High fuel costs slowing down farming activities, warns CBK

Labourers offload bags of potatoes from a  tractor to a lorry at Mwisho wa Lami in Njoro, Nakuru on September 05, 2017. [File, Standard]

Kenyan farmers have cited high transport costs as the leading factor that constrained agricultural production in July, a new sector survey by the Central Bank of Kenya (CBK).

The number of respondents who said that transport costs were “very significant,” touched a high of 80 per cent, more than input prices, for example, seeds at fertiliser at 73 per cent.

“The findings revealed that transport costs, weather conditions and input costs such as fertiliser were very significant scoring over 56 per cent of the total responses,” says the survey.

The war in Ukraine and the lingering effects of the Covid-19 pandemic have pushed up the cost of fuel, which has translated into high transport costs.

Transport Index increased by seven per cent in the last 12 months July 31 with a litre of super petrol retailing at an average of Sh159.94 compared to Sh27.98 in the same month last year.

A litre of diesel, critical for transport lorries and agricultural machinery used by farmers, retailed at an average of Sh140.91, an increase of almost a third from Sh108.58.

“The Covid-19 pandemic was found to impact the agriculture sector moderately and is no longer considered to be a major issue as the economy is now fully open following the lifting of most restrictions,” said the survey.

The 99 per cent of the respondents also mentioned market availability, labour cost and the war in Ukraine as being very significant in shaping market supplies.

“Even though land is not very significant, respondents mentioned it as an important factor that affects agricultural production. Uptake of technology remains low and could be the reason why majority found it not to significantly affect market supplies.”

As part of the recommendation by the farmers and traders to improve production, the respondents rooted for a reduction in transport costs by lowering fuel prices.

Already, there is a fuel subsidy in place that has cushioned Kenyans from paying higher prices for petroleum products.

They also recommended that market traders be provided with cheap loans, a reduction in the cost of inputs such as fertiliser and seeds, and the building of more dams for irrigation to counter the adverse weather conditions.

They also recommended discouragement of subdivision of land to promote large-scale farming and mechanisation and reduction of tax levies to support farming and trading activities. Farmers further want the government to help create markets for agricultural commodities.

Retail prices of kales and cabbages increased as traders transferred rising costs to consumers from the reduced supplies, following the persistent dry weather conditions.

However, increases in prices of dry maize, beans, wheat, beef, eggs, and milk slowed down in July. Agriculture, the mainstay of the Kenyan economy, contracted in the first quarter even as the economy grew by 6.8 per cent.

Crop growing and livestock rearing activities continue to contract, registering a negative growth of 0.7 per cent in the review period compared to a contraction of 0.4 per cent in the second quarter of last year.

“The contraction was mainly attributed to depressed rainfall during the fourth quarter of 2021 as well as delayed onset of rains during the quarter under review, thereby leading to reduced agricultural production,” reads part of the report released yesterday by the Kenya National Bureau of Statistics.