- The Cabinet Secretary has moved swiftly to push for changes that will deliver elusive reforms in the sector, but he already faces headwinds that threaten to thwart his efforts.
Agriculture contributes about 26 percent of Kenya’s gross domestic product (GDP), and is a source of livelihood for the largely subsistence farmers, making it a crucial cog in the country’s economic engine.
Despite its importance, the sector has continued to perform dismally denying farmers good returns with a myriad of factors, among them mismanagement, underfunding and infiltration of cartels blamed for the downturn.
Over the years several task forces have come up with robust recommendations meant to ensure that reforms take root and boost the country’s economic output.
Yet, Agriculture ministers have over the years come and gone leaving the sector largely unchanged. Mr Peter Munya, however, appears is out to prove he is cut from a different cloth from his predecessors.
In a span of few months the Cabinet Secretary has initiated a raft of far-reaching reforms that have attracted criticism and praise in equal measure.
He has become the linchpin in President Uhuru Kenyatta’s food security agenda, moving swiftly since his appointment in January to clean up the sector and ensure that the sector bears fruits of the reforms. Not being one to shy from a challenge, Mr Munya has been talking tough, pushing for regulations to weed out cartels. Mr Munya has initiated reforms in coffee, tea and grain sector.
But is he biting more than he can chew? Analysts reckon he currently enjoys political goodwill and therefore stands a chance of disrupting cartel activities if not completely eliminating them.
Egerton-based Tegemeo think tank senior research fellow Timothy Njagi says some of the reforms require political good will and participation of other parties such as the private sector.
Mr Munya started his reforms on the coffee sector by revamping the Kenya Planters Cooperative Union (KPCU) and brought in new directors under the New KPCU, which now takes over from the defunct body (KPCU) that has been dissolved.
The New KPCU has already started purchasing coffee from farmers and is seeking direct markets following its revival.
The Agriculture ministry has also given the new entity the role of distributing cherry advance fund to farmers in the forms of loan.
As at April, the union had distributed farm inputs to farmers using part of the Sh3 billion set aside by the government. Some farmers opted to take fertiliser from New KPCU instead of getting the cash as part of the loan.
However, the changes have been met with stiff opposition. A group of people moved to court shortly after the distribution started to stop New KPCU from issuing the cherry fund. They are challenging the outfit’s mandate to handle the fund, mill and market farmer’s coffee.
They secured a court injunction in April, but the ministry has moved on with the process, terming the group as enemies of progress and consequently opened up the reforms to legal challenges.
“The work of distributing the funds has already begun after we received all the funds from the Treasury. I want to warn the cartels who are trying to frustrate our efforts to know that we are not going to stop,” Mr Munya is quoted saying.
No turning back
Cooperative Principal Secretary Ali Noor says there is not turning back on the reforms and the only hurdle in the way of issuance of the funds is the Covid-19 pandemic that has seen the government drastically cut its spending.
“We are still issuing the funds to farmers at the moment as the process has not stopped,” notes Mr Noor. Cherry advance levy was announced by Mr Kenyatta last year in March and it is aimed at helping farmers meet their financial obligations after harvesting their crop.
Normally, farmers harvest and sell their crop through cooperatives, but have to wait for over a month before they get their payment.
The government will then recover the funds after farmers have sold their produce by deducting the amount that would have been advanced to them plus a three percent interest rate.
These reforms are designed to boost production, reduce the cost of processing and milling as well as transaction costs at the auction market.
The tea reforms announced by the CS promise to turn the sub-sector on its heads. Mr Munya says the changes will put more money in pockets of farmers who have long complained of exploitation. On the other hand the establishment is of the view that Mr Munya is overreaching his mandate with the reforms and he should stop meddling in private affairs.
The reforms have far reaching effect that will cut on the margin of the service providers while increasing on the earnings of tea farmers.
The process of reforming the tea sector, started in April when Mr Munya spelt out a number of measures and opened the same to public views and by May 21, he had already submitted the regulations to Attorney-General’s office for gazetting.
The reforms directly impact on Kenya Tea and Development Agency (KTDA) earnings, which controls 60 percent of the local market. The agency will see a reduction of the management fee that it charges farmer-owned factories.
While releasing the regulations, Mr Munya was reported saying the ministry was addressing governance challenges embedded in the tea value chain that include conflict of interest in the operations of KTDA and its subsidiaries and the auction process.
In the new regulations, the agency will cede one percent of the management fee that it charges factories, which translates to billions of shillings. KTDA has been charging factories 2.5 percent of the total income as management fee.
KTDA raised objection over the move, but it was a case of too little too late as the regulations had already been sent for gazetting.
Mr Munya also says they will incorporate other recommendations that they have received from stakeholders, which include voting for directors that will now require one-man-one-vote.
At the moment, the directors are voted in based on the shares that they have in the company and the size of tea that they have.
“This is a move aimed at locking out the small farmer so that the agency can pick people who will comply with what they want,” says Mr Munya.
KTDA lawyer Benson Millimo says the agency is a private company owned by farmers and not a parastatal and that the only way that the government can own it is through buying it from growers.
“If the government is interested in taking over the business of KTDA… is to buy-off by negotiating with the farmers; but to just come in and frustrate a private business is something that is akin to compulsory acquisition through regulations and is not allowed whatsoever in law,” argues Mr Millimo.
He also holds the view that the regulations infringe on the constitutional right to own property and challenges the government to follow the right procedures should it have interest in owning the property held by tea farmers under the ambit of KTDA.
East African Tea Traders Association, which has also been on the receiving end from the government, has openly opposed some of the regulations.
Other reforms brought about by Mr Munya include the transitioning of the current manual trading platform of coffee and tea auctions into digital ones and he gave them a two-month ultimatum.
With the exception of last year, there have been cases of fertiliser theft and irregularities in purchasing of maize at the National Cereals and Produce Board (NCPB) that have seen farmers miss out on subsidised inputs or fail to sell their crop to the board.
To tame this vice, Mr Munya has appointed a taskforce that will vet afresh all employees of the NCPB in to ascertain their suitability.
The CS also says that the board members will undergo vetting as the government seeks to bring in fresh blood aligned to the work of NCPB.
The ministry has also disbanded Strategic Food Reserve (SFR) with the function of purchasing maize now left in the hands of the private sector.
The court last week, however suspended Mr Munya’s order disbanding the SFR as the team lead by form chairman Noah Wekesa fought back.
Dr Njagi supports SFR disbandment saying that the government has no business in setting up the price at which maize should be bought.
“This is one of the reforms that should have been implemented long time ago. When the government sets price at which to buy the produce, it distorts the market,” he said.