A loader hangs onto a vehicle at Marikiti market in Nairobi with maize from Kirinyaga county. A cabal of powerful middlemen has taken over the urban food supply chain.
| Evans Habil | Nation Media GroupNews
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Inside the world of brokers who set the prices of food
What you need to know:
- Middlemen dictate what the farmer gets; what the corrupt police and county officer manning roadblocks grabs, what wholesale and retail prices will be and also keeps law and order in county government markets.
A cabal of powerful middlemen has taken over the urban food supply chain, sinking small-scale farmers into deeper poverty while raising the cost of groceries beyond the reach of poor households.
The middlemen known as brokers, operate like a pseudo government by imposing taxes on hapless farmers and traders and end up pocketing millions of shillings daily through coercion and intimidation.
So powerful are they that President William Ruto, in his August 2, 2023 public address while launching distribution of subsidised fertiliser, said only cutting them out would guarantee success of the programme.
"By cutting out brokers, middlemen and other intermediaries, we stand to eradicate corruption and inefficiencies...to concentrate maximum benefits to the farmer," said the president.
Deputy President Rigathi Gachagua refers to them as “powerful with the ability to execute State capture and stifle windows of opportunity for farmers”.
The DP says part of his work is to structure the markets so that farmers’ earnings can go up by diverting what goes to brokers to farmers.
Deputy President Rigathi Gachagua addresses mourners during the burial of Mary Wangeci, the mother of Bishop Daniel Kabono at Kagonye Secondary School in Nyeri County on January 21, 2023. He said that the war against cartels in the coffee, tea, and milk sectors is on.
“By the time we are through battling these cartels, we will have brought in value addition so as to take the raw materials that the brokers trade in…The farmer will be empowered to be dealing one on one with the market and with manufactured goods instead of the raw materials,” said Mr Gachagua in Murang’a on July 21.
Eradication of brokers featured prominently in the public fora that President Ruto held with voters in the run up to August 9 General Elections, where he came up with economic charters towards creating wealth for farmers among other entrepreneurs.
The charters are yet to be implemented, and the urbanites continue to wonder why on chanced upcountry travels they are sometimes given crop harvests for free owing to abundance, but upon returning to their city homes find the same going for a life’s worth.
For instance, regardless of the weather on any given day of the year, a piece of high quality green maize has always sold for a maximum of Sh18 at the farm gate, but reaches the consumer in urban centres for a minimum of Sh35.
The ones hawked as boiled and roasted are of lower grades and goes at a maximum of Sh10 per piece at the farm gate, but reaching the consumer at a minimum of Sh20.
The ‘brokers’ government’ has structures, network that cuts all local markets and own law complete with punishment provisions for breach of practices that make them a force that controls pricing.
Workers offload watermelons sourced from Oloitoktok in Elburgon town, Nakuru County. Most of the produce is brought in by brokers.
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Middlemen dictate what the farmer gets; what the corrupt police and county officer manning roadblocks grabs, what wholesale and retail prices will be and also keeps law and order in county government markets.
So organised are brokers that they manipulate pricing right from the farm gate all the way to the retail outlet and allocate profit margins for all in the value chain but careful to remain with the biggest pie. In a month-long study into how the broker’s government operates, the Nation sent out its journalists to execute several buys from the farm gate and transport it on road and sell it off in Nairobi’s Marikiti market.
This saw the journalists buy green maize from Kirinyaga and Embu counties as well as onions from Nyeri county and the pattern of imperfection and distortion was similar since the well-knit network of brokers operate with a synchronised script used in all major markets.
“Brokers countrywide operate a pricing cartel in all units of measure. Be it a litre, a kilogramme, a piece…at the end tail of the market, you will find that the brokers play around with farm gate price and determine what the cartels will gain,” said Mr David Makui, a broker based in Kirinyaga county.
They are so vigilant and in absolute grip of the agricultural sector such that no bulk buyer can make contact with the farmer without their input.
When we approached Mr Makui to connect us to a green maize farmer, he ensured that he was the one who bought from Ms Grace Wangechi and then sold it to us.
When the deal was done, of the 1, 000 pieces that we bought, Mr Makui bought them off at Sh9 per piece and sold it to us at Sh13 hence making Sh6 per piece.
“That is what happens…The farmer sold her produce to me in a willing buyer willing seller basis and you also procured from me in similar agreement. The road to the market will see you giving out Sh1, 000 in five roadblocks to county and police officers,” he said.
