Pricing dispute stalls Sh8.3bn deal to buy tractors from Brazil
What you need to know:
The machinery was to be kept under counties and hired out to farmers at lower rates than what private firms charge. Growers pay up to Sh3, 000 for a tractor to plough an acre.
Mechanisation in the country has been hampered by continuous land subdivision that has seen farming fields divided into smaller units, making it difficult for the operation of machines.
A Sh8.3 billion deal that was to see Kenya acquire tractors from Brazil hangs in the balance after the two countries failed to agree on pricing.
Agriculture Cabinet Secretary Willy Bett said a team of State officials are currently in Brazil to rescue the deal as Kenya looks at other countries like Korea, India or Turkey for a similar tractors deal should the earlier pact collapse. Kenya was seeking to import about 2,000 tractors and other machinery to boost food security through mechanisation in a deal reached in 2014.
“Kenya and Brazil are yet to agree on the pricing and this is the reason why it has taken long for a deal to be reached. From the look of things, it is possible that we might not get this equipment from there,” said Mr Bett in an interview with the Business Daily.
Brazilian ambassador to Kenya Marcela Nicodemos said last year that a $83 million (Sh8.3 billion) loan deal for supply of the tractors had been approved by the Brazilian cabinet at the end of 2014 and that it was up to Kenya’s treasury to agree on the terms to pave the way for importation.
“We have completed all the paperwork and it is now upon the Government of Kenya to finalise the remaining bid and start the process of bringing in the machines,” said Ms Nicodemos then.
The deal that was signed under the More Food for Africa programme in 2014 would enable Kenya to acquire agricultural machinery from the South American country beginning September of 2014. Mr Bett said that Kenya has other options with countries from Asia in pole position.
Agreed to support Kenya
In July, India’s Prime Minister Narendra Modi and Turkish President Recep Erdogan were in Kenya, while their Korean counterpart Park Geun-hye paid a courtesy call in June.
The visiting heads of state agreed to support Kenya in mechanising the agriculture sector in the country to make it vibrant.
The machinery was to be kept under counties and hired out to farmers at lower rates than what private firms charge. Growers pay up to Sh3, 000 for a tractor to plough an acre.
The government aims to lower production costs with cheap farm inputs. High expenses have been blamed for increased food prices as farmers sell their produce expensively to recoup costs.
Agriculture remains the single most important sector, contributing nearly a third of Kenya’s GDP and employing 75 per cent of the national labour force.
On Monday, Mr Bett said that mechanisation on Kenyan farms will rise to 50 per cent in the coming few years from about 28 per cent currently.
Mechanisation in the country has been hampered by continuous land subdivision that has seen farming fields divided into smaller units, making it difficult for the operation of machines.
Kenya is expected to witness growing demand for tractors with the government’s push to launch mega irrigation projects including the one-million-acre Galana-Kulalu irrigation scheme at the Coast that is billed as one of the largest agricultural.
Official data shows that 2, 259 tractors were sold last year, up from 2, 032 units sold in 2014 and 1, 179 in 2011.
