The CBK Agriculture Sector Survey has revealed a sharp rise in the number of farmers relying on buyers of farm produce for financing, highlighting the growing importance of value-chain lending in Kenya’s agricultural sector.
According to the survey, 45 per cent of farmers who borrowed money to support farming activities in May 2026 received financing from produce buyers, up from 24 per cent in March.
The increase came during the long rains season, when farmers typically require more capital to purchase seeds, fertiliser, pesticides and labour.
The findings suggest that buyers are increasingly stepping beyond their traditional role of purchasing crops and are becoming a major source of credit for farmers. Through value-chain financing arrangements, buyers provide cash advances, farm inputs or other support before harvest in exchange for agreements to supply produce once crops are ready for the market.
The survey shows that favourable weather conditions during the March-to-May rainy season encouraged stronger engagement between farmers and off-takers. Improved rainfall boosted expectations of better harvests, giving buyers greater confidence to invest in production and secure future supplies.
“The favourable weather conditions and improved outlook for agricultural production supported increased engagement between farmers and buyers,” CBK said in the survey.
The trend marks a shift in how many farmers are financing their operations. Traditionally, farmers have relied on banks, SACCOs, microfinance institutions and digital lenders for credit. However, access to formal financing remains a challenge for many small-scale farmers due to strict lending requirements, lack of collateral and lengthy approval processes.
Buyer-linked financing is increasingly being viewed as a practical alternative because it is often easier to access and is directly tied to agricultural production. In many cases, farmers receive the support they need at the beginning of the season and repay the financing through produce deliveries after harvest.
The survey also showed that digital lenders remained a key source of financing, accounting for 30 per cent of borrowing among farmers in May. SACCOs financed 23 per cent of borrowers, while other formal lenders played a smaller role during the period.
Most farmers used the borrowed funds to purchase agricultural inputs, including seeds, fertiliser and crop protection products. Others used the money to cover labour costs, land preparation and other operational expenses associated with planting and crop management.
The growing popularity of value-chain financing reflects broader changes taking place in Kenya’s agricultural sector, where financing is becoming more integrated with production and marketing. Buyers are increasingly investing in farmers long before harvest, helping strengthen supply chains while reducing uncertainty over future produce availability.
For farmers, the arrangement provides access to much-needed capital and a guaranteed market. For buyers, it offers an opportunity to secure supplies in advance amid rising competition for quality agricultural produce.
With agriculture remaining one of the country’s biggest employers and a key contributor to economic growth, the survey suggests that value-chain financing could play an even larger role in supporting production and improving access to credit for farmers in the coming years.
Leave a comment