GROUP TW0

MEMBERS
ALEX MBALE SHIPANZI AGA221-0127/2020
REAGAN OCHOLA AGA221-0135/2020
JOYCE WANJIRU AGA221-0092/2021
JOSEPH NJENGA AGA221- 0094/2021
ESTHER MWIKALI MULWA AGA 221 - 0103/2021
JACINTA NJERI AGA 221-0104/2021
GITAU ESTHER WACHEKE AGA 221-0117/2021
CYNTHIA NJOKI AGA- 0118/2021
SAKWA ARIEL AGA221-0125/2021
GITUKU IRENE GATHIGIA -AGA221-0236/2021
STEPHEN KELLY MURIITHI AGA221-0238/2021
AGRICULTURAL GROWTH AND TRANSFORMATION STRATEGY
BACK GROUND INFORMATION
Agricultural transformation is a decades-long process which involves modernization of on-
farm production, shifting production towards more value addition. Agricultural
transformation is critical to growing the economy, reducing the cost of food, alleviating
poverty and therefore delivering 100% food and nutrition security.

Millions of citizens depend on agriculture for income and food security, and the country’s
economic growth therefore depends on enabling these people to achieve food security and
contribute more fully to the economy.

Kenya has taken big strides over the years to build its macro-economic foundations for
agricultural transformation: ~33% of total GDP, ~60% of informal employment and ~60% of
exports come from the agricultural sector, with the largest contribution coming from crops
production.

Transforming the agricultural sector will cement these foundations for economic growth by
providing the tools to combat price volatility, improving the environment for private
investment, and developing more strategic approaches to lower the country’s dependence
on food imports.

The agricultural sector is the backbone of the economy with a great potential for growth
and

transformation. It contributes about 33% of total Gross Domestic Product (GDP). The sector

contributes an additional 27% to GDP through linkages to other sectors such as

manufacturing,

distribution and services. The sector employs more than 40% of the total population and
about

70% of the rural population.

To transform Kenya’s agricultural sector and make it a regional powerhouse, the

Government has formulated the Agricultural sector Transformation and Growth Strategy
(ASTGS). The strategy is anchored in the belief that food security requires a vibrant,
commercial and modern agricultural sector that sustainably supports Kenya’s economic
development, national priorities, and commitments to the Malabo Declaration under the
Comprehensive Africa Agriculture Development Programme (CAADP), and the United
Nations Sustainable Development Goals (SDGs).

Building on lessons learned from prior strategies, ASTGS takes an evidence-based approach,
as well as a sharp focus on implementation and delivery with the counties at the centre. This
approach is the basis for addressing the effects of climate change and the challenges that
constrain agricultural output, productivity and natural resource management in Kenya
today. Sustaining this evidence-based foundation will require data for rigorous performance
management today, as well as the research and innovation to propel decision making and
technologies that the transformation will require for the future.

The ASTGS prioritizes three anchors to drive the 10-year transformation, with specific
targets set for the first five years:

■ Anchor 1: Increase small-scale farmer, pastoralist and fisher folk incomes:

This is anchor aims to support small-scale farmers, pastoralists and fisher folk to transition
from highly diversified subsistence production to more specialized and market-oriented
output in higher-yield value chains thus Raising their average annual incomes by ~40% from
KES 465/day to 625/day (~35% increase)

– Directly benefit ~3.3 million Kenyan farming households

■ Anchor 2: Increase agricultural output and value add:

This anchor enable large-scale farmers to competitively and sustainably utilize suitable
agricultural land for efficient production to serve local and export demand and as inputs into
agro-processing. It also seeks to increase Kenya’s share of agro-processing through
competitive processing for domestic and export needs. Value chains for this anchor are not
prescribed, with the exception of minimum thresholds of maize grown on government land.
Producers and processers must demonstrate the ability to be competitive in their locations
and for their desired end markets. Sample value chains considered to test the impact of
these flagships include rice, fish, horticulture, potatoes, dairy, beef, imported palm oil and
wheat; which in turn will:

– Expand agricultural GDP from KES 2.9 trillion to KES ~3.9 trillion (~6% CAGR)

– Grow contribution of agro-processing to GDP by KES ~130 billion over 5 years (~50% from
KES 261 billion today)

■ Anchor 3: Increase household food resilience:

This anchor increase the ability of the country and individual households to respond to
acute emergencies and price shocks with a mix of nutritious traditional staple crops, while
building resilience to address food system risks. At the national level, the value chains of
focus are maize and beans; but at the household level, value chains are region-specific and
can include millet, sorghum, maize, beans, etc. Thus:

– Reduce the number of food-insecure Kenyans in the ASAL regions from 2.7 million on
average to zero, while reducing the cost of food and improving nutrition

– Protect households against shocks: environmental and fiscal.

