Consumers around the world struggled with rocketing food prices in 2022, and low-income households have been hit the hardest. Why? Because food makes up a larger part of their household expenditure and because they have fewer resources to fall back on in tough times like these. In this episode, The Low-How hears from consumers and food vendors in Kenya about how food price inflation is affecting them, and talks with Bopinc colleagues about three things that we as Bopinc are doing through our work with food producers across Africa to help ease the pain for low-income consumers.
Want to learn more?
Learn more about 2SCALE, an African incubator and accelerator program that manages a portfolio of public-private partnerships for inclusive business in agri-food sectors and industries. 2SCALE is implemented by a consortium comprising IFDC, Bopinc, and SNV.
Central Bank of Kenya inflation rate statistics are available here.
Why does food price inflation hit low-income consumers the hardest? This IADB blog breaks down why it's expensive to be poor.
Wageningen University’s NUTRIFOODS project is supporting
Explore our approach and our projects on the Bopinc website.
The Low-How is a new series of podcasts, launched by Bopinc in October 2022. In each episode, the Bopinc team will share our know-how about low-income markets. By harnessing the power of entrepreneurship across the value chain, we aim to improve the quality of life for consumers and entrepreneurs at the base of the economic pyramid.
Akoji John: You are listening to The Low-How from Bopinc, where we share our know-how about low-income markets. Bopinc works with entrepreneurs and companies to make the best products and services available where they matter the most.
Beryl Oyier: We are all about using the power of entrepreneurship to fulfill aspirations and meet the needs of people at the base of the economic pyramid.
Sumaiya Bushra: Come along with us as we seek out the right innovations, right for low-income markets.
George: Good morning, Patrick
Patrick: George! Good to see you.
George: Good to see you too.
Patrick: So I am Patrick Guyer, the Impact Measurement and Insights Lead for Bopinc. And I'm speaking with…
George: George Kariuki Njeru, senior Bop Marketing Specialist and also, Inclusive Agribusiness Advisor.
Patrick: We're gonna break down what that means here in a minute, but George, what are we talking about today in this episode?
George: Today we're talking about inflation, especially food price inflation, and about three ideas on how, um, our organization, Bopinc could, help low-income consumers to cope with this problem.
Patrick: All right, great. And I'm especially pleased to be speaking with you about this, George, because of your role in 2SCALE, which is basically the biggest project that Bopinc has a role in. So could you start by telling us a little bit more about 2SCALE?
George: All right, so 2SCALE is an inclusive agribusiness incubator and accelerator.
Patrick: I'm gonna stop you right there. So, inclusive agribusiness; Can you explain what inclusive agribusiness is?
George: Well, just from the word inclusive, it means bringing everyone on board. The women, the youth, the low-income consumers, considering every actor along a value chain of, for example, any kind of food or production, livestock or poultry, including everyone along the value chain. So, putting them and considering their input in the value chain and in the processing, that's what we mean by inclusive.
Patrick: Okay. Thanks for unpacking that. I'm sorry to cut you off. So please tell us a little more about 2SCALE.
George: 2SCALE is spelled as ‘2’, the numeral and then ‘scale. So ‘2SCALE’ stands for “Towards Sustainable Clusters in Agribusiness through Learning and Entrepreneurship”. So the learning and entrepreneurship bit is what we [Bopinc] do most. Uh, we help the actors, mostly the smallholder farmers to learn how to do their production better. So we help them to improve their capacity of production and ways of doing their business better. So, entrepreneurship - that's now linking them to the markets for their produce.
Patrick: Okay, great. And, and where is 2SCALE active?
George: 2SCALE is active in 10 African countries.
Patrick: Okay, so George, thanks again. It's really great to be speaking with you today on the Low-How, and so we are today recording in Nairobi, Kenya, and I want to start with, uh, I really get into the topic of inflation. So what, what is inflation like here in Kenya right now?
George: Well, if you look at the statistics in 2020, you know, with the advent of, uh, the Coronavirus pandemic, we were at about, I think 5.6 and then 2021, we rose to around 6%. Right now we are at 9.6% according to the latest, uh, statistics from the Central Bank of Kenya.
Patrick: Wow. So that means, for example, that if a one kilogram bag of maize flour costs about 90 shillings a year ago, that today it would be about 99, almost a hundred shillings.
George: Sure, yeah.
Patrick: Okay. So what about wages? Have wages for the typical Kenyan worker gone up at the same pace?
George: Unfortunately, not.
Patrick: Together with my colleague, Godfrey Katiambo, Impact Officer at Bopinc, we visited Nairobi's Kangemi Market to talk to vendors and shoppers about how food price inflation is affecting them and how they're coping with it.
Godfrey: We are right at the heart of Kangemi food market, on the west side of Nairobi. This is, basically a fresh, produce market, fresh from the farm. Most of the stuff, as you can see, is vegetables, the potatoes, the onions. So this market is mainly for fresh groceries, and fresh produce, but we also have grains. As we get deeper in the market, there are grains and all other kinds of stuff that people just buy on a daily or regular basis.
