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Friday, August 18, 2017

Agribusiness is set for takeoff

Agriculture CS Willy Bett. He says food purchases are growing at 10% per year and expected to reach Sh1.7tn by 2020.
Agriculture CS Willy Bett. He says food purchases are growing at 10% per year and expected to reach Sh1.7tn by 2020.

Last September, President Uhuru Kenyatta hosted the largest annual gathering of the African Green Revolution Forum at which he delivered a blunt assessment of Africa’s economic future. “The transformation of Africa,” he said, “will only work if we transform agriculture.”

The importance of agriculture in Kenya, and across Africa, is now widely acknowledged and a new wave of support is rising. For example, at the AGRF, the African Development Bank pledged $24 billion (Sh2.4 trillion) over 10 years for agribusiness projects in Africa. Uhuru pledged $200 million (Sh20.3 billion) in new spending to help young farmers gain access to markets, financing and insurance. The Kenya Commercial Bank Group set aside $350 million (Sh35.6 billion) for financing agriculture business initiatives.

The prospect of a surge in investments raised expectations for Kenya’s agriculture. That’s why the government, in partnership with the African Union Commission, the New Partnership for Africa’s Development Agency, the Alliance for a Green Revolution in Africa, and Africa Lead, met in Nairobi last month to build consensus for a new strategy that will guide the implementation of Kenya’s National Agriculture Investment Plan.

The discussions are part of a series of meetings to help African countries implement their commitments as signatories of the Comprehensive African Agriculture Development Programme.

The impressive turnout was a signal that, in Kenya at least, there is a strong constituency ready to translate expectations into action.

But why should anyone invest in Kenyan farms and local agriculture businesses? One answer is to be found in Kenya’s rapidly growing food retail sector. Food purchases are growing by an impressive 10 per cent per year and are expected to reach $17.6 billion (Sh1.7 trillion) by 2020. Demand has exceeded domestic supply and imports now account for about half of all domestic purchases of staples such as rice, wheat and soybeans.

And with the right mix of investments, Kenyan farmers could own 100 per cent of that market. For example, greater public investments in crop research and private investments in local production of high-yielding and locally adapted seeds and farm input could help narrow the “yield gap”.

Today, most farmers harvest about two tonnes of maize per hectare, when their counterparts elsewhere in the world get six, and about a half tonne of beans per hectare, when they could be getting 10 times that amount. Investment in better storage options, particularly refrigerated facilities, and transportation infrastructure can help link farmers to markets.

In addition, investors can take advantage of many positive developments in agriculture. For example, over the past 15 years, banana, mango and potato yields have more than doubled, making them among the most valuable crops in Kenya and opening up business opportunities. There is already a new public-private partnership dedicated to building cold storage facilities in Kenya, and elsewhere in East Africa, to capitalise on the potential of rising potato production by connecting millions of smallholder farms to produce markets.

But effectively channelling the new resources requires consensus on a detailed investment roadmap. It must inspire confidence that commitment to agriculture will generate the progress Kenyans need and deserve.

The agriculture investment forum went a long way towards finalising the NAIP. Many of us involved in the meeting felt it embraced the “seize the moment” theme of last year’s AGRF by infusing Kenya’s agriculture agenda with a sense of purpose and urgency. We are asking for a broad group of partners to join us in seizing the moment for Kenya.

Together, we can build a coalition to accumulate and allocate the right mix of investments that will ensure agriculture becomes a powerful engine for delivering economic opportunity and food security across Kenya.

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