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AGRICULTURAL DEVELOPMENT IN KENYA

Agriculture’s Contribution to the Economy
Agriculture remains the backbone of the Kenyan economy. The long-term goals of agricultural
sector are:
 Food production to contribute to national and household food security;
 Provision of raw materials for local agro-industries;
 Generation of foreign exchange through exports
 Generation of farm incomes;
 Employment;
 Stimulation of off-farm activities in rural areas to create jobs.

The dominance of the agricultural sector is shown by such important indicators as:
 Contribution of about 26% of Gross Domestic Product (GDP);
 Generation of over 60% of the foreign exchange earnings;
 Provision of employment to over 70% of the population;
 Provision of raw materials for agro-industries which account for about 70% of all
industries;
 Contribution of over 45% of the government budget.
There is a strong relationship between the agricultural and the total national GDP growth rates.
The low growth rates in agriculture and hence GDP affect food output, agricultural raw material
output, agro-based industrial output, employment creation, foreign exchange earnings, public
revenue, and so on. In effect, poor performance in the agricultural sector means poor economic
growth, accompanied by associated negative impact on national and individual incomes. The
development of agriculture is important for poverty reduction since most of the vulnerable
groups like pastoralists, the landless, and subsistence farmers, also depend on agriculture as their
main source of livelihoods. Growth in the sector is therefore expected to have a greater impact
on a larger section of the population than any other sectors.

The Role of Smallholder Sector

The agricultural sector is commonly subdivided into small-scale, large-scale, and pastoral sub-
sectors. Small-scale farms are defined as land holdings not exceeding 12 hectares (ha), but the
upper limit now has little significance, since 80% of the 3.5 million small holdings are less than
2ha. The proportion of small-holders has increased over the last three decades due to subdivision
of large holdings for settlement. Currently, the small-holder sector accounts for 60% of the
agricultural land in the high- and medium potential areas. Studies elsewhere indicate that with
more efficient use of farm inputs, the small farms are more efficiently utilized than large farms.

The smallholder sector dominates agricultural production in Kenya. In spite of their small sizes,
smallholders account for over 75% of total production and approximately 70% of marketed
production. Smallholders account for the production of over 70% of maize, over 65% of coffee,
over 50% of tea, over 80% of all milk, over 70% of beef and other meat, and production of all
pyrethrum, cotton, and most of the other food crops. These small-scale farmers are expected to
spearhead future development of the agricultural sector and the economy.
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In spite of its dominant role, the smallholder sector is organizationally and technologically
complex. This complexity arises from the dynamic nature of farming:
 A continuum from subsistence to market-oriented farming;
 Very diverse agro-ecological conditions and diverse farming systems;
 Social and cultural diversity among the farming communities;
 Low productivity and low use of farm inputs;
 Poor infrastructure, lack of rural finance, and poorly developed markets;
 Structural adjustment programmes, some aspects of which have adversely affected small-
scale farmers, such as reduced government services.

The national challenge of eradicating poverty requires that attention is given to the role that the
smallholder farming sector can play in alleviating poverty. Thus the Sessional Paper No.4 of
1997 on Industrialization Strategy to the Year 2020, the Eighth National Development Plan
(1997-2001), and the National Poverty Eradication Plan (1999) recognize the vital role of this
sector. Finding interventions that can promote the development of the smallholder sector is
critical. Commercialization of the smallholder sector is an important factor to this process.

Key Policy Issues

Agricultural policy in Kenya revolves around the main goals of increasing productivity and income
growth, especially for smallholders; enhanced food security and equity, emphasis on irrigation to
introduce stability in agricultural output, commercialization and intensification of production
especially among small scale farmers; appropriate and participatory policy formulation and
environmental sustainability. The key areas of policy concern, therefore, include:
 Increasing agricultural productivity and incomes, especially for small-holder farmers;
 Emphasis on irrigation to reduce over-reliance on rain-fed agriculture in the face of limited
high potential agricultural land;
 Encouraging diversification into non-traditional agricultural commodities and value addition
to reduce vulnerability
 Enhancing the food security and a reduction in the number of those suffering from hunger;
 Encouraging private-sector-led development of the sector;
 Ensuring environmental sustainability.