Patrick: How much is a basket of potatoes like this?
Vendor: Like 600 [Kenyan Shillings].
Patrick: So, half a year ago, how much was it?
Vendor: It was 400.
Patrick: 400 and now it's 600.
Vendor: Now it's 600. Last four years ago was 300.
Patrick: Thank you very much.
Patrick: So you're shopping for onions today?
Patrick: And onions are more expensive than they used to be?
Customer: More expensive. Yeah. Life is too hard. You buy less. You cannot buy much. Too much. Yeah.
Patrick: Thank you.
Vendor: [Speaking Swahili]
Godfrey: She says, yes, she sells beans, and the price has gone up, and, uh, she's struggling actually to sell beans.
Patrick: Mm. Yeah. So as the prices go up, are people buying less?
Godfrey: She says she's, buying less, the prices even from her sources are very high. So she's getting very little profit now.
Patrick: Yeah. Thank you very much.
Customer: We are shopping for oranges and the oranges we used to buy for 5 for 10 shillings. We are now buying five oranges at 20 shillings, 30 shillings. It has really affected us because our salaries have not increased. We don't get any support from the government. So the common mwananchi is so much affected.
Patrick: And do you find you buy different things also? Or are you just buying less?
Customer: We just buy one. There's no variety.
Patrick: So less, less variety in your diet now
Customer: Yeah, we can't afford.
Patrick: Thank you.
Patrick: So George, I'm struck by just how difficult a moment this is for a lot of the people that we spoke to, and what they told us echoes what we've learned in a small-scale consumer insights study that we recently did, with low-income consumers in Kenya.
George: What were those results like?
Patrick: Well, about 85% of our respondents told us that they were very concerned about the rising price of food, and about half of our respondents told us that they were coping, um, by purchasing, for example, lower quality foods or trying to find alternatives for the kinds of foods they usually buy.
George: That's true. Um, even in addition, people are reducing the number of meals that they're taking in a day. So if you're doing three meals, you reduce to one or two just to cope with the situation.
Patrick: Wow. And I'm curious, you have a perspective on the business side of this too. What about, uh, some of the businesses that you engage with in 2SCALE? How are businesses coping with higher food cost inflation?
George: I think that's what we would call shrinkflation.
Patrick: Shrinkflation. Okay.
George: So either way, uh, the consumer is pressed, the needs are still there, but the business is pushing the higher costs, the increased cost, to the consumer. So the consumer is paying more, but generally getting less.
Patrick: Right. So shrinkflation meaning that literally the size of the serving or the package is getting a little bit smaller, A little bit smaller, maybe you can't quite see it at first, but it does make a difference.
Patrick: Yep. Okay. And, and so from your perspective, George, what makes the high inflation so dangerous for low-income or base-of-the-pyramid consumers?
George: Well, uh, there are a few things about that. One is that the low-income consumer households spend a higher share of their income on food. So that means they are most directly exposed to rising food prices and they cannot run away from it. Uh, second, the low-income consumers generally don't have many reserves of savings. Remember this is post pandemic, all the money has been used. Some of them lost their jobs or their small businesses, uh, sunk with the pandemic. So the higher food prices have hit them so badly right now. And then on the third, we cannot forget that we are just coming out of the Covid Pandemic. We are not out of the woods yet. And just last week, uh, the Ministry of Health in Kenya announced that we have the seventh wave, so that means we are back to a high alert about the Covid pandemic. So this post-Covid and loss of jobs and sources of income has created an incredible hardship for most of these household families.
Patrick: So George, we were talking earlier about what we as Bopinc do and how we can use our projects to try to be a helpful force through our work with companies. So through our projects, through our work with companies, uh, what we're trying to do fundamentally is to bring the best products to market where they matter the most. So, with that angle in mind, what are some of the things that we could do to help as Bopinc, to help low-income consumers cope with rising food prices?
George: From my position, I see at least around three things. So the first is to help companies. The companies, like the companies we work with, most of them are, uh, agribusiness SMEs. Some are aggregating food products, others are processors that take the food to their final consumer. So we can help them to reduce their production costs by making better use of the capacities that they already have.
Patrick: So that sounds really interesting. Now, what about the next one?
George: The second one, I think, would be controlling the costs of inputs through practical stuff like composting or growing inputs. Some of the inputs by themselves, things like maize, for example, if it's a processor that is dealing with coming up with a maize meal, instead of buying all the maize from other farmers, you could consider your own farm and planting some of that maize to reduce the amount you're spending on buying from other, uh, producers.
Patrick: Okay. We'll hear more about that in a minute or two. And then what about number three?
George: Number three, um, substituting inputs, for example. Most of the wheat is imported in Kenya. So, we could consider importing wheat with lower costs and, uh, including more nutritious African crops like sorghum, fonio, casava, and the like.
[00:11:58] You are listening to the Low-How from Bopinc.
Patrick: So George, please tell us a little bit more about idea number one. So that was, uh, helping companies reduce their production costs by making better use of the capacities they already have.
George: Okay, so here we are talking mostly about the processors. So the processors could grow the existing talent, especially in production. Can I give you a practical example?
