Kenya Agricultural Sector Risk Assessment

Public Disclosure Authorized
AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER
KENYA
AGRICULTURAL SECTOR RISK ASSESSMENT
Stephen P. D’Alessandro, Jorge Caballero,

John Lichte, and Simon Simpkin
WORLD BANK GROUP REPORT NUMBER 97887 NOVEMBER 2015

AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER
KENYA
Agricultural Sector Risk Assessment
Stephen P. D’Alessandro, Jorge Caballero, John Lichte, and Simon Simpkin
Kenya: Agricultural Sector Risk Assessment

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Cover photos left to right:

1. Gathering corn—Curt Carnemark/World Bank.
2. Man with livestock—Curt Carnemark/World Bank.
3. Irrigating fields near Mount Kenya—Neil Palmer (CIAT).
4. A farmer in the Kibirichia area of Mount Kenya—Neil Palmer (CIAT).
CONTENTS
Acronyms and Abbreviations ix

Acknowledgments xi
Executive Summary xiii
Chapter One: Introduction 1
Chapter Two: Agriculture Sector in Kenya 7
Agroclimatic Conditions 8
Rainfall Patterns and Trends 8
Crop Production Systems 9
Livestock Production Systems 15
Variability in Crop Production 15
Food Supply and Demand 16
Agricultural Markets and Price Trends 18
Livestock Production 22
Food Security 23
Constraints to Agricultural Growth 23
Chapter Three: Agriculture Sector Risks 25
Production Risks 25
Pests and Diseases 31
Market Risks 34
Enabling Environment Risks 40
Multiplicity of Risks 44
Chapter Four: Adverse Impacts of Agricultural Risks 45
Conceptual and Methodological Basis for Analysis 45
Crop Production Risks 46
Livestock Risks 48
Chapter Five: Stakeholder Vulnerability Assessment 49
General Trends in Vulnerability 49
Livelihoods and Agroclimatic Conditions 49
Poverty and Vulnerability 50
Vulnerability Among Livelihood Groups 52
Vulnerability and Risk Management 52
Risk Management Capacity 52
Vulnerability in ASALs 53
Chapter Six: Risk Prioritization and Management 55
Risk Prioritization 55
Risk Management Measures 56
Illustrative Risk Management Measures 59
Prioritization of Risk Management Measures 64
Conclusion 66
Kenya: Agricultural Sector Risk Assessment iii

References 67
Appendix A: Climate Change Impacts on Agriculture in Kenya 73
Introduction 73
Principal Findings 74
Climate Change and Severe Weather Events 74
Methodologies 74
Crop Predictions 75
Crops Resistant to Climate Change 77
Conclusions 77
Appendix B: Stakeholder Risk Profiles 79
Case Study 1: Philip Mutua Mbai—Smallholder Maize Farmer, Machakos County 79
Case Study 2: Mrs. Maraba—Agro-input Dealer, Eldoret Uasin Gishu County 81
Case Study 3: Leshamon Olekoonyo—Wheat Farmer, Narok 82
Case Study 4: Marcel Wambua—Head of Finance, Lesiolo Grain Handlers Limited 84
Case Study 5: Michael Waigwa—Agricultural Underwriter, Cooperative Insurance Company 85
Case Study 6: Wilson Murunya—Livestock Herder, Kajiado County 87
Case Study 7: Yusuf Khalif Abdi—Livestock Herder, Garissa County 88
Case Study 8: Fresha Dairy—Milk Processors, Githunguri County 90
Appendix C: Stakeholder Vulnerability Analysis 91
General Trends in Vulnerability 91
Vulnerability, Livelihoods, and Agroclimatic Conditions 91
Poverty Status and Vulnerability 92
Vulnerable Groups 93
Pastoralists 94
Female-Headed Households (FHHs) 94
Unskilled/Casual Wage Laborers 94
Appendix D: Rainfall Analysis 95
Appendix E: Weather and Yield Impact Analysis 99
Background 99
Summary and Key Findings 100
Weather Information 100
Annual Rainfall Distribution in Kenya 101
Drought and Excess Rainfall Analysis 102
Rainfall—Yield Regressions 102
Appendix F: Crop Production Trends 107
Appendix G: Livestock Terms of Trade Analysis 109
Appendix H: Options for Scaling Up Livestock Insurance in Kenya 111
Appendix I: Results of Solutions Filtering Process 113
Food Crops 113
Cash Crops 114
Livestock 114
iv Agriculture Global Practice Technical Assistance Paper