HISTORY
In 2004, after years of stagnation and negative growth, the Kenyan Government launched
the economic Recovery Strategy for Wealth and Employment Creation (ERS), with emphasis
on economic growth, wealth creation and employment as a means of eradicating poverty
and achieving food security. The strategy identified agriculture as the leading productive
sector for economic recovery and recognized revival of agricultural institutions and
investment in agricultural research and extension as critical and essential for sustainable
economic growth. The development of the sector was considered to be a top priority in
poverty reduction because it was the most important economic activity relied on by the
poor in rural areas for their livelihood. In addition to the ERS in 2004, the Government
launched the Strategy for Revitalizing Agriculture (SRA).

The sector surpassed the SRA growth target of 3.1% to reach a high of 6.1% in 2007.
However, the growth trend was interrupted in 2008 by external factors of post-election
violence, global food crises, global escalation of fuel and fertilizer prices and global financial
crises.3

In 2008, the government launched Kenya Vision 2030 as the overall national long-term
development blueprint that aims to transform the country into a newly industrializing,
middle-income country providing a high quality of life to all its citizens by 2030 in a clean
and secure environment. In Vision 2030, agriculture is identified as a key sector in achieving
the envisaged annual economic growth rate of 10%. This shall be achieved through
transformation of smallholder agriculture from subsistence to an innovative, commercially
oriented and modern agricultural sector. In response to entrenching the aspirations of
Vision 2030, the Agricultural Sector Development Strategy (ASDS) was developed and has
been the overall national policy document for the rural sector ministries since.

In October 2015 the Ministry of Agriculture, Livestock and Fisheries (MoALF) conducted an
Institutional Architectural Assessment (IAA) to establish the institutional and policy
landscape of the agriculture sector in Kenya. The IAA was an interim step in preparation for
a Joint Agriculture Sector Review (JSR) that is conducted biennially under the CAADP
Framework. The study found that poor sector coordination had resulted in reduced
investments in the agriculture sector both at national level and in the counties. The Cabinet
secretary in the then MoALF, the Chair of the Council of Governors (CoG) and the Chair of
the Agriculture and Rural Development Donor Group (ARDDG) resolved to establish a
mechanism to enhance coordination in the sector through an inclusive consultation of a
process.

In 2016, the Joint Agriculture Sector Inter-Governmental Secretariat (IGS) was asked to lead
a review of the ASDS and design of a new Agriculture Transformation and Growth Strategy
that is compliant with the Constitution of Kenya 2010 and the CAADP Malabo Declaration.
JAS-IGS played a central role in guiding the processes that led to this Agriculture Sector
Transformation and Growth Strategy (ASTGS), and the extensive multi-year, multi-
stakeholder consultative process to support the ASTGS design – including national and
county level governments and non-state actors including the private sector.

The ASTGS is thus aligned with the medium-term national agriculture sector priorities and
Medium-Term Investment Plan III, the 100% food and nutrition security aspiration in the Big
Four presidential agenda, as well as the longer-term commitments to the CAADP/Malabo
Declaration, the UN SDGs, the AU Agenda 2063.

OBJECTIVES
The objectives of agricultural sector growth typically encompass various economic, social,
and environmental goals. Some key objectives include:

Increased Productivity: Enhancing agricultural output to meet the growing demand for food
due to population growth.

Income Generation: Improving the economic well-being of farmers and rural communities
by increasing their income through better yields and market access.

Food Security: Ensuring a stable and sufficient food supply for the population, both
nationally and globally.

Rural Development: Stimulating economic growth and development in rural areas by

investing in agriculture, which is often a primary source of livelihood.

Employment Generation: Creating employment opportunities, particularly in rural areas, to

alleviate poverty and promote sustainable livelihoods.

Sustainability: Promoting sustainable agricultural practices to preserve natural resources,

minimize environmental impact, and adapt to climate change.

Diversification: Encouraging the diversification of crops and agricultural activities to enhance

resilience against market fluctuations and climate-related risks.

Infrastructure Development: Investing in rural infrastructure such as irrigation,

transportation, and storage facilities to improve efficiency and reduce post-harvest losses.

Technological Innovation: Integrating advanced technologies and innovations to increase

efficiency, reduce costs, and improve overall agricultural practices.

