Industry players Tuesday reacted with cautious optimism to President Uhuru Kenyatta’s reforms in the agriculture sector.
The measures announced by the President will see policy changes and money injected into tea, coffee, milk and rice farming. Grumbling in the country’s farming regions had reached a crescendo, with leaders complaining that the sector had been neglected.
The far-reaching changes coincided with the sacking of Agriculture Cabinet Secretary Mwangi Kiunjuri, who was replaced by Peter Munya, formerly of the Trade docket.
Fresh Produce Exporters Association of Kenya Chief Executive Hosea Machuki termed the announcement a good move and urged the government to set up cold storage facilities in other counties growing fresh produce.
Mr Machuki said the fresh produce sector suffer postharvest losses of about 30 per cent due to lack of cold storage facilities, urging the government to fast-track the projects.
Fresh Produce Consortium of Kenya Chief Executive Okesegere Ojepat hailed the changes, saying Mr Munya will take decisive actions to salvage the struggling sector.
Dr Timothy Njagi of the Tegemeo Institute of Agricultural Policy and Development said the problem with agriculture is governance, and addressing it at the highest level will yield results. “You saw government agencies importing milk powder last year when farmers had a glut. Poor prices are a product market distortion from people with influence,” Dr Njagi said.
He praised the return of cooperatives to agriculture, saying it will strengthen production and marketing. However, he regretted that the President did not address climate change and building resilience. “Harvesting is going on in some places and mobile driers are a quick fix, which can save a lot of grain.”
University of Nairobi’s Bitange Ndemo noted that the ailing agriculture sector needs comprehensive surgery that will bring out reasons for its poor performance and detail what should be done to change its fortunes. “Our maize farmers produce 1.8 tonnes against South Africa’s four and the US’s 11. Some of our tea farms produce 0.8 kilos per bush against 12 in some of the best-run plantations.”
A report by McKinsey (an American worldwide management consulting firm) seen by the Nation chastises the government for running the sector without any reference to numbers, either on productivity or consumption. The reforms announced by President Kenyatta, some of which appear to have been motivated by the recommendations of the Building Bridges Initiative (BBI), could see prosecutions aimed at purging cartels that have impoverished especially maize and tea farmers.
The BBI report had recommended total war on corruption in the agriculture sector.
President Kenyatta directed law enforcement officers to break cartels “that have become leeches sucking away the blood and sweat of hardworking Kenyans, and confront them with every instrument available”.
The cartels, the report says, use State power and undue influence in politics to rig the agricultural process, frustrating both producers and consumers.
Kenya is a leading exporter of black tea in the world. But low prices, delayed payments, low initial payment by Kenya Tea Development Agency (KTDA), which markets much of Kenya’s smallholder tea, and price fluctuations have hurt farmers, the President said.
The President said conflict of interest on the part of directors and lack of clarity in the declaration of dividends by subsidiaries had hurt farmers, calling for the agency and entire marketing of tea to be restructured.
“Farmers who would be earning about Sh91 per kilo for their tea are currently earning about Sh41, with Sh50 per kilo going to brokers and middle men.”
He directed the Competition Authority to end the practice and told the ministries of Agriculture and Trade to ensure that each of the subsidiaries has separate governance structures and that the profits from each of the subsidiaries are reflected in farmers’ incomes.
He told the Ministry of Agriculture to ensure the Tea Regulations 2019 incorporate appropriate mechanisms to ensure no unregistered tea grower is allowed to sell it.
He also wants KTDA to pay farmers not less than 50 per cent of their deliveries as monthly payments, with the balance being paid as annual bonus. He said failure to add value to tea had robbed the country of its rightful share of the popular beverage’s earnings.
The President now wants the newly developed Tea Regulations (2019) gazetted within the next two weeks to pave the way for value addition before exportation of the produce.
These regulations also include the establishment of a committee to determine the formula for pricing green leaf and the formation of a self-sustaining stabilisation fund to ensure implementation of guaranteed minimum returns. The committee will also regulate the volume of teas sold through the auction and those through direct sales.
The President also directed the National Treasury to operationalise the Sh3 billion Cherry Revolving Fund within the next 30 days to cushion farmers from delayed coffee payments. He said the smuggling of powder milk into the country had led to low prices.
The speech was welcomed by dairy farmers, who called for speedy implementation of the directives.
Additional reporting by Leopold Obi