BOXES
Box 3.1: Kenya’s Dairy Sector—A Case Study of Market and Enabling Environment Risk 42
FIGURES
Figure ES.1: Historical Timeline of Major Agricultural Production Shocks in Kenya, 1980–2012 xiv
Figure ES.2: Estimated Losses to Aggregate Crop Production from Risk Events, 1980–2012 (US$, millions) xv
Figure 1.1: Agricultural GDP versus National GDP Growth (% change), 1968–2012 2
Figure 1.2: Agricultural Value Added (annual % growth), 1980–2013 3
Figure 1.3: Agriculture Sector Risk Management Process Flow 5
Figure 2.1: Average Cumulative Rainfall (mm) by Rainfall Zone, 1981–2011 9
Figure 2.2: Composition of Crop Production (area harvested, in thousand ha), 1990–2012 10
Figure 2.3: Food Crop Production (thousand MT), 1990–2012 11
Figure 2.4: Industrial Crop Production (thousand tons), 1990–2012 13
Figure 2.5: Coffee Production (tons), 1980–2012 14
Figure 2.6: Cereal Production Trends (thousand tons), 1990–2012 16
Figure 2.7: Maize Production versus Demand (thousand MT), 2003/04–2013/14 17
Figure 2.8: Trends in Cereal Prices (K Sh/ton), 1991–2011 19
Figure 2.9: Trends in Cash Crop Prices (K Sh/ton), 1991–2011 20
Figure 2.10: Coffee Price Comparison ($/kg), 2005–13 21
Figure 2.11: Trends in Producer Prices (K Sh/ton) for Fruits/Vegetables, 1991–2011 22
Figure 3.1: Historical Timeline of Major Agricultural Production Shocks, 1980–2012 26
Figure 3.2: Average Monthly Wholesale Market Prices (K Sh/90 kg), 2005–13 35
Figure 3.3: Price of Tea at Mombasa Auction ($/kg), 1980–2012 36
Figure 3.4: International Coffee Prices ($/lb), 1988–2013 36
Figure 3.5: Weekly Beef Cattle Prices (K Sh/kg) in Various Markets, 2006–11 37
Figure 3.6: Beef Cattle versus Maize TOT in S Major Markets, 2006–11 38
Figure 3.7: Cattle versus Maize TOT in Isiolo Market, 2006–11 38
Figure 3.8: Domestic Fertilizer Prices, 1998–2007 39
Figure 3.9: Exchange Rates ($/K Sh), 1995–2013 39
Figure 3.10: Commercial Banks’ Interest Rates (%), 1992–2013 39
Figure B3.1.1: Milk Production in the Formal Sector (millions of liters), 1984–2008 42
Figure 3.11: Humanitarian Assistance to Kenya ($ millions), 2000–11 42
Figure 4.1: Indicative Production Losses and Frequency for Key Crops, 1980–2012 47
Figure 4.2: Indicative Crop Losses for Maize, 1980–2012 48
Figure 4.3: Prioritization of Risks to Kenya’s Livestock Sector 48
Figure 5.1: Human Development Index Scores, by Province 50
Figure 5.2: Map of Kenya’s Livelihood Zones 51
Kenya: Agricultural Sector Risk Assessment v