George: So one of the partners that we have for the 2SCALE project is an organization that is using African indigenous vegetables to come up with nutritious food. Uh, in this case, it's a porridge flour that is nutritious. It has fruits. It has staple crops like casava and sorghum. So what happens is the market price of getting good talent for production is quite expensive because you're looking at a graduate who maybe has a Bachelor of Science in nutrition or food production. But seeing that the leaders or the directors of this SME have already trained themselves or gathered knowledge from consultants, they already know how to do the production. So, some of the casual workers that they use at the factory to come up to mill, you know, to dry, they use solar drying, so to dry and sort the pumpkins and the cassava, and then mill them. These people can be trained a little bit on what needs to be done by an expert so that the organization does not have to hire an expert to be an internal resource.
But this person who is at the low level of production can be trained and become better. So the organization will save so much money by using this talent, growing the talent within other than hiring and more expensive talent so that that way they'll save some money for themselves.
Patrick: Okay, great. Now let's go to idea number two about controlling input costs.
George: So for this one, let's actually go to a colleague, uh, Biljana Dabo in West Africa, who can tell us more about an example from Ivory Coast.
Patrick: We spoke to our colleague Biljana Dabo, a Marketing Specialist within the 2SCALE program. Recently, Biljana has been working with poultry producers in Ivory Coast who are struggling with surging costs of maize, which is an important source of feed for their chickens.
I asked Biljana what 2SCALE is doing to help poultry producers cope with rising maize prices so that their products can remain affordable for low-income consumers.
Biljana: So, first, was to make sure that farmers can have access to maize, but affordable maize. So, we had like several collaborations with input dealers to make sure that the farmers can have access to, I will say, feed with a better yield.
So they can have… a return on investment when they're producing. Then, uh, the second one was to make sure that in this farmer's organisation, they can have like some land to make sure that they can add their own maize, they can produce, so they're not depending on other farmers and on the market price because you know when there is not enough production, the price tends to increase. And the third one is what we call compost. So fertilizer… was very rare in the market and very expensive, like price doubled. So, we did this partnership with this SME, to make sure they can teach these farmers how to do compost and to use like this huge machine that tries to convert the, I will say the waste from the poultry into fertilizer in one month.
So the main goal was to use this new fertilizer to grow maize for this farmers in the organisation. So, all these activities are several objectives. One is to reduce the input price and to make sure that the chicken in the end remains quite affordable for low-income consumers, but also for the population. And second to make sure that, uh, the farmers can have like a profitable activity.
Patrick: And George, what about the last of the three, three potential solutions that you mentioned?
George: Yeah, so the last one I mentioned about.. a cheaper wheat flour import. So, we use a lot of wheat and maize flour in our cuisine. So, if you look at the, especially the East African contexts, a lot of chapatis, ugali, those are the main meals.
Uh, but we have other crops, indigenous crops, like cassava. We have sorghum, we have tef in Ethiopia, we have cowpeas, and we can grow that well across the continent. So these foods can be used as part of the normal meals. So, for example, instead of - and we'd had that in one of our 2SCALE partnerships - instead of using only maize to make the maize flour for ugali, we had a combination of maize and cassava flour, so that one was reducing the costs of buying maize, which is more expensive than cassava. And the final meal was still nutritious because it was 50% casava and 50% maize.
Patrick: Yeah. And isn't it, isn't it true also that many of those crops that you mentioned, African crops are actually a little more resilient to climate change?
George: Yes, they are. For example, cassava does not need so much rain like its counterpart, maize. Even sorghum, for example, we have one of our partnerships that, uh, aggregates sorghum in the, Tharaka-Nithi county of Kenya. The farmers say that we only need rain for about two weeks and we are, we are done. We’re going to have a bumper harvest.
So like, for example, the rains that just started about two weeks ago, we are expecting a bumper harvest come around January or February, of sorghum.
Patrick: And, and what about taste? Uh, do these, do these things taste as good as some of these alternatives?
George: Well, yeah, they do. They taste good. Uh, depends on how you cook.
Patrick: Yeah. I'm sure in your hands they would turn out great. So let me get this straight. So it sounds like there are, uh, indigenous ingredients that food producers could use that cost less, that are really local to some of the African climates. Um, they're nutritious, they taste good, and we could support local producers at the same time. Is that all true?
George: Yeah, that's true.
Patrick: So that sounds like a great option for helping low-income consumers cope with our food price. George, thank you so much. It's been a pleasure, uh, talking with you today about what we can do about food price inflation as Bopinc.
George: Yeah. Thanks for having me. It was really great to talk about what we are doing, in Bopinc and 2SCALE, which is, uh, one of the largest projects for incubation and acceleration. We are looking at having not just affordable foods, but also nutritious and safe foods, for consumers to eat.
Patrick: A great mission. Absolutely. So George, thank you again. And we also want to be sure to thank Biljana Dabo, Godfrey Katiambo and the Nairobi residents who kindly took time to speak to us for their contributions to this episode. We'll talk to you next time.