As the country’s largest employer and contributor to foreign exchange, agriculture is a critical pillar of Kenya’s society and economy, and the sector has grown steadily in recent years, despite facing a host of challenges. Although staple crops and subsistence farming are critical to maintaining food security, Kenya is also the world’s largest exporter of black tea, and the country’s horticulture and floriculture segments have seen rapid expansion in international markets.
However, the sector faces several impediments to future growth: most land in Kenya is not irrigated, leaving smallholder farmers dependent on rain-fed, low-yield agriculture, and bulk exports comprise the largest portion of agriculture revenues. Unpredictable and fluctuating weather patterns have hindered improvements to food security, and the country’s staple imports have grown considerably in recent years, while questions about the long-term viability of small-scale maize farming remain. However, plans to substantially expand national irrigation schemes, coupled with the discovery in 2013 of an enormous aquifer in the country’s hottest, driest and most food-insecure northern region, have given the sector a positive long-term outlook. This will be especially true if the private sector increases its participation in large-scale agricultural projects, as envisioned under the country’s long-term development programme, Vision 2030.
Structure & Goals
The Ministry of Agriculture, Livestock and Fisheries (MALF) oversees dozens of sub-sector and research agencies, including the State Department for Livestock, the State Department for Fisheries, the National Irrigation Board (NIB), the National Cereals and Produce Board, and the Kenya Agricultural Research Institute. Key policy goals are aligned with Vision 2030, which has identified agriculture as a crucial economic pillar, and enshrined in the Agriculture Sector Development Strategy of 2003 and the Strategy for Revitalising Agriculture, published in the same year. They also form part of the Agricultural Sector Development Strategy, running from 2010 to 2020, which incorporates Millennium Development Goals aimed at quantifiably reducing hunger and poverty by 2015. More recently, the sector’s medium-term expenditure framework for agriculture, rural and urban development, running from 2014 to 2017, targets attaining food security and proper land management by increasing productivity and value addition, while also expanding irrigation schemes across the country.
The government’s second Medium-Term Plan (MTP), covering the period 2013-17, targets the commercialisation and diversification of the agricultural sector as key facets of economic transformation. Specific goals laid out under the second MTP include putting 408,000 ha of land under irrigation, reducing fertiliser costs, establishing disease-free zones for livestock and implementing regulatory reforms to establish the Agriculture, Fisheries and Food Authority, as well as the Kenya Agricultural Research Organisation.
President Uhuru Kenyatta’s Jubilee Coalition also included a long list of agriculture policy objectives in its 2013-17 manifesto, including introducing affordable state loans to subsidise fertiliser and equipment purchases, establishing a viable national irrigation scheme that will reach 1m acres of land, doubling and diversifying food reserves from 22% to 40% of annual consumption, encouraging mechanisation and value addition, and tripling the budgetary allocation to scientific research to create a technology transfer framework aimed at enhancing productivity.
According to the “Kenya Economic Report 2013”, published by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), agriculture accounts directly for 26% of GDP and 27% indirectly, through links with service, manufacturing and distribution-related sectors. Agriculture provides 65% of the country’s exports, 18% of formal employment, 60% of employment and 80% of rural livelihoods, and the sector has been a key growth driver since independence in 1963.
Although agriculture is a year-round activity in Kenya, farmers are dependent on rain-fed agriculture, and planting seasons revolve around the so-called long rains, which occur between March and July, and the socalled short rains, which fall from September to late November. Only one-third of the total land area is agriculturally productive, including the Kenyan highlands, coastal plains and lake region, while the remainder is classified as arid and semi-arid lands (ASAL), which are characterised by low, unreliable and unevenly distributed rainfall. The primary food crops are maize, beans, cassava, potatoes, bananas and sorghum, while cash crops are dominated by tea, horticulture, coffee, tobacco and pyrethrum extract, which is used in pesticides.