Figure 5.3: Percent of Severely Food Insecure, Non-WFP Beneficiary Households by Livelihood Zone 51
Figure 6.1: Prioritization of Key Agricultural Risks in Kenya 56
Figure A.1: Current Suitability of Tea Production Areas 76
Figure A.2: Future Suitability of Tea Production Areas 77
Figure A.3: Suitability Change for Tea Production in 2050 77
Figure C.1: Human Development Index Scores, by Province 92
Figure C.2: Map of Kenya’s Livelihood Zones 92
Figure C.3: Household Food Security by Livelihood Zone 93
Figure D.1: Agro-Ecological Zones 95
Figure D.2: Mean Annual Rainfall (mm) 95
Figure D.3: Monthly Cumulative Rainfall Patterns by Rainfall Zone (mm), 1981–2011 96
Figure D.4: Location of Regional Weather Stations in Kenya 97
Figure E.1: Provinces in Kenya before 2010 99
Figure E.2: Rainfall Pels Superimposed on a Map of Kenya 100
Figure E.3: Monthly Rainfall Pattern by Region 101
Figure E.4: Calendar for Main Crops in Kenya 105
Figure E.5: Map of Average Cumulative Rainfall, by Pixel 105
Figure F.1: Maize Production, 1990–2012 107
Figure F.2: Wheat Production, 1990–2012 107
Figure F.3: Dry Bean Production, 1990–2012 108
Figure F.4: Tea Production, 1990–2012 108
Figure F.5: Coffee Production, 1990–2012 108
Figure F.6: Sugarcane Production, 1990–2012 108
Figure G.1: TOT of Individual Markets in Northern Kenya, 2006–11
(number of 90-kg bags of maize exchanged for 1 beef cow) 110
Figure I.1: Prioritization of Risk Mitigation Solutions for Food Crops 113
Figure I.2: Prioritization of Risk Transfer Solutions for Food Crops 113
Figure I.3: Prioritization of Risk Coping Solutions for Food Crops 113
Figure I.4: Prioritization of Risk Mitigation Solutions for Cash Crops 114
Figure I.5: Prioritization of Risk Mitigation Solutions for Livestock 114
Figure I.6: Prioritization of risk Coping Solutions for Livestock 114
TABLES
Table 2.1: Agro-Ecological Zones and Rainfall Characteristics in Kenya 8
Table 2.2: Livestock Population in Kenya, 2009 and 2012 10
Table 2.3: Trends in Crop Production, 1990–2012 10
vi Agriculture Global Practice Technical Assistance Paper

Table 2.4: Value of Horticultural Production 12
Table 2.5: Coefficients of Variation for Crop Production, 1980–2012 15
Table 2.6: Cereal Supply/Demand Balance (thousand tons), 2013/14 16
Table 2.7: Value of Agricultural Exports (US$ thousands), 2010–12 19
Table 2.8: Livestock Populations in Kenya 22
Table 3.1: Frequency of Major Drought Events in Kenya, 1981–2011 27
Table 3.2: Dates and Impacts of Drought Events in Kenya, 1980–2011 28
Table 3.3: Frequency of Surplus Rainfall Events, 1963–2012 30
Table 3.4: Principal Pest and Disease Risks in Kenyan Agriculture 32
Table 3.5: Frequency and Impact of Livestock Disease Outbreaks in Kenya, 1980–2013 34
Table 3.6: Interannual Crop Price Variability, 1991–2011 35
Table 4.1: Cost of Adverse Events for Crop Production, 1980–2012 46
Table 4.2: Cost of Adverse Events by Crop, 1980–2012 47
Table 5.1: Household Characteristics According to Position in the Maize Market, 1997, 2000,
and 2004 (nationwide sample of small-scale households in Kenya) 53
Table 5.2: Households’ Prioritization of Risks in ASAL Counties 53
Table 6.1: Indicative Risk Management Measures 57
Table 6.2: Filtering Criteria for Risk Management Solutions in Kenya 64
Table C.1: Poverty Transitions by Livelihood Group 93
Table E.1: Rainfall Anomalies for the 18 Weather Stations 103
Table E.2: Simple Linear Regression Results for Maize 106
Table E.3: Multiple Linear Regression Results for Wheat 106
Table E.4: Simple Linear Regression Results for Wheat 106
Kenya: Agricultural Sector Risk Assessment vii