The brokers neither own produce nor stalls, but they run the show in the market.
In what defines the prestigious place of the broker who gets his cash as 100 per cent profit and not subject to taxation, he earned Sh6,000 from the deal while Ms Wangechi says minus cost of production, she made a net profit of Sh2,000 from the Sh9,000 she received.
“This is because my cost of crop husbandry for the past three months, labour, diesel to pump water for irrigation and miscellaneous amounted to Sh7,000,” she lamented.
She said her earnings would sound dismal for the three months wait which is equivalent to Sh22 per day while the broker in less than one hour of linking me to buyers had pocketed Sh6, 000.
Ms Wangechi told Nation that “that is how we live since we cannot venture out on our own to the big markets…the brokers links us to the markets and they determine the prices dependent on supply and demand”.
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The pickup truck that was contracted to ferry the maize from Giagatika village in Kirinyaga to Marikiti in Nairobi- about 112 kilometres- charges Sh9,000.
When we attempted buying maize without the input of the brokers at Kirinyaga county’s Kiangungu village and tomatoes in Kamweli in Embu county; goons dispatched by brokers threatened to punish the farmers, forcing them to turn us away.
“It is a law that bulk buyers of farm produce must be accompanied by brokers. These brokers call the shots around these places and they have powers to summon police officers and county government enforcement personnel to come and chase you away or even arrest you,” said Mr Richard Kinyua at Kiangungu village.
At Marikiti market, vehicles ferrying the produce get parking only after paying ‘market security’ and even the rates supposed to go to the county government goes to individuals wearing no uniform and with no identifications cards. The same cartels operate in other major markets, Nation visited in Kiambu’s Witeithie, Githurai and Ruiru markets Nyeri’s Karatina and Nairobi’s Muthurwa market.
“There are brokers for every produce and they are the ones who take over selling. Unless you have a broker in charge of your consignment, no trader will be allowed to buy from you,” said Ernest Ndung’u, a broker at the market.
Mr Martin Mungai, who is one of the major brokers at the market says “the market forces have to be controlled so as to give everyone in the value chain a living”.
He says mostly what applies is a Sh20 margin for the unit of measure where all have to scramble for the ratio.
Mungai agrees that sometimes, in trying to consolidate the gain, actors in the chain play dirty including corrupting the weights and measures, dissemination of propaganda from the markets down to the farm gate so as to influence buying prices as well as prepare end users of price shocks.
“We can evaluate that a certain commodity produced locally has competition from neighbouring countries and to create a level playing ground, we ask the foreign traders about their prices and we do our calculations, generate our local prices and communicate them down to the farm gate,” he said.
In the market, the broker who will take charge of sales will take one shilling per piece hence gaining Sh1,000, while the unorthodox security cartel—that is whispered to be Mungiki—takes Sh200, a county official says. “You are supposed to pay Sh1,500 and get a receipt but you can opt to give me Sh800 as local arrangement without receipt.”
This is despite Nairobi governor Mr Johnson Sakaja maintaining that he has since partnered with digital platforms to go cashless on revenue collection. “It is surprising that such acts continue to undermine our targets of collecting local revenues. But we have made strides where in the first nine months of my tenure as governor, we had since collected Sh9 billion as local revenue compared to my predecessor’s previous year performance of Sh8 billion in 12 months,” he said.
Mr Sakaja said “all forms of proven malpractices especially those that are tailored to steal money meant for improving quality of life for Nairobians and the country in general will be severely punished,” he said.
He said the county has come up with the idea of establishing the Nairobi Revenue Authority (NRA) to help it seal such hemorrhage of revenues but it appears market gangs are deeply rooted to tackle.
Once in the markets and strategically placed, the brokers know each other by face and name.
Their communication is by twinkle of an eye, pointing of noses and twitching of mouths. As light travels, prices are determined and communicated.
“By the look of their status, on face value, these brokers assume a kind of naivety... But it is deceptive. They are the market power and they are the engines of sales. If they decide you will suffer loss in any market, it will be so and every act they execute is meant to keep themselves in the markets longer,” said Mr James Nduru, the chairman of Central region transporters association.
The unwritten law in this agribusiness is that "the farmer must never deal with the market directly and if it is a must, then before leaving the farm gate must pay five percent of the volume cost.
