Huge cash kitty to transform 2m poor farmers into surplus producers
Plans by the government to transform two million poor farmers into surplus producers, and provide capital to small scale traders, will require the State to pump about Sh250 billion in the next five years.
The Parliamentary Budget Office (PBO) noted that agriculture is the only sector that offers an opportunity for a quick turn-around, owing to its short payback period on investments while requiring minimal or no new capital investments.
Despite the move, PBO regrets that the sector has been faced with a myriad of challenges, including over-dependence on rainfall, high cost of farm inputs, inadequate capital and skills for small-holder farmers, low mechanisation, land fragmentation as well as under-absorption of modern technologies.
“To implement interventions to transform agriculture, the plan contains a financial commitment of Sh250 billion for 2020/2023 to 2026/2027,” reads the report.
Of the Sh250 billion, PBO says that, to deploy modern agricultural risk management instruments such as livestock and crop insurance, the government would be required to provide Sh5 billion within the next five, translating to Sh1 billion annually, as opposed to the current Sh500 million that has been provided.
To transform two million poor farmers from poor deficit to surplus producers through input finance, President William Ruto’s administration will have to provide Sh2.5 billion in the next five years, translating to Sh500 million annually.
Out of this money, PBO says a minimum of Sh5,000 working capital per poor family should be provided each year as input finance, and repaid each year at 5 per cent interest.
The government will also be required to provide Sh100 billion in the next five years for extension support, translating to Sh20 billion annually.
Further Ruto’s administration will also be required to provide a subsidy of Sh3000 for each 50kg bag of fertiliser for at least 375,000 tonnes of fertiliser, which is currently half of the country’s consumption.
Counties, too, will be required to provide additional annual funding of approximately Sh50 million to adequately equip staff and facilitate agricultural extension officers.
However, PBO noted that revamping of underperforming and collapsed crops, and boosting of value chains, may require additional interventions.
