Agriculture Basks in the Sunlight: Kenya's Agriculture Sector Has Enjoyed One of Its Best Periods with Surpluses Recorded in Almost Every Segment. This Has Meant Healthy Profits for Agro-Based Industries. Derek Otieno Reports from Nairobi

By Otieno, Derek | African Business, May 2005 | Go to article overview

Agriculture Basks in the Sunlight: Kenya's Agriculture Sector Has Enjoyed One of Its Best Periods with Surpluses Recorded in Almost Every Segment. This Has Meant Healthy Profits for Agro-Based Industries. Derek Otieno Reports from Nairobi


Otieno, Derek, African Business


Kenya's economic backbone, the country's agricultural sector, has made substantial improvements in the last two years. Growth in demand from Kenya's traditional markets, the stabilisation of soft commodity prices and favourable weather conditions in the second half of 2004--have all contributed to gains in the coffee, sugar, tea and horticulture sectors.

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Reforms within the moribund dairy sub-sector have also paid dividends and indicators reveal that Kenya's agricultural sector has grown faster than was ever previously forecast.

Agriculture Minister Kipruto arap Kirwa attributes these gains to the policies put in place by the government and his ministry in the last two years.

"We are on the right track. We hope that there will be great improvements in the coming years with policies to support farmers in many areas, including the marketing of their produce" Kirwa told African Business. The government is also developing policies to assist farmers to export their produce.

According to the Agriculture Ministry, Kenya's export volumes increased by 8% in 2003 (as opposed to 4% in 2002), with surplus volumes across the industry. This improved performance was due to reduced operating costs and administrative expenses.

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The food sector performed better than in previous years as it has benefited from a steady supply of local raw materials and steady consumer prices. The animal health and nutrition sector also improved despite raw material shortages towards the end of the year.

Picked at random, five companies operating within Kenya's agricultural sector have posted encouraging results illustrating how the agricultural sector is boosting its productivity and profitability.

In the tobacco industry, British giant BAT recorded a large improvement in turnover that was mainly driven by a 9% growth in the company's local sales of Benson & Hedges, Embassy, Sportsman and Safari cigarette brands. Productivity enhancement initiatives complemented improved sales with BAT's Nairobi factory becoming firmly established as the company's regional manufacturing centre. Meanwhile, another foreign player involved with the agricultural sub-sector, Unilever, achieved a significant improvement in 2004 relative to the previous year.

Unilever's profits were attributed to a marked improvement in crop production and better tea prices linked to more favourable exchange rates. …

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Agriculture Basks in the Sunlight: Kenya's Agriculture Sector Has Enjoyed One of Its Best Periods with Surpluses Recorded in Almost Every Segment. This Has Meant Healthy Profits for Agro-Based Industries. Derek Otieno Reports from Nairobi
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