ACRONYMS AND ABBREVIATIONS
ACCI Adaptation to Climate Change and Insurance IBLI Index Based Livestock Insurance
Programme ICT information and communication technology
AIDP Agriculture Insurance Development Program IFAD International Fund for Agricultural
ASAL Arid and Semi-arid Land Development
ASDS Agricultural Sector Development Strategy IFPRI International Food Policy Research Institute
CAADP Comprehensive Africa Agriculture IITA International Institute of Tropical Agriculture
Development Programme ILRI International Livestock Research Institute
CBD Coffee berry disease IMF International Monetary Fund
CBK Coffee Board of Kenya IPCC Intergovernmental Panel on Climate Change
CBOK Central Bank of Kenya IPM Integrated Pest Management
CBPP Contagious bovine pleuropneumonia ITCZ Inter-Tropical Convergence Zone
CFA Cash-for-Assets KARI Kenya Agricultural Research Institute
CIAT Information Center for Tropical Agriculture KCC Kenya Cooperative Creameries
CIMMYT International Maize and Wheat Improvement KCPTA Kenya Coffee Producers and Traders
Center Association
CLR Coffee leaf rust KEPHIS Kenya Plant Health Inspectorate Services
COMESA Common market for Eastern and Southern KESREF Kenya Sugar Research Foundation
Africa kg Kilogram
CSAE Centre for the Study of African Economies KNBS Kenya National Bureau of Statistics
CV Coefficient of variation KRA Kenya Rainwater Association
DAP Diammonium phosphate K Sh Kenyan shillings
DTMA Drought Tolerant Maize for Africa KTDA Kenya Tea Development Authority
EAC East African Community LGP Length of the growing period
ECF East Coast fever LMD Livestock Marketing Division
EU European Union MDTF Multi Donor Trust Fund
FAO Food and Agriculture Organization of the MHH Male-headed household
United Nations
MLND Maize lethal necrosis disease
FAOSTAT FAO Corporate Statistical Database
mm Millimeters
FFA Food-for-Assets
MoA Ministry of Agriculture
FHH Female-headed household
MoALF Ministry of Agriculture, Livestock and
FMD Foot and mouth disease Fisheries
FPEAK Fresh Produce and Exporters Association of MT Metric ton
Kenya
MTP-I Medium Term Plan I
GCM General circulation model
MTP-II Medium Term Plan II
GDP Gross domestic product
NASEP Kenya’s National Agricultural Sector
GM Genetically modified Extension Policy
GoK Government of Kenya NCCRS National Climate Change Response Strategy
ha Hectare NCPB National Cereals and Produce Board
HCDA Horticultural Crops Development Authority NDDCF National Drought and Disaster Contingency
HDI Human Development Index Fund
HSNP Hunger Safety Net Program NDMA National Drought Management Authority
Kenya: Agricultural Sector Risk Assessment ix

NDVI Normalized Difference Vegetation Index SACCO Savings and Credit Cooperative
NERICA New Rice for Africa SDL State Department of Livestock
NGO Nongovernmental organization SECO Swiss Secretariat of Economic Affairs
NIB National Irrigation Board TBK Tea Board of Kenya
NSNP National Safety Nets Programme TOT Terms of trade
OIE World Organization for Animal Health USAID U.S. Agency for International Development
PFS Probability of a failed season WDI World Development Indicators
PPP Public-private partnership WFP World Food Programme
PPR Peste des petits ruminants WHFSP Water Harvesting for Food Security
RPLRP Regional Pastoral Livelihoods Resilience Project Programme
Note. All dollar amounts are U.S. dollars unless otherwise indicated.
x Agriculture Global Practice Technical Assistance Paper

