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The state of commercial agriculture in kenya

Economic analysts say the contribution of commercial agriculture to the sector’s revenues has been on a gradual decline since 2013. According to a report released by ICEA lion asset management, while annual revenues from commercial agriculture rose by nearly 50% to 498 billion shillings by 2018, commercial crop revenue halved between 2013 and 2018 with the value of livestock staying flat.

Which comes against the backdrop of the recent announcement of a drop in earnings from Kenya’s tea industry agriculture is Kenya’s economic mainstay, contributing nearly a third of the country’s gross domestic product.  Agricultural produce such as tea, horticulture and coffee are among the biggest contributors to the agricultural sector’s fortunes.

But according to analysts at ICEA lion asset management, revenue from commercial agriculture as a proportion of the market value of the entire’s agriculture sector’s output has fallen by nearly 50% since 2013.

This decline was mainly driven by commercially crop revenue, which halved from 28% of the market value of crop produced in 2013 to 14% of the market value of crops sector output in 2018. There was also no improvement in commercial revenues from livestock and related produce, which remained stable at forty percent through 2013 to 2018

The sharp decline in revenue was accompanied by a 53% rise in the cost of production inputs such as fertilizer and agro-chemicals; a trend that translates into reduced profit margins for farmers.

Aggregate fertilizer costs rose by 68%, while cost of crop chemicals increased by 165% between 2013 and 2018. Aggregate cost of fuel and power increased by 34% while cost of manufactured feeds was up 28% during the period. Cost of livestock drugs and medicines declined by 23%

The report however paints a picture of unequal growth with some industries seemingly performing better than others and the production of cereals losing its shine.

Production of cereals such as maize and wheat rose by 20% between 2013 and 2018 but prices fell by 19% in that period. Horticultural produce increased by 44% and prices by 20% between 2013 and 2018. Production of coffee and tea rose by a combined 12% between 2013 and 2018 while prices were up 24% livestock and related output increased by 32% and prices by 20% between 2013 and 2018

With tea and horticulture now accounting for 80% of the agricultural sector’s commercial revenues, experts say there is need to diversify Kenya’s cash crop base in order to avoid over-reliance on these two sectors.The report comes nearly two years since the government embarked on the implementation of the food and nutrition security pillar as part of the big four agenda which seeks to achieve rapid socio-economic transformation by 2022.

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