TRADE AND AGRICULTURE


of input and output prices alongside public investments that affect agricultural production costs and revenues and allocation of resources. Overall, improved agricultural production is key to poverty reduction.


Coffee is one of the country’s main commodities.


In order to overcome various problems identified in the agricultural sector in the 1990s, the Kenyan government developed the Strategy for Revitalizing Agriculture (SRA) under the Economic Recovery Strategy (ERS). The SRA aimed to achieve the following goals:


• Reviewing and harmonizing the legal, regulatory and institutional framework;


repayment period and the self- financing requirement for finance programmes. State Trading Enterprises


(STEs) target firms like the Pyrethrum Board, the Kenya Meat Commission and the Kenya National Trading Corporation. Kenya supports STEs’ exemption from discipline in order to develop production, value addition, commercial exports and imports in the respective subsectors. In relation to food aid, Kenya supports monetization of non- emergency aid to LDCs and NFIDCs to assist distribution to beneficiaries and shuns commercial displacements.


Why Kenya initiated FEPA Economic Partnership Agreements (EPA) sprung from continued criticism that the non- reciprocal and discriminating preferential trade agreements offered to African, Caribbean and Pacific countries by European Union (EU) countries are incompatible with WTO rules. Based on the Cotonou Agreement, and in consultation with the East African Community (EAC) partner states, Kenya agreed to form the EAC Economic Partnership Agreement configuration. This was to enable negotiations with the EU as a bloc while preserving their


customs union. The EAC as a customs union therefore initialed the Framework Agreement for establishing Economic Partnership Agreement (FEPA) with the EU in 2007. Kenya aims at securing access


to the EU export market upon expiry of the ACP/EU preferential trade arrangement in December 2007. The EU constitutes the second biggest export market for Kenya after COMESA. As Kenya’s leading market for horticultural products the EU accounted for 26.4 per cent of exports in 2008. This trade has boosted economic development, creating over 1.5 million jobs and over Sh70 billion worth of investments in the horticulture and fisheries sectors. In signing the FEPA, the EAC


offered to liberalize 82.6 per cent of its trade with the EU, 65.4 per cent of which is already zero-rated under the customs union. This has left 17.2 per cent of total trade for effective liberalization to be done on a phase-down basis within a period of 25 years. Further 17.4 per cent of the products are classified as sensitive to protect agriculture and infant industry.


Agricultural policy goals Over the years agricultural policies have been government decisions to influence the level and stability


• Improving delivery of research, extension and advisory support services;


• Restructuring non-core functions of parastatals and ministries to ensure efficiency, accountability and effectiveness;


• Increasing access to quality farm inputs and financial services;


• Formulating food security programmes, and


• Improving access to markets for example rural roads and internal taxes.


These measures were successfully implemented until 2007 when the Economic Recovery Strategy for Wealth and Employment Creation was succeeded by the development blueprint, Vision 2030. Agriculture and livestock are identified among the six priority sectors likely to raise the country’s gross domestic product through export earnings.


Vision 2030 Kenya intends to apply five key strategies to tackle challenges facing agriculture: reforms, productivity, land use, markets and value addition


• Reforms: Reforming key organizations like co-


operatives, regulatory bodies and research institutions to improve their performance;


• Productivity: Provision of widely accessible inputs and services to farmers and pastoralists, including the reduction in fertilizer costs, expansion of irrigation, seed improvement and livestock development;


• Land use: Proper land use to ensure better utilization of high and medium potential lands, and benefit from the provisions of the Green Box as discussed above;


• Focus on ASALs: Developing arid and semi-arid lands (ASALs) for both crops and livestock production to benefit from WTO Blue box subsidies, and


• Marketing: Value addition to commodities through processing, packaging and branding for increased incomes to producers and processors.


Promoting agro-industry The implementation of WTO requirements has setbacks like uncontrolled imports. These have resulted in depressed incentives to farmers, most recently in the milk and maize subsectors. Besides, liberalization occasions reduced expenditure in the agricultural sector, hence poor service delivery as extension services and research are affected. This has partly fueled food insecurity.


Market access rules are key to increasing export volumes for agricultural and agro-processed products. Kenya and other developing countries should be allowed to export products in the form that yields maximum returns. Processing and value addition will promote the growth of agro-based industries. Similarly, a reduction in export subsidies on agricultural products will ensure imports do not depress domestic prices.


The Parliamentarian | 2010: Issue Three - Kenya | 47


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