Key policy concerns

Declining agricultural performance:
Declining performance of the sector in terms of its growth has been one of the major concerns facing
policy makers and those having interests in the sector. The performance of agriculture, which
remains the backbone of the economy slackened dramatically over the post independence years from
an average of 4.7% in the first decade to only below 2% in the 90s. This decline culminated in a
negative growth rate of -2.4% in 2000. As a sector that engages about 75% of the country’s labour
force, such a decline implies lower levels of employment, incomes and more importantly, food
insecurity for a vast majority of rural Kenyans. It is instructive to note that a sizeable proportion of
the rural labour force is engaged in small-scale agriculture and that women are the majority in the
sector. A decline in agriculture has thus far reaching implications in terms of employment and
income inequality as well as food security for the country.
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It is recognized that low productivity, reflected in low yields per acre of land is among the main
sources of high unit production costs in agriculture in Kenya. Among the reasons that explain this is
the inability by farmers to afford readily available modern technologies of farming. The objective of
policy makers in this area, therefore, is to increase output using improved technologies of farming,
which would inevitably increase farm productivity and hence farmers’ incomes.

Agricultural productivity can be increased, farmers incomes raised, more people fed and indeed, the
general economic welfare enhanced. The strategy for Revitalizing Agriculture (SRA), (2004-2014)
recognizes this and that to improve smallholder farm productivity as well as increase incomes,
smallholder farming must be changed from producing for subsistence to commercial profitable
businesses. It will then attract private entrepreneurs willing to invest therein and employ modern
farming techniques necessary to achieve increased productivity. When agriculture is technology-led,
not only is food security achievable but also poverty alleviation is also possible. Inability to afford
new and readily available farming technology, however, is partly blamed on poor access to financial
resources, especially in a nation where the majority, and not only farmers, are poor and the financial
markets have not developed to support agricultural investment.

Poor marketing facilities and institutions are some of the constraints to increased agricultural
production. The major marketing constraints comprise high transportation costs due to dilapidated
roads, improper handling, poor storage facilities and wastage. These result in fluctuations in both
productions and incomes. For livestock marketing, limited cattle holding grounds and meddling with
stock-routes has limited access to markets. Promoting marketing of agricultural produce will require
that holding grounds, watering points, stock-routes and livestock markets be developed; the private
sector be encouraged to invest in slaughter houses and cold storage; local authorities in collaboration
with the private sector invest in storage facilities; the government provides all-weather rural access
roads, improve communication facilities and market information systems among others.

Limited high potential agricultural land and over-reliance on rain fed agriculture.
Only about 18% of the country’s land is high and medium potential agricultural land where most
intensive crop and dairy production take place. The rest is arid and semi arid, not suitable for rain fed
agriculture. This means that increasing agricultural production will have to come from intensification
of land use in the high and medium potential lands. The high reliance on rain fed agriculture
vulnerable to weather variability leads to fluctuations in production and incomes especially for rural
areas. There is low utilization of irrigation potential with only less than 7% of the cropped land under
irrigation1. Poor rains always lead to poor agricultural performance and the subsequent famines
affecting large sections of the population. This spills over to negatively affect agricultural incomes
and hence investments in rural areas.

Droughts and floods have increased in frequency and intensity in the immediate past three decades,
resulting in high crop failure and livestock deaths. In addition, increased land degradation has also
decreased land resilience thereby exacerbating the effects of droughts and floods leading to
devastating famines that claim increasing human and livestock lives. Recurrent droughts, floods and
the associated losses are concerns that have featured much in public debate in the recent past.

Over-reliance on rain-fed agriculture, therefore, can be seen as one of the major causes of food
insecurity in Kenya. Despite the enormous potential for irrigation, irrigation based farming is not
widely practiced. It is developed under large-scale irrigation schemes for crops like rice. A few
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farmers have their own irrigation systems for export crops like horticultural produce and a limited
number of smallholders practice small scale irrigation farming. This has been due to:
 low utilization of water;
 lack of efficient technologies;
 destruction of rainfall catchment areas;
 poor management of government irrigation schemes;
 degradation of surface water;
 uncontrolled exploitation of underground water leading to a drop in the water table and
increase of water extraction costs;
 sluggishness in permit allocation for use of water;
 the lop-sided Nile Treaty, among others.

Putting more emphasis on irrigation is important in increasing arable land, productivity per acre of
land, stability of agricultural output during adverse weather conditions.

