How costly inputs have choked agricultural sector productivity
Farmers buy subsidised fertiliser at the National Cereals and Produce Board depot in Elburgon, Nakuru County on August 24, 2023. PHOTO | JOHN NJOROGE | NMG
The cost of crop production has drastically increased in recent years, straining output for the critical agriculture sector which has equally suffered the effects of drought.
Three years ago, Silper Opiyo, a maize farmer from Muhoroni in Kisumu County, only parted with Sh2,600 for a 50-kilogramme bag of fertiliser. This year, the same purchases have grown by over twofold to Sh6,000 despite the government subsidy programme.
“I needed 10 bags of fertiliser to apply during planting and top dressing, but I did not get any subsidised fertiliser. I was only able to get four bags after I had already bought the expensive fertiliser,” she says.
Cost implications for other farmers, including tea, coffee and sugarcane, have been similar, mirroring thinning margins from agriculture as an economic activity.
The Business Daily analysed the rising costs of farm inputs through the lenses of four farmers revealing the choke of costly inputs to the sector's productivity.
According to data from the Kenya National Bureau of Statistics, the overall price index of farm inputs has increased from 98.6 points in 2019 to 167.3 points in 2022, reflecting higher prices of inputs such as fuel, fertiliser, seeds and manufactured feeds.
The fertiliser price index doubled to 210.3 points in 2022 from 100.4 points in 2021. The value of fertilisers purchased in the year scaled to Sh29.9 billion from Sh20.4 billion while the total value of purchased agricultural inputs excluding labour shot to Sh88.4 billion from Sh77.4 billion in the same period.
Leading agricultural inputs include fertilisers, crop chemicals, livestock drugs and medicines, fuel and power, bags, manufactured feeds and certified seeds.
“Input costs have risen due to a number of factors. In the case of fertiliser, costs started rising in late 2021 due to supply-side constraints due to the pandemic. This was exacerbated by the Russia-Ukraine War,” notes Dr Timothy Njagi, a research fellow at the Tegemeo Institute of Agricultural Policy and Development.
The rise in input costs has seen producers reduce the volume of purchases with the overall quantum index of agriculture inputs decreasing from 108.4 points in 2019 to 63.4 points last year.
The cost pressures have driven some farmers into alternatives, some of which are not only equally expensive but also fall short of sustaining optimal yields. For instance, Muturi Wathira, a coffee farmer in Murang’a has opted to completely ditch fertiliser for organic manure.
“I last used fertiliser seven years ago, but I stopped because I get better quality coffee when I use manure,” he noted. However, manure is expensive as his 2000 coffee trees require two truck-loads at as cost of Sh100,000.
For Silper, manure use has resulted in poor yields of five to seven bags of maize in contrast to 20 to 25 bags when using fertiliser.
In 2022, the estimated production of maize slumped to 34.3 million 90-kilogramme bags from 36.7 million bags in 2021, even as the poor output was largely tied to unfavourable weather conditions.
To arrest high farm input prices, the government of the day has doubled down on subsidies for fertiliser to lower costs to farmers. However, the outcome has failed to hit the bull's eye with the initiative suffering multiple hiccups such as the cheap supplies failing to reach farmers on time as witnessed in Murang'a, Kiambu and other areas while some producers have received the cheap inputs long after the planting season.
“There was a delay in application of basal fertilizer by many farmers in Murang’a and Kiambu because Murang’a deports received government subsidized fertilizer when most farmers had planted and the crop germinated,” the Ministry of Agriculture noted in an April bulletin of crop conditions.
According to budget documents from the National Treasury, during the 2018/19 to 2020/21 medium-term period, the government distributed 32,239 metric tons of subsidized fertilizer to 60,000 farmers.
The exchequer has nevertheless highlighted limitations to the multi-year program and has recommended that the government works with the private sector to improve supplies of cheap fertilizer.
“The government has run the subsidized fertilizer program for a long-time, yet Kenya remains a food deficient country. As such, it would be important to have an impact evaluation of these programmes to ensure that there is value for money,” the National Treasury noted in its 2023 budget policy statement.
For Dr. Njagi, the distribution model of the subsidy fertilizer has been the greatest Achilles heel to the program’s effectiveness.
“By using the National Cereals and Produce Board to distribute the fertilizer, the distribution has been skewed towards maize growing areas. The private sector has been unable to sell the imported volumes in these areas, and as a result, they are still holding fertilizer purchased at high prices explaining why prices have not fallen,” he adds.
The higher agricultural input costs amidst fluctuating farm commodity prices have seen lower productivity in the sector as farmers use inputs sub-optimally while others have cut back on the area under cultivation.
According to a September 2022 report by the World Food Programme and the Boston Consulting Group, declining production due to high fertilizer prices will result in more people facing food insecurity, especially in arid and semi-arid lands.
