Fair competition key to integrating small-scale farmers into economy


A woman carries a sack with tea leaves on her back after plucking at a farm in Kapsabet, Nandi County on April 04, 2023. PHOTO | JARED NYATAYA | NMG

A conversation on a social media platform ended with the wry remark that the only group that might survive the current economic turbulence is smallholder farmers who grow what they eat and eat what they grow.

After all, self-sufficiency is the greatest wealth.

An even better prospect, however, is where these farmers also produce a surplus and use the proceeds to improve their economic well-being.

Unfortunately, for many, interaction with input and output markets of agri-food value chains is not a worthwhile venture.

Poverty data in Kenya show this. According to the Kenya National Bureau of Statistics, multidimensional poverty in rural areas stands at a startling 67 percent, compared to 27 percent in urban areas.

It is not for want of hard work that Kenya’s small and medium-holder farmers remain among the poorest of our lot.

According to the Centre for Competition, Regulation and Economic Development, agri-businesses in East and Southern Africa contend with powerful commercial interests, high transportation costs, lack of storage options, and poor access to market information.

Larger businesses buy up the harvest cheaply and sell later, significantly marked up, and sometimes to the same farmers.

More insidious than these systemic challenges are the bottlenecks ingrained in national, regional and continental value chains.

A network of regional and global companies dominates agri-food markets, controlling both supplies of key inputs and trade in agricultural produce.

The high concentration of markets has deleterious consequences on competition, increasing the likelihood of collusion, exertion of monopoly power and abuse of superior bargaining positions.

A surefire way to increase inclusion in agri-food value chains is to eliminate competition bottlenecks and open up markets for entry.

At the foundation of such intervention is competition policy enforcement.

For instance, the Competition Authority of Kenya (CAK), working with the tea sector regulator, reviewed a framework under which potential purple tea leaf investors required consent from competitors to set up.

The subsequent removal of this barrier to entry opened up the market, leading to investment in five new tea factories and the creation of more than 2,000 direct and indirect jobs.

Improved monitoring is equally essential to ensure that gatekeeper firms do not distort markets. Market inquiries with a cross-border focus can zero in on bottlenecks that transcend national boundaries.

Enforcement of competition policy need not be punitive. Engagement with sector players is an efficient way of settling matters.

Agriculture holds the key to integrating more Kenyans, particularly rural households into economic pathways. Competition agencies should implement policies that foster fair competition in agriculture.

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