Limited diversification of Agricultural production:

Narrow base of agricultural products, especially exports leads to high vulnerability of incomes to the
international market trends. The sector is characterised by weak vertical integration, made worse by
weak institutions and support services for agricultural exports. Only a few commodities (coffee, tea,
dairy, maize, wheat, beef, and horticulture provide livelihood for over 85% of the population while
coffee and tea alone provide 45% of the wage employment in the sector. Closely linked to this is the
narrow base for agricultural exports.

Primary agro-based products constitute about 51% of the country’s total exports, with the value of
exports from agricultural sector accounting for 64% of total exports. Despite the potential for exports
of fresh produce, it only accounts for 3% of the total production of fresh produce. This is mainly due
to limited diversification, and low value addition in agricultural exports. The challenges to the
diversification of agricultural exports, which hinder the realization of the potential include:

 poor outdated technology that hinders the processing of agricultural products into high value
products;

 limited access to breeds with high yield potentials;

 World Trade Organization (WTO) regulations that increase the cost of imported seeds and
planting materials;

 limited capacity by quality assurance bodies to ensure compliance with international

standards; and

 the imposition of non tariff barriers to trade like sanitary and phytosanitary standards.

Kenya has not exploited its agricultural potential to the fullest, which is necessary to diversify into
non-traditional commodities. This would improve and stabilize agricultural output, productivity,
incomes, significantly check famine and thus food insecurity. The country has varied climatic
conditions suitable for diversified agriculture into specialized niches like horticulture, herbs, spices,
fruits and even lean beef, but which have not been exploited to the fullest despite very good efforts
made in horticulture and fruits.
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Produce from agriculture is commonly marketed with minimal processing resulting in low revenue
earning capacity to farmers, and creation of fewer employment opportunities for citizens. Efforts
should be made to enhance agro-processing to increase value of agricultural exports and enhance
their income earning potential. Some of these measures recognized by SRA (2004-2014) include:
 provision of appropriate incentives for establishing agro-industries in rural areas;
 focused research on value addition regarding processing, storage and packing of agricultural
produce; promotion of partnerships between smallholders and agribusiness;
 improvement of supportive infrastructure, e.g., rural access roads, rural electrification, water
and telecommunications; and
 undertake training for farmers and farmer institutions in value addition, among others.

There is also limited exploitation of the regional market potential. The regional markets that have
resulted from regional integration, e.g. the East African Community (EAC), Common Market for
Eastern and Southern Africa (COMESA), etc., and trade liberalisation are yet to be exploited to a
significant level. The government needs to encourage trade in agricultural produce across borders,
improve and/or provide quality control services, enhance the capacity of farmers and fish traders on
sanitary, phytosanitary and zoo sanitary measures and international standards, build effective systems
to gather and utilize information on external market opportunities, enhance efficiency in port and
airport handling services to eliminate delays and costs, designate disease free zones to speed up
access to export markets for livestock and their products. Furthermore, the country can become a
regional hub for exports to the opened up markets through regional integration and trade
liberalisation to the Far East as well.

Poor and inadequate rural infrastructure:

Poor infrastructure including poor rural roads, markets and transport systems that result in high
transactions costs for farmers and inaccessibility to input and output markets are among the main
concerns for the sector. The performance of the sector is affected right from the production to
marketing domestically and even internationally. For exports this means lack of sustainable supply of
raw materials due to uncontrolled production, with gluts alternating with shortages as well as
uncompetitiveness since high transport costs are reflected in high prices. Poor infrastructure has also
contributed to the poor market integration in the country.

Although agriculture has over the years contributed more than proportionately to GDP growth in
comparison to other sectors, this has been partly due to infrastructure established through efforts
made for specific commodities. Some of these include:
 provision and maintenance of rural access roads to facilitate the movement of agricultural
produce to markets;
 establishment of agro-based industries to increase the value of agricultural produce;
 education, training and extension services to enhance the adoption of modern farming
techniques;
 establishment of local market centres to open up markets for farmers’ produce;
 rural electrification to facilitate agro-processing and safe storage for the produce.

Inadequate and declining research in agriculture:

During the first decade of independence, agricultural research emphasized cash crops and major food
crops. This led to major breakthroughs in these commodities, which largely contributed to increased
agricultural production. There was, however insufficient appreciation of the economic aspects of
small scale farming, leading to research being based on input levels that were uneconomical to the
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small farmers. Productivity from small scale farms has therefore been lower than from the large scale
farms.

