AGOA Success Story - Macadamia Nuts

AGOA Success Stories – Macadamia Nuts David Mushera owns a small farm at the foot of Mt Kenya. Amidst the goats, ducks, tea and corn are old macadamia nut trees that have traditionally supplied small-holders with a modest income stream.

Unfortunately much of the annual harvest in Kenya has traditionally lost due to the lack of suitable storage and transport. Furthermore, the Kenya Nuts Company has been the dominant buyer of macadamia nuts, essentially setting the price for small farmers.

TSA has developed registered fair trade farmer groups of Macadamia and Cashew nuts in Kenya and Rwanda with a total footprint of about 62,000 farmers

However USAID has been helping farmers like David take advantage of the vibrant export opportunities to the United States that exist under the African Opportunities and Growth Act (AGOA). USAID’s Trade Hub Program helped jumpstart this process during the 201012 period by supporting a new macadamia nut processing company – Ten Senses Africa (TSA) – committed to working with macadamia nut growers (including David) to establish cooperatives and increase production, income and exports under AGOA. Total company export revenues under AGOA have since risen to $1 million annually (2014 figures).

TSA builds on an important natural advantage of Kenyan small-scale agriculture. Farmers cannot afford pesticides, therefore, the macadamia nuts they grow are naturally organic. Over the 2010-12 USAID and the Slovak Embassy provided financial and technical support to TSA to establish a state-of-the-art processing facility in Nairobi, and to train farmers to organize themselves to become fair trade and organic certified. TSA then started up innovative contracting arrangements with the cooperatives to buy their output and export the nuts to the United States under AGOA; and also to Europe.

David Mushera is now president of the MKEMFA (Mount Kenya East Macadamia Farmers’ Association), a major TSA supplier. TSA also works actively with WAMATTA (Wakulima wa Macadamia Taita Taveta Association). USAID’s 2010-12 support program strengthened the capacity of the associations to support their members, and provided crucial training on every element of the Fairtrade International (FLO) audit processes, as well as on how to increase yields.

The two-year Trade Hub support initiative had a decisive impact on the development of the macadamia nut industry in Kenya. It re-

shaped buyer relationships and improved access to productivityenhancing technological solutions in a manner which dramatically and permanently improved earnings opportunities for Kenyan farmers.

Within two years of the program’s 2010 start-up, farmers were receiving more than double the unit price they received before selling to TSA. Currently TSA farmers reportedly receive $3,500 per hectare – 350 percent greater than their earnings prior to the Trade hub support program. At present TSA is exporting 90 tons of fair trade nuts annually to the United States – an amazing achievement.

TSA proudly reinvests at the community level: It pays a five cent per kilogram social premium fee for investment in community projects and pays the associations’ separate collection and storage fees. TSA also supports an orphanage in Nairobi with fuel and uniforms, as part of its social corporate responsibility commitment.

TSA has built on this experience to develop many more registered fair trade farmer groups of Macadamia and Cashew nuts in Kenya and Rwanda, with a reported total footprint of up to 62,000 farmers.

Direct employment has increased from 6 to 262 full time staff over the past 5 years. Today TSA’s organic certification process covers 20 percent of their farmer network, with coverage expected to reach 100% over the next 3 years.

With rising demand world-wide and dynamic market penetration opportunities under AGOA, TSA intends to become the leading exporter of Organic/Fair Trade products from East Africa. This in turn could improve the livelihoods of up to one million smallholder farmers in the next decade.