ACKNOWLEDGMENTS
This report was prepared by the Agricultural Risk Man- of Livestock for their invaluable support and contributions
agement Team of the World Bank’s Global Food and throughout the assessment process. The team would like to
Agriculture Practice (GFADR). The assessment team was thank all those who participated in the consultative process
led by Stephen D’Alessandro and consisted of World Bank and who shared their invaluable time, perspective, and per-
consultants Jorge Caballero, John Lichte, Simon Simpkin, sonal experiences. Their inputs greatly enriched the analysis
Jeremy Swift, Jonathan Nzuma, Alice Mirage, and Eric and the study’s findings. The team is also grateful to Ade-
Njue. Traci Johnson and Srilatha Shankar (GFADR) also mola Braimoh, Ladisy Komba Chengula, Vikas Choudhary
provided valuable analytical and logistical support. (GFADR), and Daniel Clarke (GFMDR) for providing feed-
back, guidance, and support during the report’s preparation.
The authors would like to thank all the technical special-
ists working across Kenya’s Ministry of Agriculture, For- Finally, the authors would like to highlight the generous
estry and Fisheries (MALF) who contributed their expertise, contributions from USAID, Ministry of Foreign Affairs
insights, and time to the study. The team is especially grate- of the Government of the Netherlands, and State Secre-
ful to Kenneth O. Ayuko of the State Department of Agri- tariat for Economic Affairs (SECO) of the Government
culture and Vincent Githinji Ngari of the State Department of Switzerland.
Kenya: Agricultural Sector Risk Assessment xi

EXECUTIVE SUMMARY
Agriculture remains vital to Kenya’s economic growth. It is also vital to the country’s
food security and poverty reduction efforts. Because the vast majority of Kenya’s poor
depend on smallholder agriculture for their livelihood, increasing their productivity
can contribute at once to improving food availability, increasing rural incomes, lower-
ing poverty rates, and growing the economy. Putting more and better seeds, fertilizers,
and other inputs into the hands of farmers and pastoralists and finding ways to link
them more directly to markets are among the key thrusts of current sector develop-
ment policies. More broadly, Kenya’s Vision 2030 aims in part to transform the coun-
try’s agriculture from subsistence to a more competitive and commercially oriented
sector, one that can meet the country’s food needs, expand exports, and become a key
engine for forward growth.
Despite Kenya’s strong commitment to agriculture, sectoral growth remains well below
the 6 percent target, and meaningful gains in productivity and in rolling back rural
poverty have been slow in coming. The Economic Survey 2014 shows that the agricul-
ture sector grew by a mere 2.9 percent in 2013, down from 4.2 percent a year earlier.
Moreover, Kenya continues to rely heavily on imports to feed its growing population1
amid a widening structural imbalance in key food staples.
Key constraints limiting sector growth are well documented, as are associated response
measures. Less well understood is how risk dynamics associated with production, mar-
kets, and policy adversely impact sector performance, in terms of both influencing
ex ante decision making among farmers, traders, and other sector stakeholders and
causing ex post losses to crops, livestock, and incomes—destabilizing livelihoods and
jeopardizing the country’s food security.
The present study was commissioned in part to bridge this knowledge gap. It is the
first step in a multiphase process designed to integrate a stronger risk focus into sector
planning and development programs. It seeks to learn from and build on a range of
1
At 2.7 percent, Kenya has one of the highest rates of population growth in the world, according to World Development
Indicators (WDI). The country’s population has tripled in the past 35 years.
Kenya: Agricultural Sector Risk Assessment xiii

