OPINION: A practical guide to the necessary Kenyan agricultural revolution

Nobody drinks oil, and no one eats cobalt, but everyone needs food to survive. This has been the demand driver of Africa’s economic engine - Agriculture.

However, despite the sector employing 60% of the continent’s workforce, it only compensates with less than one-seventh of its GDP. This huge gap is enjoyed by the rest of the world as they add value to the raw commodities we export.

This situation is the same in Kenya, this is probably not news to you; Africa’s immature secondary sector has been widely discussed yet it hasn’t translated to a change in this narrative. To understand how we’ll transform our sector and economy, we first need to understand the hurdles we face, and how and why they were put in place.

Historical challenges of the Lancaster Accords;

History is like a road map to the present. If you've seen where we've been, you'll have a much better idea of where we're going. When Kenya gained its independence in 1963, it was enabled by a series of agreements known as the Lancaster Accords.

These Accords have had a significant impact on Kenya’s agricultural sector. It is the main driver for the positives we’ve seen, but it is also the root cause of most of the challenges we face.

On the positive side, the accords led to increased investment in agriculture as they urged the British Government to provide financial assistance to Kenya to help develop its agricultural sector.

This investment led to increased agricultural productivity, which helped to improve food security in Kenya. Under British rule, much of Kenya's land was owned by European settlers. The accords stipulated that all land in Kenya would be owned by the Kenyan government, and that land would be redistributed to Kenyan citizens.

This redistribution of land helped to improve access to land for smallholder farmers, which helped to boost agricultural production.

However, the Lancaster Accords also had some negative impacts on Kenya's agricultural sector such as the increased emphasis on export crops. The Kenyan government focused on promoting the production of export crops, such as coffee and tea which focus less on their value addition.

This emphasis on export crops led to the neglect of food crops, which made Kenya more vulnerable to food shortages.

Innovative land reforms and strategic partnerships;

Kenya's approach to transformation can stand out by learning from past failures of rigid ideological projections and adopting a more balanced partnership strategy for effective problem-solving.

Under this approach, local county governments would establish cooperative partnerships to represent their citizens' interests and would seek technical expertise through strategic joint ventures.

These partnerships would include minority shareholders in the form of a strategic agricultural development company, responsible for providing technical capacity, machinery, and funding. In return, they would receive a share of the profits and dividends from the cooperative entity.

A notable example of the potential benefits of such a strategic partnership is Kakuzi PLC, which has consistently demonstrated growth and great performance since its listing on the Nairobi Securities Exchange.

The majority shareholders in this cooperative venture would be the landowners, the citizens of the region. These individuals would lease their land to their county government on a long-term basis, resulting in several advantages.

Firstly, the citizens will have a reversionary interest in the land once the lease expires. Secondly, they would receive shares in the newly formed cooperative entity, providing them with dividend income and annual rental income from the leased land.

Lastly, this approach would generate employment opportunities on these farms, contributing to broader socio-economic development, including affordable housing, factories, schools, and other initiatives that warrant further exploration.

Coordination and capacity building;

In Kenya's breadbasket regions, the average farm size has seen a stark reduction over the past decade, yet we have large parcels of land under government agencies and parastatals. 

Strategies like Land Commercialization Initiative (LCI) can be deployed to use large tracts of land sitting idle in the various government ministries and parastatals that can be used for farming as such increasing food production and bridging the gap which exists in the production process.

The question of the day is, are we ready for multi-county and regional blocks investments in agriculture? To drive this key reform agenda; Investments in agriculture should be of a national nature traversing different counties.

County governments, through the regional economic blocks, can achieve scale which can help reduce transaction costs and attract sustainable financing for these bankable projects.

Ownership can be based on shareholding with Revenue sharing arrangements with commercialization of agriculture. This will attract the right International Investors like pension funds and make it possible to raise financing through County Bonds and other debt instruments.

Further, there is an immediate need to rethink commercial farming and the sentimental attachments farmers have on the large plantations of tea, coffee, palm oil, macadamia, avocado etc.

There is a need for a current mind shift change on the capacity to manage large commercial farms management. Owners of farms are faced with challenges where their children are no longer interested in farming.

