MICROECONOMIC ISSUES IN KENYAN AGRICULTURE. Mary W. K. Mathenge

Transcription

1 MICROECONOMIC ISSUES IN KENYAN AGRICULTURE Input Use and Productivity Mary W. K. Mathenge Presentation made during the Workshop on Modelling Impacts of National Policies on Kenyan Economy, Fair View Hotel, Nairobi, April 28, 2016

2 Outline Introduction Microeconomic Issues/Challenges in Kenyan agriculture Agricultural Input Use in Kenya Fertilizer Hybrid Seed (Maize) Options for addressing challenges Conclusion & Policy Implications

3 Status of Kenyan agriculture Low and stagnating agricultural productivity Food and cash crops Overreliance on rain-fed agriculture Exposure to weather changes Climate Change High post-harvest losses and diseases incidences of aflatoxin Lack of competitiveness Regional Limited budget allocation to agriculture and research

4 Status of Kenyan agriculture contn Undesirable market interventions Adhoc and inconsistent policy decisions uncertainty/distortions Inefficient monitoring and forecasting system Food situation assessments Overemphasis on supply/ production Demand/Consumption? Increasing land constraints Uneconomical units Soil health issues acidity, organic matter, etc

5 Status of Kenyan agriculture contn State of infrastructure/public investments Rural areas impassable roads, inaccessible markets, etc Poor access to agricultural information Extension -devolution? Poor monitoring of interventions/investments Impacts and learning Recurrent Food Insecurity ASALs Regional imbalances

6 Input Use and Productivity in Kenya

7 Input Use and Productivity in Kenya Increased ag productivity key to food security & poverty reduction Stimulation/development of the non farm sector thro growth linkages Economic growth and development However, farmers face multiple challenges: Consequently, agricultural productivity low and stagnating esp in SSA Major impediment is lack of /low use of productivity enhancing inputs e.g chemical fertilizer, improved seed & pesticides due to: unavailability of liquid cash to finance purchases Risk averse nature of small-scale farmers Low returns to input use Information

8 Input Use and Productivity in Kenya Yet both credit & crop insurance markets are missing in most of SSA Food crops most affected as they lack institutional support available to cash crops Implications on food security

9 Input Use and Productivity in Kenya Tegemeo Data Trends in key agricultural input use Fertlizer Hybrid Seed (maize) Fertilizer and Hybrid Seed Use Patterns

10 Fertilizer Use in Kenya

11 Quantity (MT) Price/50kg bag (Ksh) Fertilizer Imports and Prices in Kenya 800, , , , , , ,000 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Source: MOALF Imports Consumption Mean prices

12 Prices/50kg bag (Ksh) 5,500 4,500 3,500 2,500 1,500 Trend in Fertilizer Prices by Type NPKs DAP CAN UREA Mean prices 500 Source: MOALF Year

13 Quantity (MT) National Fertilizer Use by Type 600, , , , , ,000 0 Almost half of fertilizer consumed is basal (planting & top dressing) Consumption of specialized fertilizer rising gradually Year Planting Top-dressing Tea Coffee Specialized crops Overall Source: MOALF Fertilizer used in tea slowly declining

14 FARM LEVEL DATA

15 Fertilizer by Agro-regional Zone (%) Agro regional zone Coastal Lowlands Eastern Lowlands Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands Marginal Rain Shadow Overall sample Source: Tegemeo Panel Data

16 Fertilizer Intensity(Kgs/acre) Agro ecological zone Coastal Lowlands Eastern Lowlands Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands Marginal Rain Shadow Overall sample Source: Tegemeo Panel Data

17 Proportion using fertilizer Rate (kg/acre) Fertilizer Use & Application Rates on Maize Source: Tegemeo Panel Maize (% using) Maize (kg/acre)

18 Proportion using fertilizer Rate (kg/acre) Fertilizer Use & Application Rates on Coffee Source: Tegemeo Panel Coffee (% using) Coffee (kg/acre)

