Agribusiness

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Agribusiness

Agriculture is the leading sector in contribution to the country’s GDP at 27.3%, it is Kenya’s main export earner with over 18 million Kenyans earning an income from agriculture.  The leading contributor in the sector is crops, followed by livestock, fishing and aquaculture. This is according to the MTP 2007-2013 of Vision 2030.

Kenya Vision 2030 identifies agriculture as a key sector through which annual economic growth rates of 10% can be achieved. Under the vision, small holder agriculture will be transformed from subsistence activities, marked by low productivity and value addition, to ‘an innovative, commercial-oriented, internationally competitive and modern agricultural sector’.

Agribusiness is defined as including all businesses involved in agricultural production that include farming and contract farming, seed supply agrichemicals, farm machinery, wholesale & distribution, processing, marketing and retail sales.  Agribusiness has already shown its potential to integrate smallholder farmers into the sector in a range of innovative ways.

Slow growth in agriculture

Slow growth in agriculture is attributed to the following challenges

  • Climate change/unreliable weather patterns
  • Low uptake in technologies
  • High cost of investment
  • Poor marketing systems
  • Aging farmer population
  • Low participation of youth in Agriculture

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Challenges faced by youth in Agriculture

Challenges that Hinder effective youth participation in the Agriculture sector

  • Negative perception & attitude to agribusiness
  • Inadequate skills, knowledge & information
  • Limited access to financial services
  • Limited access to land for agribusiness
  • Limited agriculture innovation, research & tech dept., adoption & utilization
  • Low productivity
  • Limited value addition
  • Limited access to markets
  • Inadequate policies to support youth in agripreneurship
  • Climate change environmental management

Innovation in Agribusiness

Farmers organizing themselves into co-operatives which can take advantage of economies of scale of larger organizations e.g. bulk buying of inputs and bulk selling of produce & adhering to quality standards

Becoming contract farmers to a commercial company that supplies specific agricultural commodities. These are known as ‘outgrower’ this provides security of supply and product integrity, protect them from fluctuations in both price and demand that exist in the open market

  1. Storage and packaging can be a way of unlocking the potential of the agricultural sector.

Opportunities for agribusiness growth

  1. Large potential to generate export earnings: agribusiness already generated 60% of Kenya’s export earnings through horticulture, industrial crops, livestock & fishery products. COMESA is the market for 70% of Kenya’s total exports to Africa.
  2. Comparative advantage in the region: Kenya is the most economically advanced country in the region however competition is on the rise from neighbouring countries and concerted effort is needed to maintain this position.
  • Rapid urbanization and increasing demand for processed foods: as more people move into urban areas, this offers great business opportunities for agriculture if well harnessed. Urban consumers will demand better quality, packaged, processed and more diverse food products.
  • High world food prices: surging world prices have highlighted Kenya’s dependence on food imports.
  • Dominant sector within the economy: compared to other sectors of the economy, agribusiness has the potential to absorb and creatively employ larger numbers of underemployed people

Trends that affect agribusiness potential

DAF area of focus is AgriBusiness

Opportunity

  • Food Security
  • Income generation
  • Employment & wealth creation
  • Build capacity for digitization
  • Value chains (end to end)

DAF Solutions

  • Attitude change towards agriculture
  • Creation of relevant linkages
  • Drudgery nature of agriculture work
  • Capacity building in using digitization
  • Encourage youth participation in taking up value chains e.g. Horticulture (fruits & veg’s),
  • Chicken or poultry, Dairy farming & growing of pulses

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