City Markets, Where Brokers Dictate Prices & How We Got Here
Passenger vehicles honked incessantly as they piled into Nairobi central business district, dropping the early birds.
It was about 5am at Wakulima Market and among the early birds were smallholder vegetable sellers, also known as mama mbogas.
The traders flocked to the famous fresh produce outlet for their day’s supplies. Soon, the market was full of the vegetable sellers, handcart pushers, brokers and suppliers of produce.
Trading had started some minutes earlier after one of the brokers rang a bell.
Our team had gone to the market last week with one of the tomato suppliers, who had brought a pick-up full of the produce.
However, one would have expected that once the bell is rang, as is the tradition, the buyers would flock the tomato supplier for the produce.
But that was not the case. Like the other suppliers, he left his produce with one of the brokers, who then sold it to the vegetable sellers as he watched.
“That is how business is done here, you have to go through the brokers, who also determine the prices, sell on your behalf, deduct their charges of sometimes up to Sh300 per crate and give you the rest. It is a brokers’ paradise here,” said the tomato supplier who we cannot name for safety reasons.
We found out that the brokers’ system at Wakulima (Marikiti) is replicated in every fresh produce wholesale markets in Nairobi, including Gikomba, Muthurwa and City Park and in major towns across the country.
“These brokers are a mini-government. They dictate the cost of every commodity, when to sell, who to buy from and most importantly, they ‘own’ the customers.
In Nairobi, the county government officials have learned to co-exist with them,” said the supplier.
The system has ensured that the brokers reap the most in the value-chain, with farmers being the biggest losers.
“Hii Marikiti iko na wenyewe,” Maurice Gikonyo, not his real name, told us.
HEAVY WEIGHTS AND LIGHT WEIGHTS
The broker, who has been dealing in onions for six years, let us into the intricate world of the agents.
“You cannot come from the farm with your produce and sell here directly to customers, how will we earn our living?” he posed.
He explained that every farmer or supplier has to surrender their produce to them and wait for whatever they will be given.
Sometimes, he told us, farm produce has to be transferred to a vehicle ‘known’ by the brokers to get access into the market.
“If I sell your onions, I earn at least Sh40 per net, and you will pay another Sh40 to the county government for every net sold, plus the offloading fee,” the broker said.
Therefore, from 200 nets of onions, which is the capacity of a medium-sized truck, a farmer parts with Sh16,000, half which goes to the county government and the rest to the broker.
By selling up to five lorries in a day, Gikonyo makes a tidy sum. Comparably, a farmer will take home Sh35,000 from a lorry of onions after subtracting expenses, that include the broker’s charges.
A 10kg net of onions currently goes for Sh500.
Not all brokers in the wholesale markets are equal. There are those with the financial war-chest who can buy farm produce at a dictated price in a single file then later sell it at double the amount.
And then there are the light-weights like Gikonyo.
Light weight or not, most of the brokers are not your average trader. Some boast of owning apartments on the outskirts of Nairobi and others drive sports utility vehicles, all courtesy of their fees.
“Sasa wewe mkulima ukikuja hapa kuuza utauzia nani? Hauna hata customers,” (If you come here as a farmer, who are you going to sell to when you don’t even know the customers) quipped Gikonyo, matter of factly.
Jonathan Kiprotich, who grows potatoes and vegetables in Uasin Gishu County, and has been selling his produce at Wakulima market, has learned how to co-exist with the brokers.
“I specifically sell my produce through one broker,” he said, adding that the broker has enabled him sell his produce at good prices even when there is oversupply.
NOT FOR THE FAINT-HEARTED
However, he noted that Wakulima market is not for the faint-hearted.
“Sometimes when there is a shortage of commodity, brokers come fighting for your produce. You have to be careful lest you lose your produce,” Kiprotich warned.
While the cartel has made many farmers sell their produce at the farm level, Kiprotich said he has stuck with market brokers.
“Most of the traders who come to buy from the farm use scales they have tampered with and further offer low prices. They can weigh your produce on the farm and get 1.5 tonnes yet it is 2 tonnes, and buy at half price because they have come for it.”
A kilo of melons at the farm can go for Sh15 and at the retail market Sh25.
“I took my green maize for sale at Wakulima market last August and regretted. The county government charged me Sh5,000 offloading fee, then I had to pay the broker Sh5,000 for selling my produce, the men who were offloading Sh2,000 and I ended up losing my maize to some brokers who forcefully took on credit and disappeared,” said Stephen Njuguna, a farmer in Eldoret, noting if the brokers were not there, he would only pay the county government the fees.
Confronted with the state of affairs at Wakulima market, city government authorities appeared hapless.
Anna Othoro, the Nairobi City County Executive for Trade, denied claims that farmers are being denied freedom to access retail markets in the city.
She appeared to shift the blame to farmers, accusing them of creating the brokers themselves by allowing transporters to pick produce from their farms to take to the market.
“The problem started when farmers allowed transporters to pick produce from them and then sell to traders at the market who would then sell to retailers. As time went by, the traders turned into brokers as they insisted on taking the produce on consignment and would only pay the farmers once it is sold after deducting their commission,” said Othoro.
EMPLOY TECHNOLOGY USE
Haggai Oduori, an Assistant Research Fellow at the Tegemeo Institute of Agricultural Policy and Development, Egerton University, pointed out that whereas there are government policies aimed at protecting farmers in the market against opportunistic brokers, there are weak enforcement mechanisms that have given middlemen a leeway to operate freely.
He noted that the brokers have taken advantage of the state of affairs to help organise produce marketing through aggregation, transportation and storage.
“It would be very difficult to eliminate brokers. They are very powerful because markets should be overseen by company franchises running like commodities exchange, which therefore allow farmers to buy shares,” he said, adding the brokerage companies will have to be registered, pay taxes, provide cold storage facilities to reduce the desperation farmers experience when they take perishable produce to the market and cartels hold them at ransom because they know that there is no place to keep it, and, therefore, be held accountable for malpractices while remaining private sector.
He observed that county governments have little experience in running private sector business and are political entities focused on provision of public goods.
“Providing public goods does not translate into efficient markets. The county governments need legislation that provides heavy penalties for malpractices. Farmers also need to be more active in seeking market power.”
Further, Oduori noted that use of technology, including online marketplaces, can cushion farmers against the ravenous brokers.
“Educating consumers to directly source produce from farms would eliminate brokers. Providing accurate and timely information on produce supply, demand and prices at no cost to everyone would reduce the advantages brokers enjoy.
The Government needs to improve on that.
County government market charges
Offloading of goods:
- Below seven tonnes per trip Sh500.
- Over seven tonnes per trip Sh1,000.
- Truck offloading at market between Sh4,000- Sh10,000.
Source: NCC website