Agricultural production and processing zones to catalyse growth

By Claire Wanja

County and national governments have been urged to consider setting up agricultural production and processing zones where investors willing to invest in food production and value addition can be given tax holidays to produce affordable food in designated zones.

In an arrangement similar to the export processing zones (EPZ), the investors will produce food, first and foremost for the local market and only surplus can be exported to other markets. They will also be expected to add value to the food they produce thereby ensuring small holder farmers get to plug the supply deficit.

Sustainable Inclusive Business (SIB), knowledge centre based in Nairobi, gave the example of Mara Farms, which is already playing in this space as one of those which could significantly expand their operations with a little help from the government. Mara produces beans for export but uses un-exported produce to make high quality soup for the local market with a focus on low end customers.

According to SIB Coordinator, Ms. Karin Boomsma, the Zones  will create job opportunities for Kenyans, make food available to Kenyans at affordable prices, make the transfer of skills and technology from big producers to small holders possible and value addition will catalyse a whole new sector of manufacturing and cottage industries thereby creating new jobs and business opportunities.

Boomsma urged the government to work on lowering the cost of power for producers who add value to their produce, zero rating tax on inputs, especially fertiliser and machinery and having a policy for all government departments and agencies to buy local.

Ms. Boomsma singled out the Galana Kulalu project in Tana River County as a good idea that can prosper with private sector involvement.

“What government can do is to make it possible for the private sector to produce food on large scale profitably. And we are not just looking at large scale investors, we are also thinking about small and medium enterprises. The bottom line is that without private sector involvement, food self-sufficiency will remain a dream for many,” emphasized Boomsma.

Boomsma argues that despite its high potential, the sector has not attracted big investments due to unfavourable policies.

“This perception has kept many young, energetic, enterprising and educated folk away from the farming business, essentially leaving it in the hands of an aging population who are short of skills, resources, networks or entrepreneurial culture,” said SIB Coordinator, Karin Boomsma.

Noting that Kenya was currently going through a period of extreme food scarcity owing to prolonged drought, with some 2.5 million people in dire need of food assistance, Ms. Boomsma said no country can prosper unless it is able to produce enough food to feed its people in a sustainable manner.

“Drought is by itself not the biggest obstacle to attaining food security but the chain is weakest at the link of planning and allocation of resources,” said Boomsma.

Boomsma praised the government for its Agricultural Sector Development Strategy whose primary goal is to make agriculture a key contributor to the country’s projected 10% economic growth per annum.

The government’s aim was to turn agriculture into a profitable economic activity which not only creates jobs but also attracts private sector finance. However, she called on the relevant departments at the county and national government to match their pronouncements with concrete action. In the 2016/2017 financial year, for instance, only 1.3% of the national budget was allocated to the agriculture docket contrary to the Maputo Declaration which called on governments to commit at least 10% to agriculture every year to catalyze rapid growth.

Boomsma says there are serious policy gaps which need to be addressed. Drought aside, the other principal cause of food insecurity is the high cost of production owing to high cost of inputs.

Apart from a few subsectors such as horticulture, tea and commercial timber, agriculture remains unattractive to investors who shun it for sectors that promise quick returns.

  

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