CBA Bank Forum: How Can We Create Optimal Agricultural Production Under The Big Four Agenda?

Commercial Bank of Africa (CBA) recently hosted its third Economic Forum. The Forum focused on Food Security and Government Policies. The main agenda of the day was to determine how Kenya can create optimal food production under the Big Four Agenda. This included discussing key thematic issues regarding Kenya’s economy and policies. Kenya has the largest diversified economy in East Africa with agriculture being the backbone of the economy.

More than 75% of Africans make their living in agriculture and the sector accounts for more than a fourth of Kenya’s Gross Domestic Product. It is therefore important to ensure that the agricultural sector is thriving. Key speakers during the forum included; Mr Harry Kimtai, Permanent Secretary of the Ministry of Livestock, Lucy Muchoki CEO Kenya Agribusiness and Agroindustry Alliance, Jane Ngige CEO Kenya Horticultural Council, Hasit Shah Managing Director Sunripe and Vertical Agro EPZ, and Kwame Owino CEO of Institute of Economic Affairs.

 

Food production in recent years has been declining due to; low adoption of technology, frequent attacks of crops and animals by pesticides, adverse weather and encroachment into arable land. Last year the country imported 100 billion worth of food. The Permanent Secretary of Livestock Harry Kimtai listed the Ministry’s areas of focus according to the Big Four Agenda. They include;

  • Enhancing Production of food
  • Strengthening the supply chain for market value addition
  • Improving food information market systems
  • Increasing Innovation in the agricultural sector.

The Ministry also plans on creating a framework that promotes an increase of production of maize, rice, processed milk, meat and potatoes. Additionally, it plans on strengthening inter-government relations, reducing post-harvest losses and value chain inefficiencies by 2022. Mr Kimtai also discussed two major systems they hope to implement going forward;

  • The Index Test Livestock Insurance- This utilizes satellite imaging to monitor livestock in order to predict drought. This allows the government to plan ahead by giving farmers payouts so they can buy feed in advance preventing the animals from suffering during the drought.
  • Livestock ID system- This would involve tagging of the animals so you can identify the animal and the owner of the animal. This would benefit a majority of pastoralist farmers who won communal land thus are unable to acquire loans from banks. Once animals and their owners can be identified, they can be insured thus their owners can acquire loans.

Other issues affecting food security discussed include the issue of food production. There is a need to boost large-scale production of food. This can be done by evaluating the subsidy programs. The government offers subsidies to farmers and there is a need to ensure maximum quality subsidies are dispatched. This, in turn, ensures that farmers get high quality produce. Additionally, the subsidy program is not well designed. For instance, the government sometimes incurs logistical issues when transporting these subsidies to farmers in various areas due to adverse weather conditions. The government needs to reevaluate this system and incorporate the use of vouchers or cash so the farmers can buy the products themselves.

There is a need to boost precision and extension farming, especially in the rural areas. There are numerous farmers continuously getting subsidies from the government. However, due to lack of adequate technological knowledge, the quality and quantity of harvest is quite low compared to the inputs. To reap quality produce, the government needs to insist on standards and promote value addition in the supply chain. This way, we as a country are able to compete favourably with other countries in the agricultural market.

The agricultural sector also needs to focus on small and medium scale farmers in the market. Overregulation is a common issue for SME’s. As it stands acquiring licenses, animal and plant passports can be quite a hustle. This creates barriers in trading of agricultural produce.  Education on the types of licenses needed is also required since some farmers are not aware of all the documentation they should have in order to be able to trade successfully.

Taxation is another issue that is making it hard for farmers to increase the quality of their product. The 16% VAT imposed on inputs makes it harder for farmers to get the right amount of inputs they need. The Horticulture sector, for instance, is suffering due to the VAT imposed on pesticides. Most inputs that come into the country spend months at the Mombasa port due to those taxes.  Poor implementation of government policies and restrictive policies also make acquisition of calcium nitrate and potassium nitrate fertilizer impossible. These are major inputs and without them, the harvest is significantly affected.

Once some of these issues are fixed, it will boost private sector investment which is currently very low and volatile. According to the Africa Maputo declarations on Agriculture and Food Security, the government is committed to investing at least 10% of their annual budgets to agriculture which will help unlock the 6% growth potential for the sector.

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