role’ in agricultural trade, explains Matsaert, noting that tapping private-sector expertise is key.

Text or smartphone-based mobile applications give even small-scale producers access to information related to trade, transport and global markets. Real-time tracking software and electronic payment systems also speed the release of agricultural produce by customs and other regulatory agencies.

TMEA’s Trade Logistics Information Pipeline initiative is an ICT-based supply chain solution designed to ensure information required by all players in the movement of cargo along the trade supply chain is available before goods arrive. This gives players ample time to perform administrative or operational tasks. Reducing cargo lead times “will be a huge benefit to perishable goods exporters from Eastern Africa,” acknowledges Matsaert.

Economies of scale mean transit costs per unit can be cut drastically if producers’ marketing activities are coordinated so output can be pooled for transport. MFK has introduced an SMS system that alerts its suppliers when to pick mangoes, as well as when and where to deliver them for collection by Nairobi-bound trucks.

Middlemen

However, bad roads and long distances involved in agricultural transport mean there are many middlemen, which erodes producer profits, states International Livestock Research Institute research technician, Francis Wanyoike.

According to Naitos Golden Inspirations, livestock producers in Kenya’s Wajir county, for example, earn a net return on investment of just 5%, compared with 30-40% for other market intermediaries. Transportation represents up to 40% of total livestock trading costs. The Accelerated Livestock Value Chain Project, a USAID-funded initiative involving ILRI, is working to cut the number of middlemen in northern Kenya’s livestock markets by encouraging direct sourcing of animals by traders from major markets like Nairobi.

Red tape and taxes

Weaknesses in many countries’ policy and regulatory frameworks present further obstacles for efficient agricultural transport and trade. Few governments in Africa effectively regulate major modes of transport. This means that issues of poor quality and safety are unchecked; this discourages competitive practices and private sector investment. Many regulations are onerous or inappropriate while reasonable regulations are weakly enforced.

Taxation is also a significant cost, especially for long-distance transport. A separate tax, for example, is often levied by local governments in each county or region through which produce is transported. To persuade governments to cut these costs, farmer associations and private firms need to work together, states Matheka.

Non-tariff barriers, such as excessive bureaucracy and corruption, can be hurdles where responsibility lies firmly with governments. Requiring livestock traders to obtain animal movement permits, for example, is a standard practice that helps reduce the spread of disease. However, it can open an opportunity for corrupt police to harass traders and transporters seeking bribes. High crime rates along some transit routes also put traders at risk of attack. Livestock traders often have to hire costly security escorts to protect them from cattle rustlers, notes Wanyoike. Kenya’s government has tried to solve the problem of banditry by banning the movement of animals at night, but the need for stopovers has raised traders’ costs.

Preservation and packing

A shortage of electricity supply in rural areas means many farmers have no access to refrigeration points for perishable produce, which forces them to use the first means of transport available, including public transport, which risks damaging produce. In response, many governments in the region are now making grid connection a priority.

In the meantime, MFK is testing the use of charcoal technology to preserve fruits and the company reports that it is working well. Another alternative introduced by a Gates Foundation-funded project in Kenya, is the use of plastic Mazzi cans that are cheaper and lighter than metallic containers but just as efficient for transporting and keeping milk fresh. Packing produce at the farm and transporting directly to airports or seaports for export removes an additional link in the transport chain. MFK has invested in packaging facilities at ‘mini-central’ points shared by neighbouring farms and has trialled farm-gate packing for smaller orders of up to 3 t, with “impressive” results, says Matheka.

Helen Castell

The Technical Centre for Agricultural and Rural Cooperation (CTA) is a joint international institution of the African, Caribbean and Pacific (ACP) Group of States and the European Union (EU). CTA operates under the framework of the Cotonou Agreement and is funded by the EU.