Inadequate research, especially demand driven research, coupled with ineffective extension and
delivery system of research findings has been yet another concern. The decline in government
allocation to the sector has contributed to this continuing trend. The results here include decline in
other agricultural services like artificial insemination services, lack of good quality seed and planting
materials for farmers. High costs have led to inadequate application of improved purchased inputs on
most of the farms. A major concern with respect to research is also that the limited research activities
generally cover only export crops, ignoring the essential food crops. The research system in place for
agriculture also faces a number of problems like lack of strong research-extension-farmer linkages,
inadequate funding, and high turnover of research scientists due to poor incentives.

The provision of services has also been affected by too many official interventions especially in
commodity marketing and pricing, characterised by proliferation of parastatal activities in pricing
controls of agricultural commodities. Limited investment and coordination by local research
institutions like Kenya Agricultural and Livestock Research Organization (KALRO) and institutions
of higher leaning is also a concern.

A number of constraints have hindered further progress in research. Lack of well defined priorities
that reflect policy pronouncements, lack of monitoring and evaluation, the low use of trained
scientists from institutions of higher learning and low funds for research have all contributed to the
concern. The ability of Kenyan agriculture to play its role in the economy depends on the research
agenda that the country charts out for its national agricultural research system. The international
agricultural research centres should therefore only complement local research output. Although
agricultural research is currently coordinated by KALRO, a critical problem is availability of
research funds. Research expenditure as a percentage of GDP remains below 10%, although most
financing has been done by donors.

Agricultural sector financing and related activities:

The lack of finance for agriculture limits increasing production and investment in value addition
activities in agriculture. Inaccessibility to credit especially for small scale farmers and especially
women has limited the range of activities, the type of technology used and the scale of operations
that a farmer can adopt on his farm. Agricultural credit available to farmers has tended to diminish
over time since independence. Although there have been a number of institutions that have been
involved in agricultural financing over time, actual investment in the sector has been small. Thus to
improve agricultural productivity and incomes, especially of smallholders most of whom reside in
rural areas, access to affordable financial credit is important to enable them acquire new farming
technology - a necessary input in realizing the higher productivity goal.

There has been a bias of credit towards large farms and cash enterprises. Poor mobilization of
financial resources through weak cooperative system, and grass roots organizations needs to be
addressed.
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Limited development and exploitation of the livestock sector:

Despite the long recognized potential of the livestock sector, this potential remains largely
unexploited. Kenya’s livestock sector contributes 10% to the GDP and about 42% of total
agricultural output. It supplies the domestic requirements of meat, milk, dairy products and other
livestock products, and accounts for about 30% of all marketed agricultural output. The sector also
earns foreign exchange through the export of live animals, hides and skins, dairy products and
processed pork products besides providing raw materials for agro-based industries. It employs 50%
of total agricultural labour force. Although livestock keeping is commonly practiced throughout
Kenya, more than 60% of all Kenya’s livestock is found in the Arid and Semi-Arid Lands (ASALs)
where it employs 90% of the local population. The livestock sector is charged with ensuring self
sufficiency in livestock products.

The development of the livestock sector is however constrained by a number of factors. Recurrent
droughts that lead to massive losses in livestock and therefore livelihoods for the pastoralists are a
major concern. This, coupled with lack of reliable markets has seriously undermined efforts to realise
the full development potential of the sector. Since the liberalisation of domestic marketing of
agricultural products, which reduced the role of marketing boards like Kenya Meat Commission
(KMC) and Kenya Cooperative Creameries (KCC), the marketing of livestock and livestock products
was left to private traders, who lacked the capacity to take over the role of the state corporations. The
marketing problem has been aggravated by the poor state of infrastructure, which increases the
marketing costs.

The high costs of inputs and veterinary services have also constrained the development of the sector.
The withdrawal of government subsidies as part of economic reforms meant that many farmers
became unable to afford veterinary services, leading to reduction in their use. The privatization of
artificial insemination (A.I) services has in effect increased costs, which has led to decline in the use
of such services. This has led to the problem of poor quality livestock through problems of
inbreeding and limited use of improved inputs. Diseases and pests also pose a challenge to the sub-
sector due to weak inspectorate and quality assurance as well as lack of enforcement of the existing
rule and regulations governing the movement of livestock and their products.