Agriculture has shown small gains in recent years, expanding by 4.2% in 2012, as compared to 1.5% in 2011. According to the second MTP, the sector will grow by an average of 6.4% annually between 2013 and 2017. In 2012 marketed agricultural production rose by 3.9%, from KSh331.8bn ($3.78bn) in 2011 to KSh344.6bn ($3.93bn). However, the “Economic Survey 2014”, published by the Kenya National Bureau of Statistics (KNBS), reported that growth in the agricultural sector decelerated in 2013 to 2.9%, partly due to inadequate rainfall in some grain growing regions.
While the majority of agricultural products are consumed domestically, cash crops and exports are a vital lifeline for the sector and overall economy, representing 50% of export earnings. KIPPRA reports that these export crops faced challenges in 2012; inflation rose to 20%, compared to 4% in 2011, and currency volatility, which saw the exchange rate depreciate to a record low of KSh106.75 against the dollar, had a negative impact on key export commodities.
Budgetary allocations to the sector have averaged around 3-4% of the national budget over the past decade, despite the country having signed the Maputo Declaration in 2003, which mandates spending on agriculture of 10%, increases to productivity of a minimum of 6%, reductions in poverty and unemployment, and improvements to food security. Agriculture and rural development spending reached KSh52.96bn ($603.74m) in 2011/12, representing 6.2% of the total, before declining to KSh51.43bn ($586.3m) in 2012/13 (4.4%) and KSh47.51bn ($541.61m) in 2013/14 (4%).
The State Department for Agriculture was allocated KSh29.31bn ($334.13m) in the 2014/15 budget, according to the government’s programme-based budget statement, including KSh12.92bn ($147.3m) for crop development, KSh3.39bn ($38.65m) for agribusiness and information management, and KSh11.7bn ($133.38m) for irrigation. The department also received KSh21.36m ($243,504) for livestock resources management, while the State Department for Livestock got KSh5.53bn ($63.04m) and the State Department for Fisheries received KSh2.13bn ($24.28m.) Total funding in the three departments stands at KSh36.97bn ($421.46m), or just 3.2% of total spending. While this represents the fourth consecutive year of budgetary declines, the country’s ongoing devolution into 47 counties could explain some of the national budgetary reductions. The 2013 budget statement reports that the cost of agricultural devolution in 2014/15 is projected to hit KSh15.7bn ($178.98m); if this indicates additional funding that will be granted to the sector outside of the national budget, total agriculture spending will reach KSh52.67bn ($600.44m) in 2014/15, or 4.65% of total spending. With agriculture still comprising less than 5% of total spending, it appears unlikely that Kenya will be able to meet its targets under the Maputo Declaration in the medium term. These challenges were highlighted in the 2014/15 programme-based budget statement, which said that inadequate funding, weak information management and monitoring, the high cost of credit, and the high cost of inputs remain challenges to future growth.
KIPPRA has reported that rainfall levels were extremely low in 2012, hurting agriculture and livestock in Kenya’s north-eastern regions and along the coastal strip. At the same time, counties in the west and centre of the country recorded heavy, short-lived rainfall that led to destructive flash floods in some areas. “One of our greatest challenges is climate change,” Kinyua Kamaru, assistant director of agriculture policy at the MALF, told OBG. “We really see the impact of irregular weather on staple crops such as maize, whereby some farmers will be able to harvest maybe only every two years. At the same time, valuable cash crops like tea are also becoming increasingly vulnerable to shifting weather patterns.”
However, the MALF’s April 2013 Food Assessment Index (FAI) found that 2012’s short rains were significantly better than the long rains, with total rainfall reaching average levels in areas outside of the northern and north-eastern pastoral regions. This followed average and above-average rainfall in both of 2011’s rainy seasons; as a result of three successive good seasons in the agro-pastoral and north-western pastoral regions, and the above-average crop production across the south-eastern and coastal marginal agricultural areas, the FAI reported that the country’s food-insecure population declined from 2.1m in August 2012 to 1.1m people in February 2013.
