Boasting some of the highest-quality horticultural crops in Africa, Kenya’s economy is heavily dependent on export earnings from a host of cash crops, including black tea, coffee, horticulture and floriculture. Exports have pointed to a strong performance, and recent private sector investment in cargo and agricultural processing facilities at Nairobi’s Jomo Kenyatta International Airport (JKIA) are expected to continue the sector’s growth and expansion, while new research initiatives could also have a major impact on productivity and yields.


At the same time, changing EU standards have created both serious challenges and new opportunities for Kenya’s agricultural exports. New regulations concerning the maximum residue level (MRL) in pesticides have affected the industry, particularly smallholder farmers, of late, while the high-potential dairy segment has been unable to expand regionally, due in large part to issues with quality control and labelling standards. However, increased private sector involvement in farmer training and traceability measures, coupled with a planned regulatory overhaul, should see the sector mature and expand steadily into 2015 and beyond.

Agriculture represents the largest foreign export earner, comprising 65% of total exports, according to the Kenya Institute for Public Policy Research and Analysis, with the horticulture, tea and coffee markets showing a steady rate of expansion over the past decade. High-quality soil and equatorial weather have enabled the country to become a major global producer of black tea, vegetables and freshly cut flowers, driven largely by smallholder farmers, a unique feat in sub-Saharan Africa. Nairobi has one of Africa’s most sophisticated export processing facilities at JKIA, offering exporters timely access to international markets. These export activities will most certainly expand with the introduction of the electronic single-window system in 2014 (see Transport chapter), which will facilitate intra-regional trade and improve cargo processing times considerably. At the same time, Swissport Kenya, one of five cargo handling operators at JKIA, recently completed a KSh1bn ($11.4m) expansion project enabling the company to handle 70,000 tonnes of additional cargo, while Siginon Freight is constructing a KSh900m ($10.26m) cargo handling facility, due for completion in 2015. The centre will include a perishable produce handling facility to meet growing international demand. “The real cost of supplying agriculture markets from Africa is compliance at the farmer level and dispatch levels,” Steve New, project director at the US Agency for International Development’s (USAID) Kenya Agriculture Value Chain Enterprises project, told OBG. “For exports you need metal detectors, refrigeration, controlled atmospheric packaging and barcoding. Kenya has already invested hundreds of millions of dollars in these services at the airport. If you are in Ghana and you want to compete, you can’t, because that investment has already been made here at a lower cost.”

Room For Growth

Kenya’s downstream agricultural sector has several of the ingredients necessary for strong growth over the medium and long term. The potential for increasing value addition to the country’s large volumes of agricultural exports is significant, particularly giving the scale of room for expansion and the fact that the African Development Bank estimates that over 90% of the country’s exports are in raw or semi-processed form.

Currently, as is the case in many frontier markets throughout Africa, Kenya’s agricultural sector is characterised by a large number of smallholder farmers who are unable to leverage economies of scale and have limited access to markets and inputs. As a result, by expanding room for consolidation in the upstream agricultural sector, the potential for higher revenues and stronger output is significant. The government has responded with plans to roll out large-scale irrigation and fertiliser programmes, in addition to a planned land policy review, which is expected to improve utilisation.

Seeds & Plants

In addition, research agencies have introduced high-yield seeds and plants that could dramatically boost production. The Tea Research Foundation of Kenya, for example, has developed over 1000 improved clone seeds, with 50 currently in use, and 13 capable of yielding 5000-8000 kg of tea per ha annually, making Kenya the world’s most productive tea-growing country worldwide. The Kenya Agricultural Research Institute (KARI), meanwhile, introduced the high-yield Brazil and KP14 passion fruit varieties, which are expected to boost productivity by up to 49%, in 2012. Developments at the Coffee Research Foundation saw introduction of the Batian pest-resistant bean in 2010, while KARI’s introduction of high-yield banana plants saw the area under banana cultivation nearly double between 1996 and 2006 to 82,000 ha.

Other productivity and value-added initiatives will see the sector expand considerably, although strategic planning will be necessary to maximise the sector’s full potential. For example, the government plans to establish an agro-processing facility in each of its 47 counties and revive defunct facilities including Naivasha’s Pan Africa Vegetables and Kabazi’s tomato-processing factory in Subukia.

The volume of inputs available for the country’s downstream agricultural activities makes Kenya an attractive location for producing a wide range of consumer products and foodstuffs, provided that factories are judiciously located and investment is channelled into productive areas. “Kenya can be a world leader in tropical juice production, but there is overcapacity in processing. The factories need to be close to the fruit crops,” Augusta Abate, the assistant programme representative at the UN Food and Agricultural Organisation, told OBG.


Despite increased efforts to expand agricultural exports, declining coffee production, falling world tea prices and reduced horticulture export values have been exacerbated by new EU compliance standards and lack of technological uptake. This has placed renewed pressure on the government and the private sector to roll out innovative schemes and policies in conjunction with KARI.

Kenya’s dairy industry, for example, is already among the most sophisticated in Africa, accounting for 14% of agricultural GDP and 6-8% of the country’s total GDP. According to USAID, the industry generates an estimated 1m jobs at the farm level, 500,000 in direct waged employment and another 750,000 jobs in support services, producing 5bn litres of milk and milk products annually. “There are a lot of opportunities for value addition in dairy,” said Abate. “Kenya is self-sufficient in milk production, but there is even more potential in the regional and export market.” To take advantage of that, Abate says, Kenya could improve traceable quality, which in turn would allow production to expand into neighbouring countries.

New regulations rolled out by the EU, Kenya’s main trade partner, for pesticide levels have also temporarily impacted export revenues, following changes in 2012 to the levels of dimethoate that could be allowed on fruits and vegetables. Kenya’s industrial farmers were generally able to sidestep the issue, given the prevalence of biological pest management systems, but smallholder farmers have traditionally used the pesticide given the lack of a readily available and affordable alternative chemical treatment. As a result, the new laws slowed sales – in January 2013, according to media reports, around a fifth of the country’s vegetable exports were not allowed into the EU due to dimethoate residue.

Smallholder Equipments 

However, Kenya has enacted a number of initiatives to ensure that the impact from the new regulations is only temporary. In February 2013, the Fresh Produce Exporters Association of Kenya (FPEAK) reported that only 1.6% of samples of Kenyan bean and mange tout exports had higher than permitted residue levels – a significant reduction. Pressure from FPEAK, along with similar concerns raised by other countries, prompted the Europe-Africa-Caribbean-Pacific (ACP) Liaison Committee, which helps oversee trade-related issues with the EU’s ACP partners, to pledge assistance to producers to help address the issue. In April 2013 the Kenya Plant Health Inspectorate Service also announced an action plan to provide training on pesticide use, a stronger monitoring plan and an enforcement programme.

Producing For New Markets

As in other export sectors, the new regulations have also encouraged producers to look for new markets abroad for sales. FPEAK has sought to expand export destinations into Africa, Eastern Europe and the US, with some success. In May 2013, for example, the US Animal and Plant Health Inspection Service announced that the US was lifting a 13-year ban on French and runner beans from Kenya, thanks to improvements in both the packaging and processing of the produce.