FIGURE ES.1. HISTORICAL TIMELINE OF MAJOR AGRICULTURAL
PRODUCTION SHOCKS IN KENYA, 1980–2012
14
Agriculture, value added (annual % growth)
20M kg
12 (US$11.4M) of
green leaf
10 damaged by
Drought; Violence follows frost; floods,
8 floods, elections;
2012
RF fever drought,
6 2006 2007
2
Drought,
0
Commodity 2011
price shock,
–2 La Nina
2008
drought,
–4 1999–2000
Drought Drought El Niño floods;
Erratic rains, Prolonged
–6 1983–84 1991–93 1.5 m affected; floods, drought,
RV fever, 2002
–8 1997–98 2008–2009
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: WDI; authors’ calculations.
broad initiatives by the government of Kenya (GoK) and that Kenya has experienced an extreme rainfall event
its development partners purposed to enhance Kenya’s during two of every three years on average. It also sug-
resilience and response to natural disasters. The ultimate gests the increasing frequency of severe droughts affecting
objective is implementation of a holistic and systematic large swaths of the country in the last decade and rising
risk management system that will reduce the vulnerability levels of year-on-year rainfall variability. The combination
and strengthen the resiliency of Kenya’s agricultural sup- of frequent severe droughts, high dependence on rainfed
ply chains, and the livelihoods that depend on them. This agriculture, and high poverty rates among smallholder
sector risk assessment is the primary output of Phase One. farmers and pastoralists makes Kenya particularly vulner-
The study’s main objective is to identify, assess, and prior- able to the effects of droughts. Erratic rainfall, punctu-
itize principal risks facing Kenya’s agriculture sector by ated by severe droughts, is the biggest risk facing Kenya’s
analyzing their impacts via quantitative2 and qualitative agriculture sector, with profound impacts on both crop
measures. Based on this prioritization, the study identi- and livestock production. In addition to extreme weather
fies key intervention areas for improved risk management. events, the global financial and economic crisis, high food
The review encompasses the 33-year period 1980–2012. and fuel prices, and a tense and at times uncertain politi-
cal environment in recent years have repeatedly disrupted
Figure ES.1 depicts a historical timeline of the most nota- agricultural supply chains and markets, jeopardizing
ble risk events to adversely impact sector performance growth and the sector’s ability to provide food security
during the period under review. The study’s main findings and reduce poverty. Other key findings of the assessment
highlight an agriculture sector increasingly vulnerable to are presented below.
extreme weather variability. An analysis of cumulative
annual rainfall during the period 1980–2011 indicates
CROP AND LIVESTOCK
PRODUCTION RISKS
2
A more extensive quantification of risk impacts was hampered by notable
Extensive livestock systems and pastoralists in Kenya’s
inconsistencies and gaps in production, weather, and other time-series data,
underlining the need for future investments in improved data collection, man- northern rangelands are particularly vulnerable to
agement, and dissemination. the effects of drought. Estimated losses to livestock
xiv Agriculture Global Practice Technical Assistance Paper

FIGURE ES.2. ESTIMATED LOSSES TO AGGREGATE CROP
PRODUCTION FROM RISK EVENTS, 1980–2012
(US$, millions)
450
400
350
300
250
200
150
100
50
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT; authors’ calculations.
populations from droughts that have occurred within the banana, and dry beans also experienced notable losses
most recent decade alone amount to more than $1.08 over the period. Sugarcane represented for nearly half
billion. Ancillary losses related to production assets and (46 percent) of aggregate indicative losses by volume but
future income and the costs of ex post response measures less than 6 percent by value (figure ES.2).
are likely several times that figure. The increased inci-
dence of droughts across Kenya’s arid and semiarid lands Relative to most other crops, maize is highly susceptible to
(ASALs) in recent years means that affected communities moisture stress. Kenya’s strong reliance on rainfed maize
have less time to recover and rebuild their assets. This has production in meeting its food needs and growing con-
weakened traditional coping mechanisms, handicapping solidation of production toward maize (and dry beans)
household resilience against future shocks. has rendered the country increasingly vulnerable to sup-
ply disruptions and food shortages. Amid declining yields,
Key select crops in Kenya experienced significant pro- productivity gains have come largely through land expan-
duction losses3 in 13 years as a result of adverse risk sion into marginal areas that receive lower and more vari-
events during the period 1980–2012, or once every three able rainfall. This trend coupled with Kenya’s increasingly
years on average (figure ES.2). All of these crop loss erratic rainfall has made the country’s maize production
events resulted in a drop in agricultural gross domestic more susceptible to moisture stress and year-on-year yield
product (GDP) of 2 percent or more. Losses ranging variability, with significant implications for the country’s
from 3 to 4.2 percent occurred in six years. Indicative food security.
losses were substantial for these events, totaling nearly
$5.10 billion, or roughly $154.5 million on an aver- Beyond weather risks, the analysis highlights the impor-
age annual basis, during the 33-year period. Maize tant threat that pests and diseases pose to Kenya’s farm-
accrued by far the biggest losses measured in production ers. Left unchecked, crop pest and diseases regularly
value over the period, accounting for nearly one-fifth cause considerable pre- and postharvest losses that
(19.8 percent) of total indicative losses. Coffee, tea, dampen yields and incomes. The most common crop
threats are armyworms, thrips, aphids, mealybugs,
and nematodes, which are all a permanent fixture of
3
Measured in terms of gross agricultural value, or the total value of volume of Kenya’s agricultural landscape, as elsewhere. Parasitic
production for each crop multiplied by the producer price. Crops covered in the weeds such as Striga are another common threat, affect-
analysis include maize, wheat, paddy rice, sorghum, Irish potatoes (1980–2006),
cowpea, dry beans, tea (1988–2012), coffee, sugarcane, bananas, and green
ing large swaths of Kenya’s prime cropland. Maize is
beans. particularly susceptible to a range of fungal (e.g., rust,
Kenya: Agricultural Sector Risk Assessment xv

