Introduction
Agriculture is the back-bone of Kenya’s economy. It provides food for the population, creates jobs for thousands of people and generates income both through local and foreign trade. Agriculture is practised both for subsistence and export. The main food crops grown in the country are maize, vegetables, beans, tubers, millet, and sorghum among others. The main cash crops are coffee, tea, horticulture, sugar cane, pyrethrum, cotton and sisal.

About 75 % of Kenya’s population live in rural areas and their main pre-occupation is agriculture, mostly practised in small-scale due to lack of capital and land. Land is owned by families but in some places it is owned communally, mostly in pastoral areas where the main activity is cattle keeping. Officially, the government recognises three broad types of land ownership namely: government land, trust land, and private or freehold land.

Agriculture accounts for 24 % of the GDP. Besides creating jobs, providing food for subsistence and earning foreign exchange, agriculture provides the raw material for various industrial products. Although its population is high, Kenya ranks among those African whose food production has kept pace with its population growth.

Whereas the bulk of the population relies on farming, only 15 % of the country’s landmass is arable, with only 7 % being classified as first class land. North Eastern Province and parts of the Rift Valley, Eastern and Coast provinces are dry and unsuitable for farming. The common pre-occupation in these areas is livestock husbandry. In most of the country, the most common type of farming is subsistence, which only produces enough for the family with little extra for sale or export. Large-scale farming, especially of cash crops is concentrated in parts of Central, Eastern, Western, Nyanza and Rift Valley provinces. In particular, the North Rift takes the lead in production of food crops, mainly maize and wheat.

Livestock farming consists of dairy, meat production and hides and skins. Livestock provides food in form of milk and meat and contributes about 7 % of the GDP. It creates employment to about 400,000 people and accounts for about 12 % of the national agricultural workforce. Like other agricultural sectors, livestock depends on rains and good weather, financial support, markets and good infrastructure.

Kenya’s agriculture largely depends on rain and when that fails, productivity is badly affected. Increasing population also puts a lot of pressure on the existing arable land, leading to sub-divisions of farms and reducing the levels of crop production.

Food crops
Major food crops include maize, rice, wheat, sorghum, potatoes, cassava, beans and vegetables.

Maize
Maize is the main staple food in Kenya. On average 1.5 million hectares are planted with maize annually, with an annual production ranging between 16.6 and 34.8 million bags depending on the weather patterns, quality of seeds and market conditions. Annually, the national maize consumption requirement is about 32 million bags. Whenever there are shortfalls, as was the case in 2005 due to rain failure, the country has to import the commodity.

Wheat
The amount of wheat produced every year in the country ranges between two to three million bags, which are produced from 140,000 hectares. The country’s wheat requirement, however, is about eight million bags, meaning there is always deficit of the crop every year. Wheat is mainly grown in the Rift Valley on large scale.

Rice
Rice is mainly grown through irrigation and thrives in various parts of the country. Although rice irrigation schemes nearly collapsed in the 1980s, a number of them have been revived in the past two years, leading to increased production. Some of the revived irrigation schemes include Ahero and West Kano in Nyanza and Mwea Tabera in Central Province. The country’s annual rice production is estimated at about 52,000 metric tones from approximately 12,000 hectares of irrigated rice, while the annual consumption requirements is estimated at 120,000 metric tones, thereby leaving a deficit of 68,000 metric tones, which is met through imports.

Cash crops
Kenya main cash crops are tea, horticulture, coffee, pyrethrum, cotton, cashew nuts, and coconuts.

Tea
Tea is currently the leading foreign exchange earner for Kenya, contributing about 20 % of the total foreign exchange earnings. In 2005, tea production increased by 1.2 %, from 324 million kilogrammes recorded the previous year to 328 million kilogrammes. Increased production during the year was attributed to favourable weather conditions particularly in the East of Rift, which maintained a higher output during the last quarter of 2005 compared to the same quarter in 2004. However, it was a different story in the West of Rift, whose production went down due to poor weather, thus recording a drop of up to 25 % of expected yields.
During the year, tea export volume went up by 4.8 %, from 333 million kilogrammes to 349 million kilogrammes, earning the country KSh 42.8 billion in foreign exchange. Despite increased export volume, the total export earnings dropped by KSh 0.6 billion compared to the previous year with the export unit price declining by 6 % from KSh 130 to KSh 123 per kilogramme largely due to increased production in the world market coupled with appreciation of the Kenya Shilling against the hard currencies.

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Reduced export earnings against rising cost of production occasioned by high cost of labour, rising costs of fuel and high inflation rate impacted negatively on the tea grower margins.