Trade Balance: Contributing to a positive trade balance by boosting agricultural exports and
reducing dependency on food imports.

These objectives are often interconnected, and achieving them requires a comprehensive
and integrated approach involving various stakeholders, including governments, farmers,
researchers, and the private sector.
PRINCIPLES FOR KENYA’S AGRICULTURAL TRANSFORMATION
Kenya’s agricultural transformation adheres to eight principles:

1. Create market-driven strategies that target growth. While raising productivity by

giving producers access to better inputs is critical, it is also necessary to improve market

opportunities by selecting the right value chains, geographies and institutional changes.

2. Set a new standard for public sector engagement. Agricultural transformation will

depend heavily on Kenya’s ability to make institutional reforms in the public sector.

Improving the governance, accountability and scope of key institutions will be the most

powerful lever to shift the agribusiness towards more stable markets, and boost food

security and economic growth.

3. Manage the transformation across both the national and county levels. All successful

agricultural transformations must be managed carefully, with a transformation mind set

and leadership decision-making mechanisms that support fact-based change. This is

especially true for Kenya, where the new devolution structures are still being adapted

as the country implements.

4. Implement as much as possible through the private sector – with oversight.

Kenya’s vibrant agribusiness sector has tremendous potential to be a powerful engine

of transformation – more so than in many other countries – with important implications

for co-financing. Evidence suggests that private sector-driven transformation is effective

when two things happen: active public oversight directs the private sector to critical areas

of transformation; and the government promotes fact-based regulations and transparent

transactions.

5. Make the transformation inclusive. Kenya’s low-income households depend heavily

on agriculture for their incomes and food security. Agricultural reform that does not

improve their lot could have the opposite effect – i.e., increase unemployment, create

unrest and constrain overall economic growth. Kenya must focus on reducing poverty

levels and improving food security.

6. Invest in talent. Talented people are at the heart of every successful agricultural
transformation – from policymakers to business owners to farmers. The Government

must face forward, embracing a younger, digital-enabled country that can adapt and

adopt lessons from around the world. To do this, it must invest in building a highly capable

work force of change-makers, including last-mile extension officers

7. Mobilize more resources. Successful agricultural transformations require strategic

financing. Countries finance their transformations from the usual sources – national

commitment, development finance, private sector investment and development partner

contributions. To mobilize more resources, Kenya must first improve its disbursement

mechanisms and utilization of development funds through monitoring and evaluation

systems, accountability, key enabling business environment policies, and mapping to

regional and global frameworks including CAADP and the SDGs.

8. Invest in change agents. In countries where small-scale farmers drive most of the

production, agricultural transformation depends on changing the behaviour of the

farmers, pastoralists or fisher folk. Change agents are front-line people who engage with

the producers including extension workers, agro-dealers, traders.

MERITS OF AGRICULTURAL GROWTH AND TRANSFORMATION STRATEGY

a. Food Security: Agricultural growth ensures a stable and sufficient food supply,
contributing to national and global food security. A robust agricultural sector is
essential to meet the nutritional needs of a growing population.
b. Economic Development: Agriculture is a significant contributor to the economy,
providing livelihoods for a substantial portion of the global population. Its growth
stimulates economic development, particularly in rural areas where agriculture is a
primary source of income.
c. Employment Generation: The agricultural sector is a major source of employment,
especially in developing countries. Growth in agriculture creates job opportunities,
reducing unemployment and poverty in rural communities.
d. Rural Livelihoods: Many people in rural areas depend on agriculture for their
livelihoods. Agricultural growth directly impacts the well-being of these communities
by providing income and improving living standards.
e. Raw Materials for Industries: Agriculture provides raw materials for various
industries, including textiles, food processing, and bioenergy. A thriving agricultural
sector supports the industrial base of a country.
 f. Foreign Exchange Earnings: Agricultural exports contribute to foreign exchange
earnings, enhancing a country's economic stability and ability to engage in
international trade.
g. Poverty Alleviation: As a source of income and employment, agricultural growth
plays a vital role in poverty alleviation by improving the economic conditions of rural
populations.
h. Rural Infrastructure Development: The growth of agriculture often leads to the
development of rural infrastructure, including roads, storage facilities, and irrigation
systems, which benefits both agriculture and overall rural development.
i. Biodiversity and Ecosystem Services: Sustainable agricultural practices can help
preserve biodiversity and maintain ecosystem services, such as pollination and water
purification, essential for the overall health of the environment.
j. Social Stability: A prosperous agricultural sector contributes to social stability by
reducing income disparities, addressing rural-urban migration, and fostering a sense
of community in rural areas.