spot, blight, smut) and viral diseases (e.g., maize streak high mortality rates, especially in improved breeds. Vacci-
virus). The most noteworthy is maize lethal necrosis dis- nation is effective, but existing coverage is limited (roughly
ease (MLND), which is considered the greatest threat 10 percent). Widespread outbreaks were recorded every
to maize production as no definitive or resistant varie- third year on average during the review period. One
ties have yet to emerge from research since the disease severe FMD flare-up in the early 1980s resulted in losses
was first detected in June 2011. Incidence in the field valued at an estimated K Sh 230 million. Other notable
ranges from 40 to 100 percent of the crop, and crop diseases include small ruminant pest (PPR [Peste des petits
losses of over 80 percent have been reported. Among ruminants]), contagious bovine pleuropneumonia (CBPP),
Kenya’s industrial crops, coffee is particularly suscep- and catarrhal fever. The risk associated with animal dis-
tible to coffee berry disease (CBD) and coffee leaf rust ease is especially acute during drought when even com-
(CLR), two major diseases of Arabica coffee that, left mon day-to-day levels of infection or internal or external
untreated, can cause up to 50–80 percent losses. Chron- parasites can be fatal.
ically low—farm-gate prices offer poor incentives to
farmers to invest in control measures for these diseases, MARKET RISKS
aggravating their impact.
At the market level, the analysis highlights price volatility
as the most significant risk. Producer prices in Kenya for
Tea production in Kenya has long benefitted from favora- key crops are subject to moderate to high levels of inter-
ble growing conditions that limit pest and disease threats. annual price variability. Rice paddy, coffee, sorghum, and
Good crop husbandry is also an enabling factor. For the to a lesser extent, cowpea exhibit the highest levels of
period 1988–2012, tea yield variability was by far the low- year-on-year producer price volatility. In the case of rice
est among the crops analyzed. However, given the high and coffee, this suggests that domestic price fluctuations
market value of tea, even small yield drops can amount are influenced by imports and/or changes in international
to considerable dollar losses, as happened in 2009, 2011, market prices. It also suggests that rice and coffee produc-
and 2012, when aggregate losses for the three years ers in Kenya are exposed to significant swings in farm-
totaled $376.7 million. Although it remains unclear from gate prices from one year to the next.
the analysis, the factors that may be driving higher levels
of observed yield volatility of late, some industry officials Although public support programs manage to keep
cited the effects of shifts in rainfall and temperature pat- producer prices for maize relatively stable, wholesale
terns, with extended dry periods possibly linked to climate prices are among the most volatile, a critical issue for
change. In addition, farmer groups interviewed for this the GoK given maize’s importance to household con-
study highlighted increased incidences of frost. Notably, sumption and food security. Sharp increases during
20 million kg ($11.4 million) of green leaf was reportedly 2008–2009 and then again in 2011 and 2012 coincided
damaged by frost in January 2012. with domestic and external shocks. For example, maize
prices jumped by 145 percent during the first six months
For Kenyan livestock, diseases pose a significant threat, of 2011 following a sharp increase (39 percent) in the
though due to a paucity of data, related impacts are dif- commodity food price index and a near doubling of
ficult to measure. East Coast fever (ECF) is perhaps the U.S. maize prices in 2010.4 In general, domestic maize
most noteworthy threat. Tick-borne, ECF can kill large prices tend to be more volatile than international maize
numbers of calves in pastoralist herds. The presence of prices, as domestic prices are highly sensitive to uncer-
ECF in neighboring countries severely handicaps effec- tainty and constant speculation in projected and real
tive control. Rift Valley fever in Kenya is similarly hard to annual output. The GoK’s active role in cereal markets,
control but is more predictable due to its positive correla- while designed to increase productivity, stabilize prices,
tion with heavy rainfall and flooding. During outbreaks, and ensure food availability, can also discourage private
animal losses are often high, as treatment by vaccination
frequently leads to abortion in pregnant animals. Foot and
mouth disease (FMD) is endemic in Kenya and can cause 4
According to Index Mundi at indexmundi.com. Data accessed May 2014.
xvi Agriculture Global Practice Technical Assistance Paper

