Farming has long been the main economic activity in most rural settings. It is the backbone that provides most households with a source of livelihood. This is one of the reasons why most African communities see land as a major asset for it provides a form of stability when it comes to providing basic essentials for survival and existence. The Economic Review of Agriculture (ERA) 2015 states that the agriculture sector is the backbone of Kenya’s economy and the source of livelihood for majority of the rural population. The sector contributes about 26 percent of the country’s GDP and employs about 75 percent of the population.
Most rural small scale farmers still have to contend with unpredictable weather patterns, inadequate access to technical expertise, outdated farming tools and techniques that tends to reduce their productivity as well as the high cost of farm inputs. In the long run, this pushes their costs of production to levels that make their ventures unprofitable and unsustainable. They also have to contend with poor infrastructure networks that make it difficult for them to access the markets that they serve in instances of heavy rains that make roads practically impassable.
The Food and Agriculture Organization states that the potential contribution of the agricultural sector to poverty reduction, improved livelihoods of rural households and greater food security in Sub Saharan Africa is undisputed. Yet growth in the sector remains challenged by an uncertain policy environment and poor infrastructural development that limit market access, increase post-harvest losses and raise the cost of trade. Thus food prices in the region remain high, which impacts negatively on food security, particularly given that most small scale producers are still net buyers of food products.
According to Juhudi Kilimo, the average smallholder farmer in Kenya owns 1 -5 acres of land and mainly produces for subsistence or sales in informal markets to earn USD 2-4 per day. They are a micro finance institution that provides loans to rural small holder farmers and small-medium agribusinesses to enable them acquire high quality agricultural assets that enhance their productivity. The CEO, Nat Robinson has pointed out that one of the major obstacles rural small holder farmers face in their quest to become productive is that they lack the collateral assets required for financing. This is due to the fact that small businesses based in agriculture are perceived as too risky by commercial and micro finance institutions as well as being simply too far away or too expensive in invest in.
He reiterates that rural small-scale farmers cannot compete with larger producers because they lack the capital to transport and market their produce to more lucrative urban markets. This limits smallholder farmers to supplying informal markets where they are often forced to sell their produce to local brokers, or in open-air markets and kiosks. In this sense, they end up being paid at rates that are below market prices for their produce.
It is thus imperative to ensure that the agricultural sector and the small scale farmers in particular get the support that will enable them to become more productive. This will in turn positively contribute to poverty eradication by creating sustainable revenue streams through the creation of quality employment avenues.
Informal Economy Analyst