Among the leading buyers of Kenya’s tea were Egypt (25.95 %), Pakistan (23.07 %), United Kingdom (15.31 %), Afghanistan (12.15 %) and Sudan (4.79 %).

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Coffee
Coffee, which was the country’s leading export in the 1980s and 1990s, has shown a marked decline in production. While in 1997/ 1998 coffee production peaked at 130,000 tonnes, the figures fell to less than 50,000 metric tonnes in 2004/2005. This is attributed to low prices following the suspension of the Intentional Coffee Agreement in 1989 and the high input and marketing costs that led farmers to reduce input use, while others abandoned production altogether. Other problems relate to poor governance especially of cooperatives and poor marketing. In fact, one of the major activities being undertaken by the government is to amend the Coffee Act to reflect emerging challenges in the sector, including marketing, as well as restructure the Coffee Board.

However, some of the on-going reforms in the management in the industry and the disbursement of the stabex funds to farmers offer promise for a bright future. The preferential access to the US market given to Kenyan coffee under the African Growth and Opportunity Act (AGOA) also puts the crop in a better stead, as it opens a new window of hope.

Cotton
Cotton production has also been in the decline in the past two decades mostly due to neglect of farmers and the collapse of cotton mills following massive importation of second hand clothes. While in the 1980s cotton production was in the range of 70,000 bales annually, this has gone down to the current 20,000 bales per year. Also, this situation has arisen due to ageing ginning equipment, low lint prices and high production costs.

However, recent developments, including the AGOA market, is giving new impetus for the revival of cotton production. A recent study by the World Bank entitled: “Kenya Value Chains” indicates that the country has high potential for cotton production and roots for fresh and renewed efforts to streamline activities to improve the crop’s yields. The report states that while the country has the capacity to produce 368,000 bales annually, it does less than 30,000.

Sugar
In a good year Kenya produces about 400,000 metric tonnes of sugar while domestic consumption of sugar is estimated at 600,000 metric tonnes. Up to the mid-80s, domestic sugar production matched the consumption levels. But the gap has grown since 1986 and the shortfall currently stands at about 200,000 metric tones a year. This deficit plugged through imports from the Common Markets of Eastern and Southern Africa (COMESA).

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Several reasons account for the sugar production deficit and includes, inefficiencies at the farm and factory levels leading to very high cost of production, inadequate processing technologies, liberalisation, globalisation and inadequate regulatory arrangements. To reverse the trend, the government has developed a strategic Plan for Restructuring the Sugar Industry 2004-2009. Among others, the government has pledged to increase resources to this sector by about 74 % during the plan period.

There are seven factories involved in sugar processing, namely Chemelil, Miwani, Muhoroni, Mumias, Nzoia, South Nyanza and West Kenya. However, Miwani and Muhoroni, which collapsed due to poor management and market strangulation, are under receivership and plans are afoot to revive them and put them back on track.

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Horticulture
The horticultural industry has grown rapidly in the past three decades to become one of the leading foreign exchange earners. Horticultural products include fruits, vegetables and cut flowers. About 90 % of the produce is consumed locally while the rest is exported. The traditional market for horticultural products has been Europe, but in recent times, there have been efforts to diversify and reach out to the Middle East, mainly United Arab Emirates and Saudi Arabia, and South Africa.

The key challenge in horticulture exports is meeting the high quality and safety standards set by the European Union and America. One of the standards adopted by Kenya is called EUREPGAP, which seeks to prevent potentially hazardous products containing biological, chemical and physical contaminants from reaching the market and consumers.

Pyrethrum
Kenya produces about 18,000 tonnes of pyrethrum on 20,000 hectares a year. This puts the country among the highest-ranking producers of the crop globally. The crop is a leading foreign exchange earner bringing in an equivalent of KSh1.5 to 2.0 billion a year. Like with other crops, the country’s capacity for pyrethrum production has not been fully utilised. Some of the challenges facing pyrethrum production are institutional inefficiencies within the industry that hamper marketing, as well high costs of producing the crop.

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Agricultural trends in 2005
Following the high crop production in 2004, there were indications that the country’s agriculture was poised to scale greater heights in 2005. But this was not to be due to insufficient rains during the traditionally long wet season (March to June) and also during the short rainy period (October-November). In fact the rains completely failed in some parts of the country, leading to serious food shortage. Towards the end of the year, the government was sending out pleas for relief food to feed about two million people, who were facing starvation due to lack of food. In the pastoralist communities, especially North Eastern Province and parts of Eastern and Rift Valley, animals were dying in large numbers, thereby terribly undermining the economic base of the people. Overall, agricultural productivity grew by 1.4 % compared to 2.4 % in 2004.