19 Proportion using fertilizer Rate (kg/acre) Fertilizer Use & Application Rates on Tea Source: Tegemeo Panel Tea (% using) Tea (kg/acre)

20 Classification of Households by Fertilizer Use Patterns Consistent users Non-consistent users Consistent non-users

21 ZONE Fertilizer use patterns by Agro-Regional CONSISTENT USERS Zone NON-CONSISTENT USERS CONSISTENT NON-USERS Coastal Lowlands Eastern Lowlands Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands Marginal Rain Shadow Overall Source: Tegemeo Panel

22 Reasons for not using inorganic fertilizer Reason Unaffordable Unavailable No need to use (returns) Uses organic fertilizer Others reasons Total Source: Tegemeo

23 Fertilizer Use Patterns by Selected Market Access Indicators Type of household Distance to fertilizer seller Distance to extension agent Distance to motorab le road Distance to tarmac road Consistent users Non-consistent users Consistent non-users Total Source: Tegemeo Panel data

24 Improved Seed Use in Kenya The Case of Maize

25 Quantity (MT) Hybrid Maize Seed Consumption 40,000 35,000 30,000 25,000 20,000 15,000 Source: MOALF Year

26 Adoption rates by Agro Regional Zone ZONE Coastal Lowlands Eastern Lowlands Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands Marginal Rain Shadow Overall Source: Tegemeo

27 Seed Use Patterns by Agro Region Zone ZONE CONSISTENT USERS NON-CONSISTENT USERS CONSISTENT NON-USERS Coastal Lowlands Eastern Lowlands Western Lowlands Western Transitional High Potential Maize Zone Western Highlands Central Highlands Marginal Rain Shadow Overall Source: Tegemeo Panel

28 What will drive-up input use in Kenya? Stable marketing environment and policy Increased private sector participation Enhance input availability at the local level Reduction of the distance to the nearest input dealers Institutional innovation in fertilizer-seed technologies Voucher schemes, starter packs Streamline the demand-side factors Information, technical training, market access factors

29 Options for Addressing Challenges Improving Agricultural Productivity and Competitiveness Encourage more widespread and intensive use of modern farming technologies (e.g. improved seeds, breeds, fertilizers) Input cost reducing measures Bulk purchasing and transport (Fertilizer) Alternative means of transport -Rail transport Support Programs to poor and vulnerable producers Targeted subsidies (e.g. NAAIAP) Farmer empowerment to sustain input use beyond subsidy regime Develop input and output markets encourage agribusiness Incentive for investment in input and food distribution Taxation VAT, cess??

30 Options for Addressing Challenges Need to reduce dependence on rain-fed agriculture through investment in irrigation. Increased budget allocation for irrigation Water harvesting/storage Expand the scope of the emerging crop and livestock insurance services to cushion farmers against risks from climate change and extreme weather conditions Increased and innovative models of public-private partnerships Agricultural insurance policy Reduction in post-harvest losses and incidences of aflatoxin. Store during periods of oversupply Adoption of improved storage technologies Warehouse receipt systems

31 Options for Addressing Challenges Increased efforts and budget allocation to boost and maintain adequate strategic food reserves Help stabilize domestic prices (times of shortages) Emergency purposes local purchases of food staples during times of surplus Government playing a regulatory role rather than active participation in the market to deal with distortions/artificial shortages in the market allowing price setting through supply and demand dynamics Providing an enabling environment for private sector/businesses Good disaster management plans should be in place always important in managing potential effects of drought, floods, fluctuations in international food prices, etc Ensure efficient distribution of food if/when needed

32 Options for Addressing Challenges Need for appropriate and well coordinated trade policies that take into account the domestic supply and demand for food at any given time Establish a more efficient monitoring and forecasting system more responsive to agents/institutions with better market and weather information and intelligence Improve road infrastructure: poor quality roads Increase costs of transportation hinder effective distribution of available stocks from surplus to deficit areas Expand off-farm employment in rural and urban areas o Provide income to meet food and other needs Recognize food security a regional issue comparative advantage Monitoring and Impact assessment of programs /interventions to learn what works

33 THANK YOU