The radical thinking around this should be listing commercial farm operations on Real Estate Investment Trust (REIT) arrangements at the Securities Exchange. This process is doable, and it will involve legal, financial, and regulatory considerations.

Kenya's population is on a relentless growth trajectory, with an increase of one million people annually. In the coming decade, this translates to an additional 10 million mouths to feed.

The strategic establishment of county-level agricultural cooperatives in Kenya offers a multifaceted solution to the nation's complex agricultural challenges and builds a more sustainable agricultural future. Moreover, Kenya must acknowledge that Asia's development trajectory, though impressive, cannot be replicated verbatim.

Africa, and Kenya in particular, possess unique dynamics that demand tailored strategies. Consolidating small-scale farmers into cooperatives or larger entities, while integrating sustainable agricultural practices, can harness the advantages of scale while respecting Kenya's distinctive context. This approach not only offers economic stability and rural development but also preserves Kenya's unique path to growth.

Planning the economy around agro-industrialization;

Kenya stands at a critical juncture, facing multifaceted challenges that include the transformation brought about by the Green Revolution in farming and the concerning trend of deagrarianiation. It is crucial to delve deeper into these issues to understand their implications for Kenya's future development.

The Green Revolution, an agricultural transformation that began in the mid-20th century, introduced high-yielding crop varieties, advanced agricultural technologies, and increased use of fertilisers and irrigation.

While it significantly increased agricultural productivity worldwide, it has also had unintended consequences. In Kenya and other developing countries, the Green Revolution's increased capital intensity placed considerable pressure on small-scale farmers.

The high cost of inputs such as artificial fertilisers made it challenging for these farmers to keep pace, leading to a complex landscape where modernised farming practices coexist with traditional methods.

Simultaneously, Kenya grapples with deagrarianization, a process marked by the declining role of agriculture in the economy and the migration of rural populations to urban areas. This trend has been exacerbated by several factors, including the increased exposure of national agricultural economies to global markets and the shift towards specialisation in cash crops for export.

Small-scale farmers, particularly vulnerable to these changes, have faced economic strain, forcing some into insurmountable debt or to seek seasonal employment in urban centres to supplement their farming income.

Consequently, there is an urgent need for Kenya to address the challenges posed by deagrarianization and the disparities resulting from the Green Revolution.

Premature deindustrialization, an unexpected global phenomenon, is another pressing concern for Kenya. This phenomenon challenges the conventional narrative of development, particularly when juxtaposed with the experiences of countries like Brazil and India.

Kenya should be cautious not to succumb to this trend and must nurture its industrial sector in a concentrated manner that emphasises our competitive advantage. One promising avenue is agricultural manufacturing, which can diversify the economy, reduce over-reliance on a single sector, and stimulate industrial growth.

In light of these complexities, Kenya must chart a strategic course that acknowledges the nuances of its agricultural landscape. This includes not only bolstering the agricultural manufacturing sector but also consolidating small-scale farmers into cooperatives or larger entities, enabling economies of scale and equitable access to resources.

Sustainable agricultural practices must be integrated into these efforts to ensure long-term environmental viability. By doing so, Kenya can both counter the negative effects of deagrarianization and leverage the Green Revolution's advantages while tailoring its developmental path to its unique context.

Adapting to climate change

With El Nino an imminent danger, it’s no surprise that the Global Risks report marked ‘failure of climate change adaptation’ as one of the top 10 risks for nations over the next two years. Adapting to these challenges will be a vital cog in Kenya’s agrarian economy.

Kenya's climate adaptation strategy must be a priority given the significant impact of climate-related disruptions on the country, especially in the agricultural sector. Recent events, such as the prolonged wet weather and flooding caused by the Indian Ocean Dipole and the subsequent desert locust swarms, followed by severe droughts, have demonstrated the urgent need for robust climate adaptation measures.

To maximize the effectiveness of these climate adaptation measures, a data-driven approach is essential. Precision farm management, animal husbandry, and market analysis powered by data can empower farmers to make informed decisions, improve efficiency, and reduce waste. This data-driven agriculture will promote more sustainable and profitable farming practices, aligning with Kenya's broader climate adaptation goals.

The future is not necessarily bleak, but we must act swiftly to enjoy the fruits of our labour figuratively and literally.

Hosea Kili - OGW is Group Managing Director & CEO of CPF Financial Services Group