1. 5/11/20151 Summary of Key Findings J. Nyoro Director Tegemeo Institute

2. 5/11/20152 Key issues Average age of a Kenyan Farmer is currently about 60 years Land size is becoming a key factor in influencing agricultural productivity in Kenya. 30% of sample are cultivating less than 1 acre of land Per capita land cultivated is declining from 0.46 acres in 1997 to 0.39 acres in 2007 Performance of agricultural productivity is mixed with best performers as maize, tea and dairy, poor performers are coffee and sugar..mixed performance as horticulture Fertilizer consumption in Kenya has been a success case Increased diversification to include off-farm income Declining poverty levels from 56% to 37% Production and sale of domestic horticulture not keeping up with rising urban population

3. 5/11/20153 Good Performers (Productivity ) 1997200020042007 Maize overall Bags/acre 6.67.28.29.3 HPMZ11.510.413.813.3 Tea (kg/acre)3,9313,8694,2064,507 Dairy (lt/cow/yr)1,1641,0791,2981,371 Maize (40%), Tea (15%), Dairy (18%)

4. 5/11/20154 Poor Performers (Productivity) 1997200020042007 Coffee1,4591,8261,5771,285 Sugarcane22.326.126.723.9 Coffee (12%), Sugarcane (8.4%)

5. 5/11/20155 Drivers of Productivity Higher rates of seed and fertilizer adoption High quantities of fertilizer used Reduce distances to fertilizer and seed stockists from 8.1m to 3.4km and 5.6km to 3.4km Better marketing arrangements and stable output prices Improved access to credit 26% to 33% Access to motorable roads from 1.1km to 0.5km Better Access to Extension from 5.4km to 4.6km Increase in crop particularity maize Good governance of institutions

6. 5/11/20156 Summary of the Productivity Trends Increasing Maize Tea Dairy Declining Coffee Sugarcane Rising but fluctuating Horticulture (cabbages Irish potatoes)

7. 5/11/20157 Fertilizer use trends Increasing fertilizer use from about 200,000 tons in early 1990s to over 450,000 in 2007 Increasing commercial imports with declining donor imports Limited government participation in input markets High adoption and application rates in maize and other crops Decreasing fertilizer marketing margins Reasons for upsurge of fertilizer use: Stable and predictable input policy Private sector investment 10-11 importers, 500 wholesalers and over 8,000 retailers Expansion of input dealers Greater competition among importers But 2008 high global prices has raised concerns for fertilizer use

8. 5/11/20158 Potential for Reducing Fertilizer Prices  Reduce costs of supplying fertilizer to farm gate  Port costs at Mombasa  Improve rail / road infrastructure  Promote viable farm extension / service provision to raise efficiency of fertilizer use  What about input subsidies?  Modalities of undertaking input subsidies:  Targeted input voucher program less likely to undercut commercial input distribution system  Ensure that input subsidies are pro-poor by targeting the poorest farmers

9. 5/11/20159 Domestic Horticulture Production and sales of domestic horticulture is not keeping up with rapidly rising population Traditional horticulture marketing systems still dominate the marketing systems though other modern systems like supermarkets are gaining popularity Investment in traditional systems such as wholesale markets will have higher payoff in the short run that that in the modern outlets chains like supermarkets

10. 5/11/201510 Enterprise Diversification

11. 5/11/201511 Diversification of Enterprises General enterprise diversification from largely crops to more mixed business with crops, livestock, and particularly business Proportion of area allocated to fodder crops has increased thereby raising the important of livestock income as a contributor to household income Proportion of improved breeds have increased due to better marketing and more stable markets

12. 5/11/201512 Income, Poverty and Inequality Real income for low income group has increased but that of the highest income group has declined making the average income stagnate Poverty levels have reduced from 53.7% to about 37.3% More people have exited out of the poverty (20%) than has re-entered (5%) with about 30% has remain above the poverty bracket Inequality has reduced slightly

13. 5/11/201513 Poverty Dynamics 1997-2007

14. 5/11/201514 Drivers out Poverty Age and gender: Younger households and male headed households Higher land sizes and smaller households Education where primary could be necessary but not sufficient Engagement in business, salaried activities Technology adoption Access to financial services Linkages to farm institutions such as cooperatives, Access to better infrastructure (roads, electricity, piped water) Regional dimension: Central highlands compared to Western lowlands

15. 5/11/201515 Implications Make farming more attractive to young people Land consolidation will be a key determined of productivity in future Agricultural productivity better where there is mutual trust between public and private sector where markets are reliable and prices stable Price stability a key determinant of productivity Access to services such as credit, extension is a key driver to productivity Kenya should not disrupt its long term growth projectory with unsustainable short term interventions Build better trust between Public and private sectors particularly in fertilizer marketing

16. 5/11/201516 Implications cont… Put more emphasize on livestock particularly beef Productivity is necessary but should also encompass quality and to enhance competitiveness Regional trade particularly in agricultural commodities has great potential in achieving growth Encourage new opportunities where young people feel attracted such as in dairy and horticulture Emphasize on public private partnerships to build mutual trusts between operators Adopt a radical and aggressive approach is policy recommendations