Page 48 - Ramco JO SACCOStar _Vol 50.indd

LOCAL OUTLOOK
GOVERNMENT to establish
AGRO-PROCESSING HUBS
By Nicholas Waitathu
Co-operative Societies in
production and marketing of
agricultural produce stand
to benefit from an expanded market
locally and internationally, thanks to a
Government initiative to establish agro-
processing hubs in the country.
Government is planning to establish six
industrial hubs in identified blocs with
the assistance of the private sector. This, processing units and more investors are
Co-Operative Marketing Societies, hopes
will enable them to enhance value
addition of their products.
The establishment of industrial hubs
is expected to offer huge market
opportunities to co-operative societies in
production and marketing of agricultural
produce.
Further, the launch of the hubs will help
in improving the operating climate and
thus enable small traders to increase
value addition of their products.
Most Small and Medium Enterprises
(SMEs) in the agriculture sector are
undertaking marketing of value-added
products in low volumes compared to
current market demands. Majority of
them depend on obsolete technology
leading to high cost of production.
During the recent Agricultural Industry
Forum (AIN), stakeholders complained
that farmers are suffering owing to the
dismal performance of the co-operative
societies.
Agriculture Cabinet Secretary Peter
Munya said, “Kenya cannot achieve
sustained growth without a strong and
vibrant agribusiness sector and needs
all hands on deck to make an impact.
We need to initiate more public-private
partnerships to achieve our goals and
are ready to join hands with interested
private sector players, non-state actors
and development partners to move this
agenda forward.”
The manufacturing units, he said, will be
developed using a one-stop-shop rapid
Public-Private Partnership (PPP) process
for local and export markets.
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The Ministry of Agriculture is expected to
form the Agro-Processing Delivery Team
(APDT) to spearhead the establishment
of the industrial parks.
Within its first year, the APDT will identify bill every year. Kenya’s, agro-processing
and fund the completion of up to 10
feasibility studies.
Already, the Government has engaged
the African Development Bank (AfDB) to
carry out a viability survey of two agro-
being sought to finance viability studies
of the other industrial hubs.
AIN chairman Edward Mudibo recalled
that collapse of former giant district Co-
Operative Unions like Kisii, Muranga,
Nyeri, Kirinyaga, Meru, Bungoma, Kilifi
and Machakos has compounded the
growers’ problems of earning premium
prices in the local and international
markets.
“The defunct unions played a key role to
link farmers well in the market those days.
Equally, some of the institutions were
undertaking value addition and thus able
to earn premium prices over and above
procuring farm inputs in bulk and thus
farmers could enjoy economies of scale,”
said Mr. Mudibo.
According to the Economic Survey
2019, the manufacturing sector growth
increased by 4.2 per cent in 2018
compared to a revised growth of 0.5
per cent in 2017. The sector’s volume
of output expanded by 5.1 per cent in
2018 from a contraction of 0.8 per cent
recorded in 2017.
“The growth was on account of increase
in production of dairy products, tea, coffee
and sugar due to favourable weather
conditions. The improved performance
was attributed to increased production
of manufactured food products, which
include sugar, dairy product, meat
and meat products and other food
commodities,” the survey states.
Current data from the Ministry of
Agriculture reveals that agro-processing
accounts for 3.2 per cent of Gross
Domestic Product (GDP), 2.4 per cent
of employment and 8.5 per cent of
exports. But only approximately 16 per
cent of Kenya’s raw agricultural produce
is processed leading to a high import
levels, however, remain lower than those
of Kenya’s regional and international
peers, despite Kenya’s broad access to
raw materials.
Further, during the review period, the
total number of Societies and Unions
registered increased from 19,951 in
2017 to 20,547 in 2018.
Co-operatives recorded growth in the
sale of agricultural produce across
selected crops due to improved weather
conditions in 2018. The sale of coffee
and milk contributed 44.9 per cent and
52.9 per cent of total sales, respectively
in 2018.
Overall, the total value sales from
co-operatives societies increased
marginally from Sh10.568 billion in 2017
to Sh10. 590 billion in 2018. The sale of
coffee to the marketed production by
cooperatives went up to 32.1 per cent
in 2018 compared to 29.6 per cent
recorded in 2017.
Similarly, this trend was witnessed with
pyrethrum as its share increased by 4.8
percentage points to stand at 95.4 per
cent in 2018. The share of sugar cane
remained at the 2017 level while that of
milk decreased by 2.1 percentage points
to 24.7 per cent.
Agriculture Chief Administrative
Secretary (CAS) Linah Jebii Kilimo opines
that there is need for farmers to form
more marketing bodies as well as adopt
technology to enhance value addition.
“This will enable them to expand their
markets and benefit from premium prices.
Equally the same will strengthen their
ability to face cutthroat competition in the
market,” said Kilimo.