In summary, the importance of agricultural sector growth extends beyond food production,
influencing economic, social, and environmental dimensions. Sustainable and inclusive
agricultural development is key to addressing various global challenges.

CHALLENGES AND SOLUTIONS.

ANCHOR:1

INCREASE INCOMES OF SMALL HOLDER FARMERS,PASTRORLIST AND FISH FOLKS

■ Flagship 1 stimulation of local agricultural markets and businesses for crops, livestock and
fish

Small-scale farmers often adopt a highly complex and risk-averse decision-making approach
to their farming to protect their limited incomes. This, combined with difficulties in
accessing low-cost, flexible finance, means they are often unwilling or unable to invest in
inputs which could have a great impact on productivity and incomes, such as fertilizers and
lime that match soils, seeds of higher-value crops, livestock health inputs, fish feed,
extension services and mechanization. Without these investments in productivity-enhancing
inputs, small-scale farmer incomes are limited. Significant investment is required to improve
small-scale farmer ability to invest in improved inputs to drive increased yield and,
ultimately, incomes.

■ Flagship 2 Nationwide subsidy programme focus

Limited ability to invest is not a problem unique to Kenya as it is a global issue. Currently,
the Government of Kenya allocates KES 5 billion, mainly to target increased maize
production through fertilizer and maize seed subsidies every year, coming to an estimated
subsidy of KES 6,215-8,340 per farmer with an average land holding of ~0.5ha. The subsidy
has historically typically included basal dressing fertilizer (Diammonium Phosphate, DAP),
top dressing fertilizer (calcium ammonium nitrate, CAN), and improved maize seed.

As a result, there has been a significant increase in the uptake of fertilizer, with a 36%
increase in use on maize fields between 1997 and 2010.Similarly, the use of improved seed
amongst small-scale farmers has increased from 67% in 2000 to 81% in 2010. Despite this
increased uptake of fertilizer and improved seeds, average maize yields have declined from
2.2 MT/hectare in the 1990s to 1.74 MT/hectare in 2012 and are still well below potential.
One key reason for this seemingly incongruous outcome is that the fertilizers being used are
driving soil pH down, and it is the soil acidity that is the major limiting factor for crop
production. It is estimated that soil acidity affects ~9 million acres under maize, legume, tea,
coffee and other crops, mostly in the Nyanza, Rift Valley and Western provinces.

However, most farmers in these areas have not conducted soil tests and are unaware of
their soil needs. Using lime to neutralize soil acidity, together with other inputs that match
soil needs, such as phosphate fertilizers, could lead to an increased yield of up to 77% in
these areas over five years.

There is therefore an opportunity to have a significant impact on small-scale farmer yields,

and therefore incomes, by linking input subsidies to soil testing results and enabling farmers
to choose appropriate inputs from their local agro-dealers to match their soil needs.

A restructured subsidy system could also be more inclusive of farmers and put the decision
back into the hands of the farmer to utilize the subsidy for the inputs s/he prioritizes,
instead of only focusing on fertilizers and maize seed. This would be most impactful if
farmers could use the subsidy on inputs that increase efficiency or value of their produce,
such as blended fertilizers to match soil needs, seeds for higher-value crops, livestock health
inputs, livestock and fish feed and mechanization. The blended fertilizers would serve not
only to avoid increasing acidity but also to provide for severe deficiencies in micronutrients
such as manganese, magnesium, calcium, boron and others.

SOLUTIONS

 To provide farmers with an increased ability to invest in the right inputs at the right
time, this flagship proposes five main design elements:

1. Reallocate government procurement of fertilizer and maize seed to an e-voucher system

that can serve farmers nationwide and allow them to purchase a range of inputs

2. Put the provision of inputs into the hands of the private sector, including registered agro-
dealers

3. Establish a system that reliably disburses funds when the farmer uses the e-voucher, such
that input suppliers are immediately paid and therefore not disadvantaged by participating
in the programme
4. Roll out nationwide farmer registration to screen for eligibility, with verification by
extension agents at every registered farm during the first three years, and develop a
national farmer profile database

5. Integrate mandatory partial use of the e-voucher for extension services to inform farmers
of soil needs (based on the national soil mapping initiative), with compulsory lime vouchers
for farmers with acidic soils