Tea production increased marginally in 2005, by about 1.2 % at the end of the year, compared to 16 % the previous year. Despite the decline in tea output, particularly in the East of Rift Valley, performance in the sub-sector remained good given that production remained above the 300,000 tonnes achieved in 2004. The reduced productivity was witnessed mainly between March and June due to the hot and dry weather. Even if the previous production level was not achieved, there was general good performance attributed to ongoing reforms in the industry. These include licensing of 10 new factories, which has expanded capacity for handling the leaf.

Also giving good results was sugar, whose outputs rose by 4.5 % to 4,751,432 tonnes, up from 4,548,881 in 2004. Even so, output of processed sugar reduced by 0.4 % to 507,306 tonnes from 509,245 tonnes previously. Sales of sugar during the period declined slightly by 5.2 % to 487,856 tonnes, from 514,742 tonnes. Competition from cheap imports particularly Sudan, Zambia and Egypt, continued to haunt sugar industry.

Coffee output, however, went down by 12.6 % during the year, recording 51,387 tonnes, compared to 58,795 tonnes in the 2004. The aver-age price of coffee, however, increased to US dollar 2,108 a tonne from US dollar 1,454 in the period.

Pyrethrum output also reduced by 7.3 % to 3,946 tonnes, down from 4,255 tonnes in 2004. Hence, earnings from exporting the crop fell to US dollar 14.8 million, unlike in 2004 when it reaped US dollar 14.9 million.

Another notable item was milk production, which went up by 17.4 %. In real terms, some 281,336 million litres of milk was produced during the year, compared to 239,705 million before. The improved performance is attributed to the favourable weather conditions, especially the short rains, in the last quarter of 2004. Besides, changes in the industry such as improved regulatory support and the revival of the Kenya Cooperative Creameries and a growing regional market enhanced dairy produce. The table below gives an indication of the production levels of some selected crops.

Sugar cane, which has gone through lean times in the past, also sent very strong signals of recovery. With the production rates rising by 6.6 % to 4,438,020 tonnes compared with a 5.85 % in 2003, sugar cane production was largely good. The increase in cane production saw the levels of processed sugar increasing by 13.1 % to 508,965 tonnes from 450,043 tonnes in 2003.

Livestock development
Livestock farming involves keeping animals for milk and meat. Animal skins and hides are also used for making various leather products such as shoes and bags. Most of the milk is consumed locally and some are exported, especially to neighbouring countries. Like other agricultural sub-sectors, livestock production was on the upward move. Production of both dairy and beef animals increased due to favourable weather during the year. Pasture and water were available in reasonable quantities and few animal deaths were recorded compared to the past.

One notable development in the livestock sector is the revitalisation of dairy farming following the Kenya Cooperative Creameries (KCC) by the government. Starting in 2003 with the take-over of the organisation by the New Kenya Cooperative Creameries, the dairy sub-sector has witnessed a major transformation. Disillusioned farmers who had shifted focus to other areas were lured back when the earnings were increased and payment mode streamlined. Moreover, more collection centres were opened, where milk is received and cooled, thus making it easier for the farmers to deliver their products on time and avoid wastage. This has seen a marked rise in milk processing, from 30,000 litres a day in 2000 to 300,000 litres daily in 2005. Together with other milk processors, this has ultimately pushed the production levels to 3 billion litres annually.

Further, the revival of extension services also played a big role in boosting milk production and so is the liberalisation of the markets, especially allowing smallscale milk producers to sell their products to their preferred clients, including open hawking of the commodity. Indeed, many dairy farmers preferred selling their milk directly to the consumers instead of delivering them to the processors because that assured them of instant payments. As at the end of 2995, the small-scale dairy farmers accounted for 70 % of the milk produced in the country. Similarly, the revival of the Kenya Meat Commission offers a ready market for the pastoralists, who can now sell their products and get value for their animals.
Despite the gains, livestock sector continued to experience many problems. Lack of clear policy and guidelines on live-stock trade, dysfunctional farmers’ cooperatives and poor marketing strategies are some of the challenges the sector has to confront. At the political level, there is concern that livestock department has continuously been tossed from one ministry to another, hence making it difficult to have consistent policy direction. Although there is the Ministry of Livestock and Fisheries currently that is responsible for managing the sector, this only came into being in mid 2003, having been split from the larger Ministry of Agriculture and Livestock Development. The Ministry of Livestock was first created in 1979 from the Ministry of Agriculture. But in 1983, the two ministries were merged together, split again in 1986, merged in 1992 and split again in 2003. Such structural changes affect long-term strategic planning and development of the sector.

