1. Facilitating Equitable Agricultural Development in sub-Saharan Africa
The Case of Kenya

2. Contents Introduction Objectives, TORs and methodology
Agriculture and development: The Linkages
The case of Kenya
Structure of agriculture in Kenya
Evolution of Policies
Key stakeholders
Private sector in Agriculture
Conclusions and recommendations

3. Introduction
In most African countries, agriculture accounts fro almost 1/3 of GDP and per cent of employment
Essential for manufacturing (raw materials) and an important source of export revenue
Directly linked to economic growth and poverty alleviation in most of SSA
However, agro-pessism in the last 3 decades led to underdevelopment and neglect of the sector in most SSA
Identified by WDR 2008, IFAD 2011 as important sectors for poverty reduction in Afrrica

4. Objectives, TORs and Methodology
Analyse the enabling environment for inclusive agricultural development in Kenya
Trends in agricultural sector investments, expenditure and development
Policy, legal and regulatory frameworks in the sector
Relationships existing between policy makers and key stakeholders
Private sector in Agriculture and smallholders
Recommendations for policy

5. Methodology Literature review
Secondary data from MoA, Mot and several parastatals
Primary data from
-FGDs with farmer organizations,
Key informants from agricultural sector
Consultations with FNRG

6. Agricultural Development: Positive Linkages
Food Productivity
Food security
Control rising prices food
Employment and incomes
Farm and off farm employment and services
Incomes through participation in domestic and export markets
Raw materials for manufacturing
Employment in manufacturing
Value added and increased competitiveness in world markets
Multiplier effects (services)

7. Agriculture and development: negative linkages
Falling world prices acts as a dis-incentive for production and exports
Trade liberalization and SAPs led to collapse of many sectors
Bio-fuels distorting food prices
Subsidies in developed countries leading to unfair competition
WTO rules and regulations – standards, tariffs
Low expenditure and investments in agriculture

8. Agricultural Sector in Kenya: An overview
contributes to 23 per cent of GDP, 65 per cent of total exports and 70 per cent of employment
Economic growth is highly correlated with Agricultural growth (figure 1.1)
More than 80 per cent of total agricultural production is done by low income smallholders with farms ranging from 0.25 to 2 acres
Consists of 6 sub-sectors – Livestock, food crops, industrial crops horticulture, fisheries and forestry
Horticulture contributes 33 per cent of GDP and 38 per cent of export earnings

9. Agricultural systems, production and trade
16 per cent arable land in medium to high potential areas
Land fragmentation is too high, about 4 million farms are less than an acre
Small holders re about 6million with farm sizes ranging between 0.25 to 3 ha
Major crops cash crops include, horticulture, tea, coffee, sugarcane and cotton
Major food crops include maize and rice

10. Trends in productivity
General low productivity per ha for most crops except tea and horticulture
Decreasing area under production for key crops such as cotton, sugar, coffee which are directly linked to poverty alleviation
Increased area under production for maize but decreasing yields 9productivity)
Low technology adoption and poor farming methods

11. Evolution of policies
Pre-independence policies were mainly colonial, Africans were not allowed to grow any cash crops but they provided labor for the British farmers
Post independence – 1960’s to 70’s
government intervention and support in production and marketing
Smallholders organized in cooperatives
Rapid growth in agriculture (6 per cent)

12. Evolution of policies cont’d
Liberalization era 1980’s to 90’s
Liberalization as a conditionality for Aid
SAPs saw abolition of marketing boards and cooperatives
Abolition of government support in production and marketing
Declining growth in the sector to -4.1 percent at tis lowest
Post liberalization policies
Emphasis on the need to revitalize agriculture
Increased agricultural spending and an increase in agricultural growth

13. Stakeholders Government institutions Parastatals for various crops
Ministries – Ministry of Agriculture, Ministry of Regional Development Authorities, ministry of cooperative Development and Marketing, ministry of fisheries Development and ministry of Livestock Development
Parastatals for various crops
Producer organizations – umbrella organizations for farmers
NGOs and civil society
Research institutions
Donor Agencies and ODAs,

14. Investments, expenditure and resource allocation
Government expenditure on agriculture was 10 per cent of total budget at independence currently stands at 6.4 per cent
Trends indicate a strong correlation between expenditure in agriculture and agricultural growth
Low investments in technology, irrigation or value added
Recurrent expenditure is very high for most ASMs – 80 per cent and 20 per cent development expenditure
Expenditure in specific sub-sectors also shows glaring neglect of sectors mainly due to political reasons ( such as cotton, sugar, coffee)
Donor funding based on donor’s priorities and has been increasing in the last 5 years
Low private sector investments in the sector and Low FDI except for horticulture

15. Challenges Productivity – Poor access to inputs
Low technology adoption
High transaction costs
Dependence on rain fed agriculture
Poor infrastructure
Lack of organized marketing systems often leading to exploitation of smallholders by middlemen
Poor Access to credit and financing

16. Challenges contd’ Policy related challenges
Enabling environment and trade policy frameworks not suitable for investments in the sector
Lack of participation of and sufficient representation of farmers in policy making
Cheap imports and cartelization of some subsectors – maize and sugar act as a dis-incentive for production – maize and sugar scandals
Land policy and land tenure systems to uneconomical units
Insufficient investments and budgetary allocation in the sector
Mismanagement of parastatals

17. Private Sector in Agriculture
Typology –
farmers, middlemen, Processors and foreign investors
Supporting institutions – financial and credit, capacity building, marketing and information support
Agro –processing and value added is still low
FDI predominantly large farms –dominion and horticulture sector (employment, vs competition)
Middlemen – exploitative to smallholders during surplus periods

18. Constraints for private sector development in agriculture
Macro-economic environment – inflation, high interest rates and high taxes
High cost of energy
High cost of labour
Poor infrastructure
Policy and regulatory environment not conducive for smallholders
Lack of clear regulatory measures to protect smallholders against exploitation by middlemen
Regional Trade policies that are not harmonized and therefore hamper exports

19. Smallholders in Agriculture and their constraints
Constitute 80 per cent of total agricultural output
Lack of technology and poor technology absorption
High cost of inputs
Lack of information and knowledge en better agricultural practices
Lack of proper marketing channels hence exploitation by middlemen
Poor access to credit
Poor infrastructure especially rural access roads
Cheap imports –sugar, maize, rice and cotton sectors (dis-incentive for production)
Lack of proper representation in policy decisions –lobbying is mostly done by large farmers eg wheat sector

20. Conclusions Major highlights
Poor policy, legal and regulatory frameworks that hamper development of the sector
Poor resource allocation and investments in the sector by the government (poor planning)
Low FDI inflows
Low technology adoption resulting in low productivity
Poor infrastructure
Macro-economic environment that is not condusive for investments and growth of the sector
Corruption, cartels and cheap imports virtually leading to a collapse of sugar, cotton, rice and perhaps maize sectors

21. Recommendations
Need to increase resource allocation to a desired level of 10 per cent of government expenditure and a need to review recurrent vs. development expenditure
Urgent need for stabilization of macro-economic environment
Urgent need of investments in rural infrastructure and irrigation
Creation of a stimulus package for investments in agro-processing, value added and export promotion in the region
Addressing corruption and cartels hampering the development of some sub-sectors
Enhancing support services for smallholders by strengthening their producer organizations and cooperatives, including institutional capacity for policy advocacy and lobbying
Address regional disparity in resource allocation and government’s investments