The government will need to heavily invest in agriculture as well as prop up the sectors that are intertwined with agriculture to lower the cost of living and make life bearable for Kenyans.
This is according to the Kenya Institute for Public Policy Research and Analysis (Kippra), which in a new report said the high cost of food has hit many households hard.
This is especially the case for poor Kenyans, who, according to Kippra, are now spending at least 60 per cent of their income on buying food, as high prices push essentials out of reach.
“To enhance macroeconomic stability to support strong growth and reduce the cost of living (there is a need to) accelerate investments in the agriculture sector for strong growth and stable food prices.
“This includes enhancing affordable inputs, upscaling irrigated agriculture and adopting climate smart practices. This will revamp the sector’s resilience to weather-related shocks and provide fresh impetus for agriculture sector growth,” said the State think tank, adding that the country needed to also work on agricultural inputs such as fertiliser production as well as support manufacturers that process agricultural produce and improve roads that lead to farms.
“Further, adequately budget for the services and manufacturing sector to sustain growth in these critical sectors and enhance employment creation.”
Kippra, in the Kenya Economic Report 2023, noted that households are spending 54.3 per cent of their income on food and this goes up significantly for low-income households, spending more than 60 per cent of their expenditures on food.
“Therefore, high food prices reduce access to adequate food in terms of quantity and quality. In addition, poor households are forced to cut back on spending on other essential items such as health, sanitation, clean water and education. This pushes them into poverty and makes them more susceptible to poor health and malnutrition,” said Kippra.
The high cost of food has been among the drivers of high inflation which peaked at 9.6 per cent in October last year - beyond the government’s upper limit of 7.5 per cent.
The inflation rate has since eased to 6.7 per cent in August on account of recent rains and within the government’s target of between 2.5 per cent and 7.5 per cent.
Inflation is the increase in prices of goods and services over time.
The surge in inflation in 2022, Kippra explained, was driven by food inflation, which reached a double-digit inflation from April 2022 and increased persistently from 12.1 per cent in April to 15.8 per cent in October 2022, reflecting an increase in the cost of purchasing a food basket over this period.
Food and non-alcoholic beverages take up 32.91 per cent share of the CPI (Consumer Price Index) consumption basket, which measures change in consumer prices over time. This makes the food basket a major contributor to the overall CPI.
High food inflation was due to low rainfall but also aggravated by high cost of inputs, including seed and fertiliser, as well as the high cost of fuel that is key in agricultural processes as well as taking produce to market.
In addition, Kippra noted, global food inflation and depreciation of the shilling exposed the country to high cost of imported foods, which is transmitted to domestic food prices.
“Further, investments in enhancing agricultural productivity are hampered by gaps in the food supply chains that contribute to import dependency and post-harvest losses,” said the institute.
“Poor market infrastructure, such as poor rural roads and feeder roads, and poor market information flows contribute to distribution constraints, and to food surplus and wastage in some parts of the country while other parts experience food shortages.”
Kippra noted that also key in reducing the cost of food would be the promotion of crop diversification and improved crop variety, including the promotion of local indigenous food crops that are less affected by extreme weather conditions.
“Further, more research is imperative to ensure that drought resilient crops are supported depending on the regional climatic conditions and soil types”.
It also noted that the government needs to promote post-harvest management of fresh produce to minimise post-harvest losses. This can be through agri-food processing and putting up adequate storage facilities.