Spotlight on Agro-processing as a Driver of Growth

Less than 8 percent of the land in Kenya is used for Agriculture and only about 20 percent of the lad is suitable for farming. About half of all crops grown in the country are grown through sustenance farming which requires fertilizers to enrich the soil for the production of crops.

The agriculture sector contributes about 25.3 percent to the GDP, and is the source of about 75 percent of industrial raw materials and 60 percent of export earnings. The sector accounts for 65 percent of Kenya’s total exports, 18 percent and 60 percent of the formal and total employment respectively.

While most crops are grown for foreign markets, it is important to consider regional demand. More than two thirds of global manufacturing activity takes place in industries that tend to locate close demand. Proximity to demand is an important factor as tit reduces logistics and transports costs and also increases access to raw materials and supplies.

Still, the sector has suffered several challenges which have seen the contribution of key crops like cotton, sugarcane, pyrethrum and sisal decrease. Kenya’s status as an agro based economy points to agriculture as the pillar to industrialization given the closeness to raw material, suppliers and regional demand.

No company in Kenya has an extensive regional presence whose value chain sources inputs or feeds them into all three East African Countries. Traditional exports dominate the field and few efforts have been made to expand to new products. The automation of agro processes could help us leap into secondary and tertiary value addition and turn cottage industries into fully-fledged manufacturing firms.

Agro processing value chains are important for job creations as well as earning of foreign exchange. Availability of raw material dependence on rain fed agriculture to provide raw materials is not a viable option and it continues to affect the sub sector until options like irrigation are explored and implemented.

According to the Kenya Association of manufactures priority agenda on securing industry in Kenya for shared prosperity 2015, it is appropriate to explore possibilities of utilizing water from Lake Victoria for irrigation especially in Nyanza, Western and Rift Valley regions. The government should also invest more in rural roads and electricity connections, while agro processing needs to invest in cooling facilities.