Maize is Kenya’s most important staple crop, dominating the cereals segment, with annual production standing at 387,300 tonnes in 2012, compared to 155,000 tonnes of wheat. The average Kenyan consumes 98 kg of maize annually, according to the US-based international aid agency ACDI/VOCA, yet maize prices in Kenya are among the highest in sub-Saharan Africa, and the poorest quarter of the population spends nearly 30% of its annual income purchasing maize. Inefficient production and marketing in the maize subsector continue to contribute to poverty, while erratic weather patterns in recent months have seriously impacted production, as well as the country’s food security outlook.
Maize farmers are highly dependent on annual rains, and as a result production has been erratic over the years. In 2006, for example, 470,700 tonnes of maize were made available to the market, with this expanding to 508,800 tonnes during the bumper year of 2007, before a large-scale drought in 2009 reduced marketed production by more than half to a total of just 191,000 tonnes. Recovery since 2009 has been steady, with marketed production rising to a two-year high of 405,800 tonnes in 2011, but the fluctuations in production levels have been a headache for stakeholders.
“From a policy perspective, the biggest crop for food security is maize,” Steve New, project director at the US Agency for International Development (USAID) Kenya Agricultural Value Chain Enterprises Project, a project funded by USAID and implemented by Fintrac (a USbased agriculture consulting company), told OBG. “You find a lot of politics are involved in the maize market compared to other foods, because maize is the main staple that everyone wants to eat. Solving the problem is relatively easy, technically speaking, but in policy terms it is nearly impossible. The government wants to keep prices down for consumers, but they also have a large constituency of small-scale farmers who always want a better price. The simple answer is that stable maize supply depends on medium- and large-scale farmers, with smallholder farmers growing maize mainly for home consumption,” New added.
In its February 2014 “Food Security Snapshot”, the UN Food and Agriculture Organisation (UNFAO) noted that low and erratic rainfall had a significant impact on the sector in 2013, reporting that harvests from the 2013 short rains have been below average, with farmers along the south-eastern and coastal regions among the most affected by the delayed onset of short rains, while a dry spell in November contributed to poor crop development. In November 2013, the Tegemeo Institute, an agricultural policy think tank based out of Nakuru’s Egerton University, reported that Kenya’s maize production declined by one-third during the 2013 harvesting season, due to poor rainfall and delayed planting. The institute said that farmers harvested 28.9m, 90-kg bags of maize during the long rains season, against a projection of 43.4m bags for the 2013/14 crop season, putting pressure on the government to issue import licences, which are generally used in food security emergencies. UNFAO projected that maize production in 2014 will be 40-50% below average levels, and as much as 70% below average levels in mixed farming areas around Kitui, Makueni and Tharaka-Nithi.
Yields were reduced due to poor rainfall distribution and a lack of subsidised fertiliser, which, according to UNFAO, did not arrive in some cases until June, when crops were already too developed to benefit from its application. UNFAO expects that cereal projection declined by 11% in 2013 compared to 2012, with cereal import requirements for the 2013/14 marketing year expected to jump by 24% to reach 2.36m tonnes.
Pushing For Change
Maize has proved problematic as a staple crop, and ongoing food security challenges stemming from the country’s maize dependence remain unsolved, although stakeholders are increasingly pushing to adopt rice, potatoes and even matoke, the staple banana popular in Uganda, in an effort to diversify the sector and reduce maize dependency. However, the government’s ability to change consumer habits remains in doubt, and maize reliance is expected to remain unchanged in the long term. “Maize will only succeed as a commercial crop if there is a shift from subsistence farming to new technologies including irrigation. If government plans to tap underground water reserves succeed, production and market prices will be low, which will be a very positive thing in the long-term. Small-scale farmers need to focus on niche products and high-value cash crops rather than staple production, to meet their income expectations,” said New.
The reasonably good rainfalls of 2012 also improved the livestock sector, which contributes 42% of agricultural GDP, and 10% directly to overall GDP, according to KIPPRA. The sector also accounts for about 30% of the agricultural products that earn the country foreign exchange through the export of live animals, dairy products, hides and skins.
The segment has expanded significantly since 2006, although this is due in large part to better record-keeping and tracking systems, with the KNBS reporting the number of animals brought to slaughter by licensed abattoirs stood at just 1.91m head of cattle and calves, 4.78m head of sheep and goats, and 176,000 head of pigs in 2006. In 2012, these numbers had expanded to 2.19m, 5.92m and 235,400, respectively.