ANCHOR :2

INCREASE OF AGRICULTURAL OUTPUT AND VALUE ADD

■ Flagship 3 setting up of agro-processing Hubs

The proximity of most main agriculture production zones to large domestic markets and key
export locations suggests high potential for agro-processing across geographies and value
chains. Although the opportunity is compelling, many high-impact projects in the national
pipeline do not materialize because they typically encounter five challenges:

1. Lack of early-stage funding to complete international standard feasibility studies

2. Limited inter-ministerial and county-level coordination

3. Sub-optimal procurement processes with complex requirements

4. Lack of critical infrastructure (roads, power and water) at potential sites

5. Lack of incentives, e.g., transport and tax breaks to commercialise new facilities

■ Flagship 4 scaling up commercial farms

An opportunity exists to expand Kenya’s agriculture production on available, arable land

through large-scale commercial farming. However, given the existence of large portions of
arid land across more than 23 ASAL counties, and given Kenya’s low levels of irrigation – less
than 1% of land mass is irrigated. the availability and reliability of water supply is of critical
importance to Kenya’s future ambitions to expand land use for agricultural purposes.

SOLUTIONS

 Operating with a clear agro-processing mandate under the Agriculture

Transformation Office (ATO), with measurable Key Performance Indicators (KPIs),
performance-based budget allocations, and regularized reporting requirements. The
Agro-Processing Delivery Team (APDT) will embed six guiding principles for
successful agro-processing delivery:

■ Ruthless focus on project feasibility

■ Uncompromising insistence on procurement best practice

■ Structured process to maximize competition and private sector involvement

■ Highly coordinated response to specific project bottlenecks

■ Codified approach to minimize conflicts of interest

 To successfully unlock available, arable land for agricultural purposes, the Kenya
agriculture sector will:

1. Learn from early, pioneering projects:

In Kenya, a range of initiatives has been undertaken to expand land use for agriculture
production. The most prominent is the Galana Kulalu Food Security Project, a flagship effort
to put around 400,000 acres (~160,000 hectares) of new land under production. Past
projects have taught us five important lessons:

– Completion of independent, international standard feasibility studies is critical

– Due diligence on land ownership queries must be completed

– Delivery of large farm projects should be decoupled from associated large dam build
programmes

– Transparent governance structures with clear reporting and monitoring mechanisms are
necessary

– The private sector’s participation must be increased to ensure that the best technical
solution is developed for every new farm

2. Optimize alternative water supply options: To increase water storage capacity and meet
its irrigation need.

ANCHOR: 3

INCREASE HOUSE HOLD RESILIENCE

■ Flagship 5 Restructuring governance and operations of the nationwide strategic food

reserve.

The reserve system also faces challenges with regard to food safety and quality control. In
the past 10 years, there have been at least two contaminations of aflatoxin in NCPB and at
least two reports of maize rotting in the reserve. This is despite the fact that SFRTF mandate
(since 2015) prohibits storage of grain for more than two years

Two major challenges the SFRTF oversight board faces. First, the current system creates
added uncertainty in the markets (because decisions are not always easy to predict).
Second, without a mandate for transparency in the evidence behind decision-making,
accountability is more difficult. Third, the board often lacks sufficient budget to effectively
carry out its mandate. Most of the money received is spent on buying stock, mostly maize,
with very little left for cash reserves. With no cash reserves for the purchase of grain during
emergencies and because of the bureaucratic process of requesting additional funds, there
are sometimes delays in purchasing stock during emergencies.

■ Flagship 6 making farming and pastoralist households more resilient in ASAL regions

Lack of Community involvement

Failure of inclusion of the communities in the ASAL regions on the projects proposed to
boost food resilience

Poor Coordination

One of the biggest challenges faced is advancing conflicting programmes on the same
regions

SOLUTIONS

 The recommendations of the flagship mitigate for “business as usual” emergency

drought management, but there is a critical role for the rapid response team in
supporting disaster management in response to pests and diseases both on farm and
off farm. Further, global price shocks can escalate the cost of providing food very
quickly. The disaster response team can and should facilitate the disbursement of
emergency stock and cash as needed, with data use to predict emergency needs.
 Having an intervention that would have significant impact on water availability,
which would in turn empower the local leadership to champion and conduct water
management practices such as reservoir monitoring and maintenance. Other water
efficiency uses such as water harvesting will help offset some of the need for water
once the rains end. Productive drought-resistant crops and suitable livestock species
need to be developed for ASAL regions to reduce vulnerability of the communities in
those regions. Climate change mitigation and resilience measures such as an early
warning and response system for adverse environmental effects such as drought are
also critical to this flagship