The agriculture sector stands out in this year’s Budget as the only one whose allocation has been reduced.
The National Treasury slashed the money it has allocated to the critical sector in the 2022-23 financial year by 15 per cent compared to what the sector received last year.
The agriculture sector will now get Sh63.9 billion, a drop from Sh75.7 billion allocated in the current financial year that ends June 2022.
The reduction is despite agriculture facing major challenges in the course of last year that have spilt into 2022.
Top of the problems that the sector faces include the drought that persisted last year and is still being witnessed over the current March-May long rains season.
The bad weather conditions resulted in the sector contracting by 1.2 per cent in 2021. This is even as the rest of the economy posted a 5.4 per cent growth, appearing to be shrugging off the impact of the Covid-19 pandemic.
The sector is also grappling with the rising cost of inputs, worsened by the Russia-Ukraine war. Higher input costs are expected to result in higher food prices in the coming months.
Agriculture is key to Kenya’s economy, being the largest contributor to the gross domestic product (GDP) – the value of goods and services produced in the country – and the largest employer.
Its importance was perhaps most felt in 2020, the year that Covid-19 hit hard, resulting in most sectors shedding jobs.
Agriculture absorbed many people that lost jobs in other industries, while good yields helped tame the high cost of living.
So central is agriculture such that even with the lower allocation, National Treasury Cabinet Secretary Ukur Yatani told Parliament when he presented the Budget Speech Thursday that the projected six per cent economic growth this year would be “supported by a recovery in agriculture, industry and services sectors”.
Agriculture industry experts and observers said it was curious for Treasury to reduce the allocation at a time when the sector needed more resources to cope with the shocks.
“It is a bit disappointing (to reduce allocation) considering that the sector is already facing quite a number of shocks this year. It does not give confidence that the sector is being prioritised,” said Timothy Njagi, a development economist and research fellow at Tegemeo Institute of Agricultural Policy and Development.
“We already have a drought, the rising cost of inputs…it is a puzzle that in the midst of all these challenges, the allocation would go down.”
Dr Njagi told The Sunday Standard that while Treasury has set aside Sh3 billion for a fertiliser subsidy for the October-December short rains season, Kenya still faces a more immediate challenge with farmers suffering high cost of fertiliser over the current planting season.
This could translate into higher food costs in the coming months. He noted that the current system of subsidising inputs covers only a handful of farmers, something that the government could have considered expanding.
“The government is talking about a subsidy next season, what happens between now and the next season? The current subsidy is done through the e-voucher that is targeted to a number of people who have been registered,” said Dr Njagi.
“This could mean that from around June and July, we might face higher food prices. If farmers are facing a higher cost of inputs, as they do now, consumers have to pay for that.
“You would have expected more targeted interventions such as increasing the e-voucher to cover more people.”
Financial consultants Deloitte Kenya said there is a need for the government to increase investments in the sector.
“The agricultural sector is estimated to have contracted by 1.2 per cent in 2021, due to adverse weather conditions,” said the firm in a review of the Budget.
It said the government subsidies on fertiliser and growth in demand for produce might help the sector withstand the shocks this year and post a 4.6 per cent growth.
“To boost agricultural produce, it will be key for the government to increase investment in key programmes and projects that will lead to higher yield, notably provision of subsidised fertilisers, quality and certified seeds and mechanisation, all aimed at ensuring that we produce enough food to feed ourselves as a nation,” said Deloitte.
“There may be a need to implement reforms that ensure sustainable farming practices.”
Consulting firm PwC said the money set aside for agriculture might be inadequate. “It should be noted that the agricultural interventions may not be enough to cushion against the drought,” said the firm in a post-Budget brief.
It said that agriculture being a cornerstone of the Kenyan economy, the sector was key to the government’s economic strategies.
Agriculture contributed 23 per cent to GDP in 2020 and employs about 40 per cent of the population.
“This makes the industry an important pillar in both the Economic Recovery Strategy (ERS) and the Big Four Agenda,” said PwC.
“Despite its economic significance, the sector is yet to realise its full potential due to low mechanisation and productivity, limited market access, lack of value addition, inadequate agricultural inputs, uneconomical sub-division of land and change in land use, adverse effects of climate change, and post-harvest losses, among others.”
Agriculture was to play a key role in the delivery of President Uhuru Kenyatta’s Big Four legacy, where he aimed to attain food and nutrition security for all Kenyans.
Implementation of the Big Four Agenda, which was delivered over the Medium-Term Plan III of Vision 2030, is set to end this year and pave way for the next medium-term plan.
When a review of the third medium-term plan is done, it might reveal that Kenya got nowhere in terms of becoming food secure.
An Oxfam report published last month showed that 3.1 million Kenyans are facing starvation and in need of aid, attributing the dire food situation in the country to a 70 per cent drop in food production.
The non-profit organisation said nearly half of all households in Kenya have to borrow food or buy it on credit.
Dr Njagi said the dire food situation calls for an overhaul of how Kenya goes about its agriculture.
“The target (under Big Four Agenda) was 100 per cent food and nutrition security by end of 2022, but already, we are talking about millions of people who need relief food. It is a clear disaster,” he said.
“Ideally, even when we have a drought, people should be able to withstand it as there should be options that guarantee food security and not rely on food aid to survive.
“You should also have stable food prices but when you have them doubling within a few months, that is an indicator that we are not doing well.”
Dr Njagi said to transform agriculture, there is a need for strong political will.
“Transformation will not happen when we keep doing things the same way over the years, we need a radical shift.”