Dairy represents the most significant growth opportunity in the livestock market, and one which could easily see significant expansion in the coming years. At the same time, cattle are Kenya’s most important source of red meat, supplying 80% of the nation’s ruminant offtake for slaughter, according to the Intergovernmental Authority on Development’s Centre for Pastoral Areas and Livestock Development. More than 80% of beef consumed in Kenya is produced by pastoralists, either domestically or in neighbouring countries, and then imported on the hoof, often unofficially. However, challenges persist: the government reported that delays in operations following the merger of three formerly separate ministries have slowed regional service delivery, while the State Department of Livestock remains heavily understaffed and unable to procure necessary goods and services. This in turn has contributed to the delayed release of donor funding.
Ongoing erratic weather conditions are also expected to impact the segment, with the UNFAO reporting that depressed rainfall in 2013 had a negative impact on herds in the northern and north-eastern regions. In May 2014 the government announced it had allocated KSh600m ($6.84m) to buy starving and dying livestock from northern farmers, reporting that a total of KSh220bn ($2.51bn) had been spent on relief food distribution since February 2014. Addressing these challenges will require substantial investment in new irrigation schemes. Within the public sector, the Department of Livestock plans to carry out a number of new initiatives before 2018, including establishment of a livestock insurance scheme to protect cattle farmers.
Sugarcane production has grown modestly in recent years, and represents another area with great potential for future development. Production expanded from 4.93m tonnes in 2006 to 5.6m tonnes in 2009, reaching a six-year high of 5.7m tonnes in both 2010 and 2012, according to the KNBS. Producer prices have shown far more rapid growth, jumping from KSh202.7 ($2.31) per 100 kg in 2006 to a six-year high of KSh379.2 ($4.32) per 100 kg in 2012, representing 87% growth.
However, the sector is still unable to meet domestic demand, which has expanded from 450,000 tonnes in 2003 to 800,000 tonnes in 2013, and Kenya imported an estimated 300,000 tonnes of sugar in 2013/14, leading the government to propose a comprehensive sector-wide reform in 2013. These reforms are particularly urgent given the expiration of the Common Market for Eastern and Southern Africa’s import safeguard agreement. The deal, which was originally set to expire in April 2014 but was subsequently extended by a year, sets an import quota of 350,000 tonnes of sugar annually to protect local farmers from regional competition.
The government’s recently unveiled strategic master plan involves surveying existing mills and an assessing of the best areas to grow sugarcane in Kenya, with the wetter coastal region identified as a better location for sugarcane production, compared to the crop’s current concentration in the western and Nyanza regions. The government also plans to promote faster-growing cane varieties, which will take 12 months to mature compared to two whole years for existing cane.
With stakeholders increasingly pushing for Kenya to diversify its staple crop base and reduce maize dependence, rice has been identified as a high-potential crop, as rice imports continue to increase rapidly. Despite the significant demand for rice within the country, rice paddy production stood at just 40,300 tonnes in 2012, compared to 38,300 in 2006.
In May 2014 the MALF’s Rice Production Unit (RPU) reported that Kenya imported 85% of its rice, with 413,000 tonnes imported in 2013, while the US Department of Agriculture (USDA) estimates the country will produce just 79,000 tonnes in 2014/15, an increase of 4% over 2013/14’s 76,000 tonnes.
Data from the USDA show that rice consumption and imports have expanded significantly in recent years. Consumption is expected to more than double to 495,000 tonnes in 2014/15, compared to 237,000 tonnes in 2004/05, with the MALF reporting that per capita consumption of rice has been growing at 12% annually, compared to 4% for wheat and 1% for maize. The USDA reports that Kenya's milled rice imports are likely to increase to 475,000 tonnes in 2014/15, due in large part to population growth, urbanisation, and a corresponding increase in domestic consumption.
