How cotton farming withered in liberalization

By John Oyuke

It is often said that when a developing country carries out economic liberalisation, the possibility of tremendous shocks and instability heightens. It is worse when its knowledge base is not adequately prepared to deal with the consequences.

The sudden forced liberalisation in Kenya in the 1990s was therefore no exception. The move not only resulted in rapid influx of imports, but also accelerated the immediate collapse of many businesses. One of the victims of this liberalisation wave was Cotton Board of Kenya, which until 1991 controlled the cotton industry. The abrupt manner in which the industry was liberalised left the board without any role.

Its subsequent fall in 1992 threw the sector into a disarray and regulatory and monitoring vacuum, from which it is only now slowly emerging. Prior to the collapse, Cotton Board of Kenya, which replaced the Cotton Lint and Seed Marketing Board, had the monopoly powers in all aspects of regulation.

These included licensing and control of ginneries, licensing of imports and exports, pricing, quality control and supply of planting seed through ginneries across the country. It also provided farmers with chemicals including pesticide sprayers. Price regulation ensured that farmers’ produce was bought at a guaranteed price. But after its collapse in 1992, brokers bought cotton at as low as Sh15 a kilo for high quality Grade A and Sh9 a kilo for Grade B.

The prices were too low to sustain farming of the crop, which requires heavy chemical inputs to prevent diseases, aphids and borers. Farmers who could not afford chemicals harvested as little as 5kgs of cotton per acre. The result was a mass withdrawal from cotton growing. The Government decided to liberalise the Cotton industry in 1991 and to allow private investors to participate in the industry.

But in its wisdom or lack of it put no alternative institution in place to carry out the crucial regulatory and co-ordination tasks. The general disorder as a result of the regulatory and monitoring vacuum that characterised the sector did not only affect farmers, but the industry in general with major victims being the Kicomi of Kisumu, Rivatex (Eldoret), Kenya Textile Mills (Thika) and Mountex (Nanyuki).

The vacuum resulted in seed contamination, inadequate control of lint quality and the collapse of input credit mechanisms. There was also dumping of used clothes locally known as "mitumba" which was originally meant for the troubled Great Lakes region, but somehow ended up in the local market retailing at very low prices.

Contributing to a motion to review the Cotton Act, a year after the Narc government came to power in 2003, Prof Ayiecho Olweny, Muhoroni MP, described the collapse of the board as a major frustration to the cotton industry.

The board was the major link between the farmer, the Government and the buyer.
He described the crop as one, which used to support farmers and population in the low-lying areas of Kenya, particularly Nyanza and Eastern Provinces, saying major cash crops grown in the country are from the highland areas.

"We know very well that one of the things that led to the collapse of the cotton industry was poor marketing and pricing strategies," said the Education Assistant minister.

Olweny added that farmers would also be paid late even after delivering their produce to the various receiving points. On his part, Mbita MP Otieno Kajwang noted that while Uganda and Tanzania farmers continue to produce cotton and their governments are supporting the venture, Kenya watched as the cotton industry to collapses.

Creation of the Cotton Development Authority (CODA) in 2006 has, however, seen a number of farmers growing cotton.