The Setting
The Kenyan economy is characterized by a high dependence on the agricultural sector.
Agriculture’s share of gross domestic product (GDP) averaged 35 percent over the decade 1972-82. This had fallen to 31 percent by 1988. Agricultural exports constitute the bulk of Kenya’s exports, approaching 60 percent of the total over 1972-82. Agriculture also employs the bulk of the population, up to 75 percent, either as small peasant farmers or employed wage labor in the commercial sector.
GDP growth rates were impressive, with an average yearly growth of 6.4 percent during 1965-80 and a lower but still respectable 4.2 percent during 1980-88. Agriculture’s growth rate was 4.9 percent per annum during 1965-80 and 3.3 percent per annum during 1980-88. The agricultural sector’s performance has fluctuated over the years. However, its pre-eminent position in the Kenyan economy remains unchanged.
Only about one-fifth of Kenya’s land is suitable for intensive food production, and this area supports about two-thirds of the country’s population. The other four-fifths of the land is considered arid or semi-arid and suitable mainly for extensive (livestock) agricultural production. However, population pressure has forced the government to encourage emigration to the semi-arid areas like the Machakos and Kitui districts, and small farms and maize cropping (with livestock) now predominate there.
Post-Independence Agricultural Policy
3.1 Main Thrusts
Kenyan economic policy goals in the post-independence period were: high and growing per capita incomes equitably distributed among the population and universal freedom from want, disease, and exploitation. Kenya’s first five-year development plan (1960-70) set out an import-substitution industrialization program to diversify the economy away from its agricultural base. The policy instruments used to encourage these aims were tariff protection, monopoly status, quotas, subsidies, and the maintenance of an over-valued exchange rate. These interventions’ net result was an implicit taxing of agriculture, while the manufacturing industry received protection from competition. Sharpley (1984) noted that the 1972 periods were marked by a decline in the domestic terms of trade between agricultural and non- agricultural commodities and by a net capital outflow front the agricultural to the non- agricultural sector. However, the real income earned by agriculture increased by over 40 perCent during the same time period. This suggests that agriculture still grew substantially despite the policy environment being unfavorable toward it.
Agricultural policy, post-independence, focused on three main areas: land transfer programs, smallholder development, and promotion of cash crops by both smallholders and large-scale farmers (Jabara 1985, p. 612).
Changing the ownership structure of Kenyan agriculture, which arose from colonial rule, was the primary agricultural policy target. The limited land reform program that commenced in the mid-1950s was expanded. The government devoted much of its efforts towards land transfer and smallholders’ resettlement on formerly European-owned mixed farms. From 1963-64 to 1968-69, three-quarrels of all agricultural development expenditure went into land transfer programs. Despite this being the main policy instrument and the majority of the agricultural budget resources flowing to it, the policy outcome was of limited success. About one-third of European farmland was made available for transfer while two- thirds, mainly corporate fame, were left untouched. By 1968, a total of 934,000 hectares of land had been transferred, with about half being settled by approximately 500,000 smallholders.
The development of smallholder agriculture was the second policy goal of the time, and by 1979 out of the estimated farmed area of 6,2 million hectares, two-thirds was operated by smallholders with an average farm size of two hectares or less {Livingstone 1981).
Cash crop production for export, particularly by smallholders, was also encouraged.
The main smallholder cash crop rapidly became tea, with the government setting up the Kenya Tea Development Authority (KTDA) to oversee the establishment and ongoing management of smallholders in the industry. The KTDA had full regulatory and financial powers and was a forerunner of other marketing boards established in other agricultural industries. The KTDA provided infrastructure {roads), extension services, credit, collection, processing, and marketing of tea front smallholders.
Other policy changes which took place in the immediate post-independence period included projects to encourage livestock production in arid and semi-arid areas and experimentation with integrated rural development projects,
However, the effectiveness of these agricultural policies in this period was limited in terms of their impact on output; on the whole, government policies continued to favor large farms, export crops, and firms in the high potential areas (Hinderink and Sierkenbiirg 1987,
- 243). Such a policy stance must have been of concern to those interested in developing the semi-arid areas.
3.2 Political Pressures
Several authors (Cox 1984, Johnston 1989, Bates 1981 and 1983) developed the theme of Kenya’s elite (politicians, government officials) having a strong self-interest in a prosperous agricultural sector. In colonial times, most Europeans were engaged in agricultural production, and government policies towards agriculture were quite favorable. In independent Kenya, many former European farms (large scale) were acquired by the new African elite. They had a direct interest in agriculture’s profitability and a direct means of influencing agricultural policies to achieve a favorable position for agriculture via the creation of institutions and the choice of economic policies. The commodity-specific agricultural policies adopted tended to support this thesis.
The main source of agitation for independence was in rural areas, and farmers dominated the liberation movement. In colonial Kenya, farmer interests usually made up most representatives in political institutions like the colonial parliament. These two factors explain to a significant extent the influence that farmers had upon the colonial and post-independence governments. Unsurprisingly, the agricultural policies they adopted were sympathetic to the interests of farmers. It is clear that the structure and operations of the political institutions in Kenya, both before and after independence, were to introduce a bias in favor of farmers’ Interests in the making of public policy.
An agricultural policy consists of government actions that affect farmers’ incomes by influencing the prices they confront in the major markers that determine their incomes.
These are the markets for agricultural outputs, the markets for farm inputs, and the markets for goods in the non-farm sector.
In the markets for almost all agricultural commodities, a government policy-making board or marketing board existed. In these institutions, farmer interests were usually in the majority, and thus public policy was skewed towards achieving farmers’ objectives (particularly higher incomes via higher prices for their outputs).
Concerning inputs, farmers interests were similarly well-represented on most government instrumentalities for products which were inputs to farming in the colonial period, Land laws operated to ensure the availability of plentiful and productive land to European settlers. The land laws were similarly adjusted to achieve the land reform goals of the post-
Independent government in placing many smallholders on their own small farms. In particular railways, transportation facilities had been provided to agricultural areas «r encourage the production of export crops which were then shipped through ports which had been specially developed for this colonial trade. In post-independence Kenya, farmer’s interests were similarly well placed to continue the subsidies they received on transporting their inputs and outputs. The market for capital by settler farmers was similarly skewed due to government funds being available at subsidized interest rates to develop their farms.