30 April 2014

Kenya: State Targets Value Addition in Agriculture Recovery Plan

THE government plans to establish at least 47 agricultural value addition processing plants to spur growth in the sector that accounts for over a quarter of total economic output.

Ministry of Planning said yesterday it will be partner with the 47 county governments in establishing at least one plant per county.

It hopes this will improve the value of agricultural exports which are mainly shipped raw.

The setting up of the plants is one of a few policy interventions that Planning and Devolution Cabinet secretary Anne Waiguru said the government will institute to avert further slides in the sector that contributed 25.3 peer cent to gross domestic product in 2013 up from 24.6 per cent a year before.

The growth in the sector declined to 2.9 per cent from 4.2 per cent in 2012 due to "depressed rains especially towards the end of the year", Waiguru said.

She expressed regret about the dropping performance in the dominant sector for stagnating growth in the economy despite key fundamental indicators like interest rates, inflation and foreign exchange remaining stable.

The growth in the economy in 2013 was flat at 4.7 per cent, barely unchanged from 2012's 4.6 per cent.

"We can have other sectors registering growth and macroeconomic fundamentals remaining stable but as long as the agricultural sector is not growing, then the impact in the overall economic growth will be minimal," she said when she launched the Economic Survey 2014.

Waiguru said the government would further expedite establishment of a fertiliser factory which it hopes would reduce the cost of the usually imported input to farmers.

Ministry of agriculture on February 25 awarded a Sh104 billion ($1.2 billion) fertiliser plant contract to Japanese Toyota Tsusho.

The government will also increase investment in irrigation to reduce reliance on rain-fed agriculture which is usually erratic, the CS reiterated.

It has already started the infrastructural tendering process for the one million-acre Galana -Kulalu Food Security Project at the Coast as it hopes to increase the land under crop production.

The model irrigation project launched on January 9 is estimated to cost Sh260 billion($3 billion) upwards in capital expenditure.

The government has pledged Sh34 billion in infrastructure development and allocated Sh3.6 billion ion the current financial year. The private sector is expected to pump in the remainder Sh252 billion($2.9 billion) investment along the agricultural value chain.

The policy interventions are expected to turn around the sector that experienced a drop in production in two of the six major crops.

Coffee production posted the sharpest reduction of 18.8 per cent to 39,800 tonnes down from 49,000 tonnes in 2012.

Production of the staple maize also went down by two per cent to 38.9 million bags, deepening the deficit that is sought from neighbouring Uganda and Tanzania.

Tea and wheat however posted improved production at the rate of 17.1 and 19.5 per cent over year 2012 to stand at 432,400 and 194,500 tonnes respectively.

The value of tea however deteriorated by 34.3 per cent a kilo at the Mombasa Tea Auction touching their lowest point since the political and financial mayhem of 2008.

Horticultural production posted a 3.9 per cent rise to 213,800 tonnes.

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