Managing the agricultural and livestock sector
There are two ministries that are responsible for agriculture - Ministry of Agriculture and Ministry of Livestock Development and Fisheries. The ministry of Agriculture is responsible for developing the national food policy, providing agricultural Credit and developing agricultural policy. The Ministry of Livestock Development and Fisheries is responsible for development of livestock, providing policy on dairy farming and marketing.

There are a number of parastatals involved in the management of agriculture, and they include Kenya Dairy Board, Kenya Farmers Association Ltd., Kenya Tea Development Agency (KTDA), Horticulture Crops Development Authority, National Cereals and produce board (NCPB), Coffee Board of Kenya and Kenya Seed Company Ltd.

Challenges
facing agriculture
Although there were signs that agriculture was on the path to recovery, several challenges still persist and hamper high productivity. Top on the list is the country’s dependence on rains for agriculture. Given the fact that rains keep fluctuating as the environmental patterns change, steady crop production cannot be guaranteed. Dry weather is particularly bad for livestock keepers and in hardship areas like North Eastern Province and parts of Rift Valley and Eastern provinces, this leads to mass death of animals and loss of family incomes. Poor infrastructure throughout the country, especially dilapidated roads and malfunctioning rail line, hampers quick and efficient transportation of crops to the market. Worst-hit are horticultural products that require quick deliveries to the markets.

Despite the fact that international prices of tea and coffee has been improving, there is still concern that the crops are underpriced and farmers are not getting good value for their sweat. Other crops like sugar cane are still under-priced and cane farmers hardly make ends meet from their outputs.

Slow pace of policy and legal reforms has affected the management and expansion of some agricultural sub-sectors. At times, some policy changes have created conflicts between players and the government, as was witnessed when towards the end of the year, the government altered rules on sugar imports.

Poor equipment and high cost of farm implements and inputs like fertilisers and pesticides have generally made farming an expensive activity. In turn, that increases the cost of the final products and affects their competitiveness in the market. Put differently, the high cost of crop production increases the prices of the products and makes them vulnerable when competing against cheaper imported products.

Lack of capital to invest in farming and a general low level of funding from the government has also hindered increased crop production. Most farmers use traditional farming methods because they cannot afford modern and capital intensive ventures as they lack the requisite resources. Matters are made worse by the fact credit facilities are few and given their small farm holdings, they do not have the right collaterals for big credits. Lack of capital also means that livestock farmers cannot put abattoirs or milk processing plants to consume their products.
Poor governance in key agricultural institutions, mainly in the farmers’ cooperatives, lack of training and skills among farmers and the increased cases of HIV/AIDS have also worked against agricultural productivity.

There are many diseases that affect livestock and crops and since farmers are not well equipped due to lack of funds, skills and technology, they are unable to fight them. In particular the diseases have always killed large herds of cattle and goats and impoverished the herders in hard-ship areas.

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Way forward for agriculture
The government has developed a 10-year plan, Strategy for Revitalising Agriculture (SRA), which seeks to transform agricultural activities into more profitable and internationally competitive ventures.

Among others, the plan also seeks to streamline management of the relevant institutions so that they can play their rightful roles in promoting farming. Already attempts have been made to revamp and revitalise some institutions such as the Agricultural Finance Corporation and the Kenya Cooperative Creameries by appointing new management teams and injecting funds into them so that they can carry out their activities.

Also included are reforms in land tenure that involve creating the right legislative framework that protects ownership and also compelling landowners to put them into proper use to increase productivity. The law reforms also seek to empower women to own land and since they are the majority in agriculture, enable them to use the title deeds to secure bank loans and increase their productivity.

At the policy level, too, the government has significantly increased financial assistance to farmers especially through funding institutions like Agricultural Finance Corporation so that the farmers can go into big scale farming that promises high yields and incomes.
It is also promoting irrigation farming, especially in dry areas, to save the farmers the agony of relying on the unreliable rains. At least, some KSh1.5 billion was allocated in the 2005/6 budget for construction of dams and bore-holes for irrigation, especially in the dry areas. With irrigation, farmers will be able to plant crops all year round and maximise on their land.

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While it is laudable that the government has steadily been increasing funding to agriculture, a lot still needs to be done to ensure that farmers are accessible to loans and other credit facilities to support their productivity. The ongoing policy and legal reforms must also be expedited to make farming an enriching and fruitful activity.