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The rise and rise of agriculture: once upon a time, agriculture was a dying sector of Kenya's economy. Now no more. For the past few years, it has been the wheel behind the country's economic turnaround, reports Wanjohi Kabukuru.

While campaigning for the presidency in late 2002, President Mwai Kibaki had to use layman's economic terms to explain to a local radio interviewer why Kenya was an agricultural economy. The interviewer would not budge. His "critical questions" chided the country for not jumping onto the industrialised nations' bandwagon.


Kibaki went back to basics to educate not only the interviewer but the radio station's audience on why agriculture was the backbone of Kenya's economy and how it impacted the health of all other sectors.

Why did Kibaki put such an emphasis on agriculture? It was for a good reason. According to the latest Kenya Economic Survey published by the government, agriculture remains the engine of the economy, employing 75% of the workforce. Agriculture and agro-related industries also account for over 50% of GDP and more than 60% of the country's export earnings.

On taking over power, Kibaki's government inaugurated the Economic Recovery Strategy for Wealth and Employment Creation which was to run from 2003 to 2007. In this document, agriculture was given the greatest attention.

Between 1987 and 1993, market liberalisation policies removed agricultural subsidies on beef, animal feeds, fertilisers, dairy products, cotton, sugar, maize, tea, rice and wheat.

The cotton and sisal sectors collapsed totally. Coffee, tea, dairy, pyrethrum, livestock, and the grains sectors remained stable but only for a while. By the 1990s, Kenyan agriculture was in tatters. Both SAPs and blatant malfeasance by the former government saw to it that the remaining pillars of the sector had virtually collapsed.

The giant Kenya Cooperative Creameries, Kenya Seed Company, and Kenya Farmers Association were all run into the ground. Vital state organs like the Kenya Meat Commission, Milling Corporation for Kenya, Cotton Lint and Seed Marketing Board, National Irrigation Board, Kenya National Trading Corporation and the Pyrethrum Board of Kenya all suffered the same fate.

The coffee industry recorded the most dramatic fall in its contribution to GDP. In 1992, it stood at 40% but fell to an all-time low of 1% by 1993. Coffee farmers, overwhelmed by "corruption fatigue" in their cooperatives, sought new crops better-paying crops to farm.

A moribund player joined the top ranks of the economy that had been the preserve of coffee and tea. Horticulture. The emergence of horticulture as one of the country's major export earners along with tourism saw a boost in the labour market and an improvement of foreign earnings. "Today, horticulture leads as the largest contributor to the country's agriculture export earnings," says David Kibe, an economist with the Ministry of Planning and National Development.

In 1992, horticulture contributed a mere 0.52% to the GDP while coffee led the pack at 40%. Today the tables have been turned, with horticulture standing at 25% and coffee just 5%. According to the Central Bureau of Statistics horticulture now earns Kenya $614m annually and employs over two million people.

Over 65% of Kenya's flowers, fruits, and vegetables are exported to the EU market. Currently, Kenya is the lead exporter of cut-flowers to the EU, supplying 31% of the total. But lately a move by 'eco-sensitive' stores in Europe to use 'food mile' labels threatened this lucrative sector.

It echoed the campaigns of a few years ago by human rights activists that insisted that flower farm workers--mostly women--were given a raw deal by their employers in terms of pay, working conditions and exposure to hazardous chemicals.

The flower industry's voluntary trade association, the Kenya Flower Council under its chairman Erastus Mureithi, successfully made a robust defence against these accusations, and indeed has countered the eco-campaigners rhetoric with evidence that flowers grown in Kenya have a smaller carbon footprint, even after being flown to Europe than those grown in hothouses in the EU itself.

President Kibaki's government did not need to reinvent the wheel. It simply went on a charm offensive reclaiming what belonged to farmers. Kibaki has has faithfully attended nondescript farmers' fairs, popularly known here as "agricultural shows", in all the major towns of Nairobi, Mombasa, Kisumu, Nakuru, Eldoret and Nyeri for the past four years without fail.


To turn the agricultural sector around, Kibaki made the youthful Kipruto Kirwa--who hails from the country's breadbasket Trans Nzoia district--the agriculture portfolio. The livestock portfolio was passed over to Joseph Munyao.

In the last four years, agriculture has been heavily subsidised by the government, giving farmers a much-needed breathing space. Fully aware that farmers had little to do with the running down of their institutions, the government set off to woo them back to the farms by writing off the debts of coffee, tea, pyrethrum, dairy, livestock and sugarcane farmers.

