A traceability system gives Kenyan chilli farmers access to the EU market

The export of Kenyan chillis to Europe slowed down in 2019 when the European Union (EU) introduced new plant health regulations. The costs associated with these pest control and containment measures are too high for small exporters and smallholder producers, especially if they are not part of a cooperative. As a result, around 80 per cent of exporters now opt to sell their chilis to less stringent markets at a lower price. 

With co-funding from the SSNUP programme, the impact investor Alterfin supported PHYMA Fresh Produce Limited, a Kenyan fruit and veg exporting company, in implementing a traceability system for their chilli producers in 2022 to comply with the new EU regulations. Thanks to this project, chilis exported by PHYMA are now fully traceable from farm to fork across all sourcing, packaging, processing, and shipping stages of the value chain. This not only makes the whole process more transparent and efficient for all agricultural value chain actors but also reduces waste. 

The new traceability system brought benefits for both the farmers and PHYMA: the individual farmers now meet the stringent control requirements needed to export to the attractive European market, while PHYMA can manage the different groups of farmers more efficiently. For example, the central database now enables registered farmers to automatically benefit from PHYMA’s out-grower scheme, which includes: 

• timely, free, certified seedlings 
• cash advances for fertilisers and pesticides
• purchasing guarantees for the harvested products
• support in obtaining the GLOBAL G.A.P. GRASP certification.

797 farmers, of which 65% are women, were integrated into the new tracking database. In addition, the new system records the working time of 87 seasonal workers (including 68 women), which makes their wage calculations easier and more transparent. By the end of 2023, PHYMA aims to integrate 1,500 farmers - of which at least two-thirds are female, and over 20% are young people aged between 18 and 35 - into its fully traceable chilli value chain.

This project illustrates the benefits of traceability systems for all agricultural value chain actors: while the system enables exporters to generate additional revenues by giving them access to high-end markets such as the EU, processors and farmer organisations benefit from streamlined operations. Traceability systems may also have indirect positive effects on smallholder farmers if designed inclusively, for example, in the form of more precise wage calculations and well-managed out-grower schemes.