Increasing domestic production will be critical to improving long-term food security. Around 95% of rice is grown under irrigation in paddy schemes managed by the National Irrigation Board, with average production reaching 5.5 tonnes per ha for aromatic varieties, and 7 tonnes for non-aromatic varieties. The NIB has identified increased yields as the most efficient way to bolster domestic supply; this will require use of new pesticides and fungicides, as well as concerted efforts to increase the land currently under irrigation.
Kenya has limited arable land and rainfall compared to other African countries, despite boasting one of the most sophisticated agricultural sectors in sub-Saharan Africa. Farmers’ dependence on rain-fed agriculture has made the sector, indeed the country, extremely vulnerable to climate change and inconsistent weather patterns; for example, a devastating drought in 2009 cut maize production nearly in half, left 80% of cattle dead in some parts of the country, and cost the economy roughly $12bn, according to African Development Bank (AfDB) estimates.
This event was preceded by the El Niño floods, which destroyed $800m worth of infrastructure in 1997 and 1998, of which only $120m was replaced. The La Niña drought of 1999/2000, meanwhile, resulted in $5bn of losses to the economy. Vision 2030, the second MTP and the Jubilee Government’s manifesto all recognise the need for extensive irrigation, and aim to achieve inclusive growth across all counties via large-scale irrigation schemes that promise to bring between 404,000 ha and 1m ha under irrigation over 2018-30. Other goals include increasing water storage by 2.4bn cu metres and raising access rates for water and sanitation to 75%.
Several plans are under way to achieve these objectives. The Ministry of Environment, Water and Natural Resources has invested heavily in the Thwake Multipurpose Water Development Programme over the previous nine years, a project that aims to deliver irrigation to Kitui and Makueni, two historically impoverished counties in the south-east. The AfDB has stepped in to provide 35% of the financing for the project’s first phase, which entails the construction of a 77-metrehigh rock-fill dam that is capable of storing around 681m cu metres of water.
The Galana irrigation project represents the most ambitious scheme under development, and involves the construction of two dams on the Galana River and one on the Tana River. The five-year, KSh250bn ($2.85bn) project is expected to enable Kenya to become a maize exporter capable of producing between 40 and 50 90-kg bags of maize per acre per season, nearly double current levels. In January 2014 local newspaper The Standard reported 10,000 acres have been cleared to be used as model farms for the project, which will cover areas in Tana River County.
Officials have announced that 500,000 acres will be allocated for maize, bean and sorghum production; 200,000 acres for sugarcane; 150,000 acres for beef, game animals and fisheries; 50,000 acres for horticulture; 50,000 acres for dairy animals and value-added products; and 50,000 acres for fruit orchards.
However, reports in the local media in May 2014 indicated that the project was facing delays related to financing. Indeed, private sector participation will likely represent the most viable method through which to deliver large-scale irrigation projects in Kenya, as evidenced by the NIB issuing a tender in April 2014 for private engineers and geologists to join a panel of experts studying the scheme’s feasibility.
“The government is unlikely to successfully develop its subterranean water resources on its own. They tried five years ago, investing KSh2bn ($22.8m) in irrigation schemes, but were not able to produce efficiently. I suspect there will be opportunities over the next few years for proposals from the private sector for large-scale agriculture projects, including irrigation,” said New.
Perhaps most promisingly, the September 2013 discovery of a 250bn-cu-metre aquifer in Turkana, arguably the country’s poorest, hottest and driest county, has raised hopes that the area could see a massive northern irrigation project implemented. In February 2014 the country began drilling its first boreholes in the Lotikipi aquifer, with agriculture highlighted as a main beneficiary of the activities. Developing the Turkana aquifer, which holds enough water to supply the country for 70 years, will dramatically improve food security for the country’s northern populations.
Agriculture is expected to maintain its dominant economic position, bolstered by improvements to staple crop production, new initiatives aimed at improving food security and diversification, and a growing recognition of the private sector’s role in agricultural development. The sector has shown promising growth, with far-reaching government development strategies expected to see production and output improve in the coming years. Water discoveries have given the sector an especially positive outlook, and harnessing investment in new irrigation projects is expected to have a significant impact on future growth.
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