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DEVELOPMENT-KENYA: From Value Added to Income Gained

Joyce Mulama

NAIROBI, Jul 3 2006 (IPS) - Over 80 percent of Kenyans depend directly on agriculture for their livelihood, according to government statistics. But, certain farmers in the East African country find themselves hard pressed to derive the full benefit from their produce, because they cannot add value to it.

The African Institute for Capacity Development (AICAD) is equipping farmers to overcome this hurdle, however. AICAD is a joint initiative of Kenya, Uganda and Tanzania, and is supported by the Japanese government through the Japan International Cooperation Agency.

Based at Jomo Kenyatta University of Agriculture and Technology in Juja, just north of the Kenyan capital, Nairobi, the institute’s main objective is to reduce poverty in Africa through skills development.

AICAD’s value addition training programme got underway in November last year. To date, it has seen farmers in Kenya, Uganda and Tanzania being trained, while a second round of instruction is in the pipeline. According to Jane Kembo, AICAD’s training and extension director, 30 farmers have been taught in each of the three countries.

Agricultural value addition involves processing farm goods to transform them into products of greater worth, with a longer shelf-life, that can earn producers additional income. For example, milk may be processed to make cheese and butter, among other products.

Even though the AICAD programme is relatively new, it has already yielded benefits.

“We have carried out two monitoring activities, and as many as 60 percent of the farmers have improved their incomes by at least 30 percent after the value addition training,” Kembo told IPS.

“We have lots of success storiesàFor example, there are farmers who are making as much as 1.2 million Kenya shillings (about 16,200 dollars) on one crop per season, after training on crops such as snow peas.”

This success can bring with it a new set of problems, however.

“Once they (farmers) add value to their products, they are no longer producers but manufacturers. They will have entered into competition with imported products from the region and the world over,” says James Nyoro, executive director of the Tegemeo Institute of Agriculture Policy and Development at Egerton University, also located in Kenya.

“But for our farmers the cost of doing business is high because the minute they add value, they are grappling with the high cost of power (and) transport because of the poor infrastructure and telecommunications,” he adds, in reference to the decrepit road and rail networks in parts of East Africa.

Noted Kembo: “The farmer needs infrastructure to support his production. It is not enough to say to farmers ‘Produce more,’ if their produce will rot on the farms.”

One way of circumventing this difficulty may be for farmers’ cooperatives to join forces in setting up processing plants, so that they can spread the costs of power and transport by grappling with these expenses as a group.

The Githunguri Dairy Farmers Cooperative Society in central Kenya seems to have pulled off this feat. Under the auspices of the society, several farmers’ groups have put up a plant for producing pasteurised milk, yoghurt and cheese, all which can be found in supermarket chains across the country.

But, producers who overcome power and transport constraints still have to run the gauntlet of a punitive tax policy.

“The minute you add value, you deviate to manufacturingàYou are governed by policies that influence industrialisation, and they come with huge taxes,” says Nyoro.

As a result, calls have been made for cabinet to develop policies that provide greater incentives for value addition – appeals that authorities in Kenya seem to be heeding.

A government paper presented last year at a workshop on adding value to agricultural products, held in Nairobi, talks of exempting imported goods used in processing from duties and value added tax. It also mentions assistance for investments in plant and equipment.

Lack of access to credit for starting value added initiatives is a further obstacle, while agricultural subsidies in wealthy nations can also be problematic. African farmers may be able to add value to their goods, but they often cannot price these goods as cheaply as their counterparts in the developed world.

“This means their (African farmers) products will be costly and they will not be able to compete with products from Western countries that subsidise their farmers,” says Nyoro.

The issue of subsidies has proved a bone of contention in international trade talks, where rich nations have refused to end the funding.

Reports from the latest round of discussions, currently underway in the Swiss city of Geneva, indicate that wealthy and developing nations are still at loggerheads over agricultural protectionism – with India threatening a walk-out, Thursday, in the absence of greater cuts to U.S. subsidies.

The so-called Doha Round of talks, named after the Qatari capital where it was launched in 2001, has set increased economic growth in developing economies as one of its key aims. While the round was initially scheduled to wrap up in 2004, its finishing date has now been pushed to the end of this year.

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