Facilitating Equitable Agricultural Development in sub-Saharan Africa

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

2. Contents • Objectives, TORs and methodology • Agricultural sector in Kenya: an overview • Evolution of polices and outcomes • Stakeholders and their relations • Stakeholder participation in policy process • The Private sector in agriculture • Smallholders and agricultural development • Challenges for various stakeholders • Recommendations

3. Objectives, TORs and Methodology • Analyse the enabling environment for inclusive agricultural development in Kenya • An overview of the sector • 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

4. 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

5. 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, fisheries and forestry • Horticulture contributes 33 per cent of GDP and 38 per cent of export earnings

6. 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

7. 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 (productivity) • Low technology adoption and poor farming methods

8. Evolution of policies & outcomes • 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)

9. 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 its lowest • Post liberalization policies eg SRA • Emphasis on the need to revitalize agriculture • Increased agricultural spending and an increase in agricultural growth

10. Stakeholders • Government institutions • Ministries – Ministry of Agriculture, Ministry of Regional Development Authorities, ministry of cooperative Development and Marketing, ministry of fisheries Development and ministry of Livestock Development • Their role is mainly policy implementation, creating an enabling environment • Parastatals for various crops – managing the production and marketing of various crops • Producer organizations – umbrella organizations for farmers • NGOs and civil society –advocacy and lobbying • Research institutions- provide evidence based research • Donor Agencies and ODAs, - funding for projects and programs • Farmers, private sector and agro-processors

11. Relationship between stakeholders • Individual smallholders produce or subsistence and may sell to middle men or producer organizations • Some have contractual arrangements with agro-processors e’g sugarcane industry • Middlemen either sell directly in the local markets, supermarkets or they sell to aggro-processors • relationship.docx

12. Relationships between stakeholders in policy process • Pre- independence policies were largely made by the colonialists to suit them, no participation of any other stakeholders • Post independence policies were dictated by the government with no participation from other stakeholders • In the 1990’s era of SAPS policy was largely influenced by doors and policy process was largely a donor / government affair • Post liberalization –involved participation of private sector lobby groups, advocacy through civil society and POs through policy round tables

13. 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

14. 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 • Cartelization o the agricultural sector

15. 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

16. 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 conducive 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

17. 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