Think tank seeks ban on export of raw materials to boost earnings

Work in progress at  Avoveg Limited, a company dealing in the processing and export of horticultural produce. [David Njaaga, Standard]

A State-backed think tank is seeking amendments to the export laws to allow traders to sell only value-added produce to overseas markets. The changes will affect the Crops Act of 2013 and the State Corporation Act of 2019.

The move, according to the Kenya Institute for Public Policy Research and Analysis (Kippra), aims to maximise the potential of the agricultural sector in favour of President William Ruto’s Bottom-up Economic Transformation Agenda (BETA).

Coffee, tea, avocado and macadamia are the crops targeted by Kippra. 

As detailed in the latest policy document, Kippra notes that the country is a major agricultural exporter of high-value crops yet some key products such as coffee and macadamia have not met their full potential. 

“Agricultural value addition provides a viable option for small-scale crop and fruits farmers to enhance product shelf-life and offer them a ready market for the produce, besides providing nutritious food,” reads the policy monitor document titled, Kenya @60 and Industrialisation Prospects under BETA published this month. 

Kippra cites a report by the International Food Policy Research Institute (IFPRI), which estimates horticultural losses in Kenya to be 50 per cent, mainly due to poor storage, low-value addition and poor handling practices resulting in significant losses to the farmers.

Therefore, it concludes, that value addition becomes important in this case as prioritised under the BETA plan.

“For the international market, value-added goods are in greater demand,” the document says.”It is essential that farmers, investors, and other participants seize the chances to add value to the abundant (high value) crops, fruits and vegetables before exporting.” 

Kippra states that the method of first discovering what traits the markets desire in their agricultural goods and, then inventing or manufacturing products with those attributes, is swiftly displacing the attitude of producing raw agricultural commodities and then selling.

The policy think tank notes that economic transformation can be achieved by incorporating value-addition practices along the value chain in identified value crops before export. “This can be achieved by engaging different cooperative societies, shortening the value chain, and linking producers directly to exporters,” reads the Kippra report.

Additionally, there is a need to aggressively promote a big and viable domestic market for the commodity by investing more in local processing facilities and partnerships.

“The Crop Acts No 16 of 2013 and the State Corporations Act, Cap 446 of 2019 needs to be amended to ensure that only value-added crop products are exported,” it adds.  Adoption of value addition in tea, coffee, avocado and macadamia, says Kippra, will not only make farming a viable venture but also increase the financial value of the produce, and improve the income of smallholder farmers.

Kippra cites that avocados account for 84.5 per cent of Kenya’s fruit export revenue annually, which is more than Sh15 billion ($100 million) according to the Horticultural Authority Report, 2017-2018.  “The avocado has been re-branded as the green gold due to its high demand and versatility,” Kippra says.” It has been identified in BETA as one of the value fruits that can be exploited to boost export revenue and earn Kenya additional income.”

Kippra says the value chain in Kenya faces challenges, including poor storage and insufficient infrastructure that lead to a loss of produce by up to 50 per cent.  “To overcome the losses in the avocado value chain, value addition should be embraced. Processing avocados into products such as avocado oil, guacamole, and frozen avocado pulp can improve their shelf-life and fetch more income on the international market,” the policy document says.

For macadamia, the report says value addition can help increase the income of small farmers by enabling them to sell processed and packaged macadamia nuts directly to consumers or exporters. 

“This can be done if farmers form associations and invest in procuring processors. Processing Macadamia nuts into kernel, oil, or other products can also lead to the creation of more job opportunities in the country and thus spur economic growth as envisioned in the BETA plan,” Kippra says. 

The report states that in the tea sector, the Tea Research Institute has developed over 1,000 improved cultivars (varieties), of which 53 superior cultivars have been carefully selected for consistent yield and quality and subsequently released for commercial use by both smallholder and large estate growers. 

“However, the current diversification of tea products remains limited, comprising less than one per cent of the total tea production in the country. This presents a unique opportunity for expansion, as broadening the range of tea the tea processing industry is undergoing notable changes,” the report says. 

Kippra says value addition would allow Kenya to maximise the African Free Continental Free Trade Area (AfCFTA). 

The same can also be replicated for coffee as the report states that leveraging the AfCFTA offers a promising avenue to enhance the marketing of coffees from New Kenya Planters Cooperative Union (New KPCU) and the Nairobi Coffee Exchange. 

“AfCFTA facilitates easier access to a broader African market by reducing trade barriers. For Kenya’s renowned coffee industry, this means improved competitiveness, joint branding, sustainable practices, and efficient supply chains,” the report says.