By tackling corruption and dishonesty within the agricultural sector, Kenya's economy has now reemerged to earn the country the title of "merging African tiger".

In 2002, Kenyan economic growth stood at 0.3%, today it shouts from the rooftops at an impressive 5.8%.

In 2004, the government unveiled a 10-year $11m Strategy for the Revitalisation of Agriculture (SRA 2004-2014) plan with the vision to "transform Kenya's agriculture into a profitable, commercially oriented and internationally competitive economic activity".

In a bid to bolster productivity of Kenya's countryside and mitigate urban drift, the Ministry of Energy has inaugurated over 160 rural electrification projects.

Wisely ignoring World Bank advice, the government revived the Kenya Meat Commission (KMC) and cleared the organisation's debts. The same tactics were used for Kenya Cooperative Creameries which was bought back at a cost of $5.7m, and the Kenya Seed Company.

The dairy industry has experienced such phenomenal growth that the Livestock Ministry is worried. In 2006, 3.5bn litres of milk was produced, an increase of 10% on 2005's production of 3.2bn litres.

A report by the Kenya Dairy Board indicates that Kenya has the highest per capita consumption of milk in the region at 80 litres per person annually.

"It would be bad after raising the expectations of the farmers this high, for the prices to drastically reduce, or for the milk to lack a market," says Joseph Munyao, the livestock minister. "We don't want to go back to where we were when farmers were desperate and did not know what to do with their milk."

To this end, his ministry is seeking new markets for surplus dairy products. The successful story of the Kenyan dairy sector has attracted major financial institutions, which have now taken the plunge and come up with tailor-made loans and other incentives to attract dairy farmers.

The Kenya Meat Commission woke up in the middle of 2006 after 15 years in the freezer, to the great relief of livestock keepers, mainly drawn from the pastoralist herder-communities. In less than six months, livestock exports have earned the country over $5m.

To further boost their productivity and cushion them from the harsh effects of drought, the government has drilled some 500 boreholes in Kenya's dry areas and dug and constructed 600 water pans and dams.

But while most agricultural sectors have been revived, the story percolating the sugar industry is not so sweet. According to the Kenya Sugar Board, the country's sugar companies, mostly government-owned, are struggling with heavy debts, outmoded technology and are likely to collapse once the Common Market for Eastern and Southern Africa (Comesa) safeguards on sugar come to an end in February 2008. Four government-owned sugar companies, namely Nzoia, Miwani, Muhoroni and Sony have combined debts of $614m. Comesa is a trading bloc that brings together 22 countries in the region.

While Kenyan companies spend $642 to produce a tonne of sugar, sugar millers in other Comesa countries spend only $128. Under the Comesa moratorium, Kenya will be compelled to open its sugar market to exports from other Comesa members. Consequently, it is believed the government is not interested in paying off the debts of the sugar factories as they are unviable.

The pyrethrum sector is also deeply enmeshed in wrangles. At the centre of the bickering is a company called Midlands which has allegedly been given illegal powers to process pyrethrum--a function that was initially the preserve of the Pyrethrum Board of Kenya (PBK).

As the dispute continues, pyrethrum farmers are yet to be paid some $11m owed to them by the PBK. The irony is that Kenya is the world's leading producer of the crop, accounting for 70% of the world's production.

Other than tea and coffee, Kenya also exports livestock and dairy products on a large scale to the Middle East, Far East, Europe and the Comesa region. Tea, coffee and dairy farmers now receive their highly improved earnings promptly and, according to government spokesman Alfred Mutua, farmers' earnings in all the sectors--tea, fish, coffee, cereals, dairy, and beef--have recorded a 1,000% rise.

Elsewhere, all the irrigation schemes at Bura, Mwea, Bunyala, Perkerra, Hola, Ahero and West Kano are now fully operational in an effort to enhance production throughout the year.

Kenya depends on rain-fed agriculture and during drought spells, its production is badly affected, as occurred during 2004 and 2005 when the rains failed. Even so, by 2006, the country's agricultural sector had grown by 6.9% as compared to 1.7% in 2004.

Agricultural entities are also recording remarkable triumphs on the stock market. For example, at the close of 2006, Sasini Tea and Coffee, which had adopted value addition to its beverage products, emerged as the top gainer on the Nairobi Stock Exchange (NSE) with a 464% share rise.
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Title Annotation:FOCUS ON KENYA
Author:Kabukuru, Wanjohi
Publication:New African
Geographic Code:6KENY
Date:Jul 1, 2007
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