Food security for poverty reduction in East Africa: the role of government and private sector

On 17 October 2012 the East African Standard and the Agricultural Sector Development Forum (ASDF), headed by the President of Kenya Mwai Kibaki, facilitated a round table discussion on food security and the engagement between government and the private sector in agriculture.

According to the Kenya Producers Coalition (KEPCO) over the decade after independence in 1963 10% of the government’s budget was spent on agriculture. By 2000/01 this had fallen to just 1.2%. However, by 2008/09 the situation had improved with budgetary allocations rising to 6.5%. Currently, the sector represents 25% of Kenya’s gross domestic product (GDP) and employs around 75% of the country’s population either directly or indirectly (i.e. food processing industries).

At an earlier talk on youth employment hosted by the World Bank and Africa Gathering, Su Kahumbu’s discussion focused on how large-scale farmers consistently produce for the export market while the small-scale subsistence farmers bear the weight of feeding the nation (her argument was geared towards getting youth into agriculture as a means of self employment). It would be interesting to hear from the round table discussions how the government intends to partner with the private sector in order to redress this imbalance and support subsistence farmers to be lifted out of poverty.

The panel in this instance comprised discussants from various sectors in Kenya including the private sector – Vimal Shah, Chief Executive Officer of BIDCO Group, a regional leader in the manufacture of edible oils and hygienic products; Dr James Mwangi, CEO and Managing Director of Equity Bank Limited, a leader and pioneer in offering low cost financial assistance to farmers in the country; and Patrick Kamugi, Managing Director of East Africa Maltings Limited, a subsidiary of East African Breweries. Panellists representing the government included the Lands Minister Dr. James Orengo and the Minister for Agriculture Dr Sally Kosgei, a prominent technocrat before venturing into politics in the 2007 general elections. The moderator for the discussion was Joe Ageyo, a prominent media personality and News Editor for the Nation Media Group.

The round table opened with the Lands Minister initiating a discussion around the recent consolidation of Kenya’s land laws into a single piece of legislation. Patrick Kamugi spoke about the breweries’ partnership with sorghum farmers stating that the East African Breweries are financing around 40,000 households in Kenya and Uganda as well as ten large-scale farmers in the production of sorghum. The purpose is to build a sustainable value chain in the beer making industry, while at the same time empowering locals through market entry for their produce. Dr Sally Kosgei talked about Kilimo Biashara, an agricultural credit guarantee scheme. The discussions then shifted from food security and agricultural policies towards land rights issues.

Vimal Shah discussed the lack of extension services (application of scientific research and new knowledge to agricultural practices through farmer education) in the agricultural sector, emphasising that this was essential for sustainability. The Minister of Agriculture admitted that there was a shortage in extension officers, but unfortunately there was no discussion on how to address these capacity issues.

Vimal Shah put forward the suggestion (which was supported by the Permanent Secretary of the Ministry of Lands, Dorothy Angote) of taxing people with small idle land, and that the cost of the tax should be equal to the amount gained if leased out, in essence forcing people to lease out their land. In theory, this could be a plausible approach – unused land would cease to exist and food security would be enhanced. However, there was no discussion about the potential negative impact this could have on poor land owners.

The aim of the discussions was to forge a collaborative path for government and the private sector in order to move subsistence farming onto an agribusiness platform for sustainability purposes. Instead of coming up with a framework that will assist small-scale farmers to be lifted out of poverty, the forum produced ‘solutions’ that would push them further into deprivation. It seemed to endorse an idea that would push these farmers and land owners further into poverty and would lead to a reliance on social protection measures such as cash transfers to meet basic needs such as food, the obtaining of fertiliser, seeds and credit facilities. In the discussion round up both the private sector and government representatives agreed that engaging in agriculture needs to be made an attractive option for youth, that credit facilities for small-scale and subsistence farmers need to be enhanced and that such forums are useful in driving forward overall food security objectives.

The discussions would have been more fruitful if they had addressed how agricultural and food security policy and financing could help lift the rural poor out of chronic poverty.

Steve Kenei is based in Development Initiatives’ Nairobi office and can be contacted via steve.kenei@devinit.org

emily.gerrard

Interesting post. Thanks Steve. I haven’t quite followed which supposed ‘solutions’ could push subsistence farmers further into deprivation. Is it more than the proposed tax on small idle land?
- Kenei Kiprono Kipchumba
  
  Hi Emily, the whole idea of agribusiness being championed by government seemed like it was dumping the sector’s woes on the private sector, the cost of production is going up almost on a yearly basis, there is a substantial shortage of extension services, there is no market for produce (even though the northern and north eastern parts of Kenya are in perpetual food crisis), irrigation is still largely an idea (has not been implemented to the fullest), while I did take particular note of the idle land tax, it was just an example of leaving the free market forces to govern such an important sector, its interests would have better been served with the government coming up with fixes (lowering fertiliser cost, initiating irrigation schemes in rural areas, agricultural financing, improving road systems to access new markets in rural area etc etc) before inviting the private sector to move forward. As it is, the rural poor can’t afford to farm and be subject to unregulated market forces.
- http://twitter.com/Okwaroh Kenneth Okwaroh
  
  Emily: Indeed the hungry countries of the world are normally the ones with the highest percentage of the population in agriculture mainly because farmers are still stuck in less productive subsistence farming. 89% of the population in Burundi is involved in agriculture yet 80% vulnerable to food insecurity. In Kenya, agriculture
  contributes over 70% of rural informal employment though 45.8% in food poverty.
  