The high potential for exports from livestock and livestock products remains unexploited due to
inadequate capacity in standardization and quality control as well as inadequate processing capacity.
This has meant that the livestock sector is largely dominated by primary production with little
processing of produce. The shortage of high quality breeding stock acts as a further constraint to the
exploitation of exports from the livestock sector. The lack of quality control and standardization of
livestock products has significantly hindered access to foreign markets as local farmers fail to meet
export health standards and quality requirements

Due to pressure from other competing land uses, the high and medium potential areas have been
turned into growing of subsistence crops. This has meant that alternative management systems for
livestock production have to be adopted. While, in the high potential areas, livestock production is
threatened by population pressure, in the ASALs, it is problems of land degradation, droughts, and
soil erosion that are the main threats. Inadequate water facilities, poor marketing infrastructure and
poor animal husbandry practices as well as poor slaughtering practices limits the quality of hides for
exports.
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Other policy concerns in the livestock sector arise from the marketing of products like dairy. Milk
marketing was liberalized in 1992, leading to the proliferation in the market of private processors and
informal traders/hawkers of raw milk. Critical issues that have emerged influencing the development
of the sector therefore include, marketing arrangements for private traders, product quality control
and assurance as well as the management of strategic reserves. Although Kenya has the potential to
meet her domestic demand for meat and realise a surplus for export, local producers continue to face
problems of drought, and poor marketing outlets that limit their production. Poor timing of livestock
sales, with majority of pastoralists selling their stock under very desperate circumstances, is another
problem.

There is therefore need for programmes that enhance access to appropriate production technologies
and inputs as well as increasing the efficiency and overall productivity of the sector. The
revitalization of the livestock sector will therefore require among other things, the rehabilitation of
marketing infrastructure facilities, facilitating the private sector to invest in both primary and
secondary livestock processing plants close to production areas. It will also be necessary to develop
programmes that promote and support the production of feeds that augment the conventional feeds.
Privatizing the Kenya Meat Commission (KMC) to provide a market outlet for livestock will also
contribute to reducing the vulnerability of livestock farmers especially pastoralists whose livelihoods
depend on livestock. This is especially important in addressing the problem of food security in the
ASALs.

Lack of a comprehensive land use policy:

This has over time led to difficulties of access and utilization of land. The country lacks a clearly
articulated land policy with the result that issues like land use, management, tenure reforms and
environmental protection are inadequately addressed through the existing systems. Land is an
important resource in agriculture in Kenya and lack of access to or ownership of land is considered
one of the major causes of poverty. The scarcity of agricultural land makes the issue of land use
policy a critical one. Less than 20% of the country’s land surface is in high and medium potential
areas

Issues on land that are relevant to agricultural development include conflicts between different land
uses due to the lack of a coordinating body that can ensure harmony between different users.
Harmonization of different development activities that can foster optimal land use and control of
environmental degradation is a critical issue.

The failure by the existing land conservation policy and the need to have attendant laws to generate
environmentally sound land use habits for sustainable development is a relevant concern for
agriculture. There has been an over emphasis on the protection of property rights and inadequate
provision for the regulation of the rights in the interest of soil conservation. This is compounded by
the lack of a well coordinated land management policy with respect to various land uses. The
existence of numerous legislations and complex procedures relating to plan approvals, subdivisions
and registration prevent the various government agencies from keeping up with the demand for their
services.

The lack of accurate and up to date database information on land is also a critical issue. Most
information on land continues to originate from the districts.
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The problems of pastoral land tenure relations, with its roots in the dispossession of pastoral
communities of their lands by the colonial administration, has implications for agricultural
development especially food security and sustainability. There should also be security and equity in
access to and use of land in pastoral areas. There is therefore need to provide a legal framework that
defines and recognizes pastoral land and related natural resource rights. There is need to recognize
pastoralism as a legitimate land use system as the basis for legal backing.

REFERENCES
Alila, P.O. & Atieno, R. (2006). Agricultural Policies in Kenya: Issues and Processes. A Paper for
the Future Agricultures consortium Workshop, Institute of Development Studies, University of
Nairobi, 20-22 March, 2006.

Ministry of Livestock and Fisheries Development (2006). Draft National Livestock Policy. Nairobi:
Government Printer.

Muturi, S.N. (ed)(2001). Marketing of Smallholder Produce: A Synthesis of Case Studies in the
Highlands of Central Kenya. Technical Report No. 26

Republic of Kenya (2002). National Development Plan 2002–2008. Nairobi: Government Printer