  That makes agribusiness sound fantastic! However there lurk a plethora of impracticalities that ‘stupidise’ policy focus on agribusiness and explains why it is bound to fail. Agribusiness loosely refers to businesses that earn most or all of their
  revenues from agriculture; normally large scale business ventures (dabbling in
  processing, manufacturing, packaging and product distribution). They are more
  productive operating at that scale, have access to easier credit and posses the
  muscle to thrive in competitive markets. Clearly subsistence farmers cannot operate in that scale for many reasons that range from capital to capacity. They are best suited producing what sustains them than embarking in ambitious
  agribusiness ventures that they cannot sustain.
  
  I – Like any other businesses, agribusiness requires that farmers obtain substantive
  capital to invest in efficient farm management. The range of resource requirements necessary to produce market worthy products is prohibitive. This is beyond just owning a piece of land (however fertile it may be). Farmers require capital or securities for a bank loan to engage in agribusiness. Both are often unavailable for many small-scale farmers. Moreover, banks cannot finance all farmers
  in fact the current lending portfolio of banks for agriculture sector ventures
  is just about 3% meaning they aren’t inclined to funding agribusiness.
  
  II – Agribusinesses largely rely on agro-economic advice on suitable commodities to
  produce and economical methods to employ in order to maximise profits from the
  farm. Honestly, it is naive to expect that the people currently involved in agriculture (no matter how many agronomists the government employs) will have access
  to sufficient counsel to determine what is best to farm and to what scale.
  
  III – Agriculture takes place in rural sub-Sahara, home to the world’s poorest who live
  on less than US$ 1.25 a day. Some of whom look to government for social
  transfers and other forms of social protection. In 2011 about 47.8% of the
  population were in multidimensional poverty in Kenya out of which nearly 55% in rural areas barely eking a living. Yet this is the cohort that agriculture sector policy hopes to transform into agri-businessmen and women expected to raise business capital, take business risks, and muster the art of producing competitively, accessing markets and drawing the most from their produce.
  
  IV – Individual or household incomes are largely prohibitive and preclude many from investment in agribusiness. In 2011 per capita incomes were US$1,492 in Kenya. So imagine an individual or household entitled to less than US$1500 spending it on leasing a piece of land, or purchasing day old chicks, using the same amount to manage their investment and still sparing some for food and other non-food
  basic needs. The math just doesn’t add up.
  
  You can go on and on; the impracticalities are numerous. Besides failing to improve food production, focusing on agribusiness is bound to exacerbate inequalities among farmers. The government is better off identifying agro-ecological zones best suited for profitable agriculture. Focus on investing in these areas, empowering farmers in such zones to specialize and produce optimally through proper mechanised agribusinesses with the capacity to produce sufficient food, create meaningful employment and raise national income.
http://twitter.com/Okwaroh Kenneth Okwaroh

Emily: Indeed the hungry countries of the world are normally the ones with the highest percentage of the population in agriculture mainly because farmers are still stuck in less productive subsistence farming. 89% of the population in Burundi is involved in agriculture yet 80% vulnerable to food insecurity. In Kenya, agriculture
contributes over 70% of rural informal employment though 45.8% in food poverty.

That makes agribusiness sound fantastic! However there lurk a plethora of impracticalities that ‘stupidise’ policy focus on agribusiness and explains why it is bound to fail. Agribusiness loosely refers to businesses that earn most or all of their
revenues from agriculture; normally large scale business ventures (dabbling in
processing, manufacturing, packaging and product distribution). They are more
productive operating at that scale, have access to easier credit and posses the
muscle to thrive in competitive markets. Clearly subsistence farmers cannot operate in that scale for many reasons that range from capital to capacity. They are best suited producing what sustains them than embarking in ambitious agribusiness ventures that they cannot sustain.

I – Like any other businesses, agribusiness requires that farmers obtain substantive
capital to invest in efficient farm management. The range of resource requirements necessary to produce market worthy products is prohibitive. This is beyond just owning a piece of land (however fertile it may be). Farmers require capital or securities for a bank loan to engage in agribusiness. Both are often unavailable for many small-scale farmers. Moreover, banks cannot finance all farmers
in fact the current lending portfolio of Kenyan banks for agriculture sector ventures
is just about 3% meaning they aren’t inclined to funding agribusiness.

II – Agribusinesses largely rely on agro-economic advice on suitable commodities to
produce and economical methods to employ in order to maximise profits from the
farm. Honestly, it is naive to expect that the people currently involved in agriculture in Kenya (no matter how many agronomists the government employs) will have access
to sufficient counsel to determine what is best to farm and to what scale.

III – Agriculture takes place in rural sub-Sahara, home to the world’s poorest who live
on less than US$ 1.25 a day. Some of whom look to government for social
transfers and other forms of social protection. In 2011 about 47.8% of the
population were in multidimensional poverty in Kenya out of which nearly 55% in rural areas barely eking a living. Yet this is the cohort that agriculture sector policy hopes to transform into agri-businessmen and women expected to raise business capital, take business risks, and muster the art of producing competitively, accessing markets and drawing the most from their produce.

IV – Individual or household incomes are largely prohibitive and preclude many from investment in agribusiness. In 2011 per capita incomes were US$1,492 in Kenya. So imagine an individual or household entitled to less than US$1500 spending it on leasing a piece of land, or purchasing day old chicks, using the same amount to manage their investment and still sparing some for food and other non-food
basic needs. The math just doesn’t add up.

You can go on and on; the impracticalities are numerous. Besides failing to improve food production, focusing on agribusiness is bound to exacerbate inequalities among farmers. The government is better off identifying agro-ecological zones best suited for profitable agriculture. Focus on investing in these areas, empowering farmers in such zones to specialize and produce optimally through proper mechanised agribusinesses with the capacity to produce sufficient food, create meaningful employment and raise national income.

Food security for poverty reduction in East Africa: the role of government and private sector

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