sector investment in input supply, storage, and other ser- With regard to Kenya’s sugar industry, the unpredict-
vices due to the added uncertainty over the timing and ability of current policy5 related to import regulations
scale of public interventions. and ongoing exceptions to the COMESA rules pose con-
siderable risk to mills, cane producers, and other stake-
holders. Unpredictability also impedes investments and
ENABLING ENVIRONMENT needed industry reforms, including the planned privati-
RISKS zation of remaining government-owned mills. Sizable
Among notable risks within the sector’s enabling environ- unrecorded imports of refined sugar from outside the
ment are Kenya’s growing cereal imports, which bring region pose additional risks to the industry. Prices can
added uncertainty to the country’s food security situa- fall precipitously when the market becomes saturated
tion. Imports today make up a much higher proportion and mills are unable to compete, as happened in 2002
(37 percent) than they did a decade ago. This exposes the when industry assumed massive debts. A more recent
country to external pressures that can adversely impact surge in sanctioned and unsanctioned imports in 2013
domestic food prices, availability, and access. Moreover, resulted in sizable government payouts to a number of
amid recurrent maize shortages, uncertainty exists about mills to stave off their bankruptcy.
whether rising Kenya maize imports will be able to fill
the gap in light of Kenya’s 50 percent ad valorem tariff for Finally, the political uncertainty and associated insecurity
non-COMESA (common market for Eastern and South- that have disrupted agricultural production and markets
ern Africa) sourced maize, its import ban on genetically in recent years have declined markedly since the new
modified (GM) maize, and inadequate supplies of non- constitution was enacted in 2010. Moving forward, the
GM exportable maize in the COMESA region. This is restructuring, consolidation, and reorganization of the
especially true in light of episodic export bans for maize sector’s legal and regulatory frameworks and ministerial
in Tanzania, Malawi, and Zambia during production functions and the devolution of policy planning, deci-
shortfalls. Supply markets have also thinned out due to the sion making, and administration to the county level will
growing attractiveness of the South Sudan market and of continue to have major consequences for the sector. Such
markets in the Democratic Republic of Congo for Ugan- seismic change imparts uncertainty and significant and
dan and Tanzanian maize exports. myriad institutional risks in the short to medium term.
These include potential for increased inefficiencies, dis-
The increasing frequency of shocks and the country’s grow- ruptions, and breakdown of critical public services such as
ing dependence on emergency aid are also noteworthy. In extension, data collection, and management information
addition to an estimated half million Somalian and Suda- systems (MIS) and higher volatility of producer, whole-
nese refugees in Kenya’s Dadaab and Kakuma camps, an sale, and retail prices.
estimated 1.5 million Kenyans are chronically food inse-
cure and in need of assistance, according to the World MANAGING
Food Programme (WFP). In drought years, that number AGRICULTURAL RISKS
can grow exponentially, as it did in 2011 when 4 million
While hindering growth, unmanaged risks are also a sig-
Kenyans in the northern rangelands needed food aid. Dur-
nificant factor contributing to chronic poverty in Kenya.
ing 2006–11, Kenya received $1.92 billion in emergency
Shocks to agricultural production and markets adversely
aid, up from $150 million during the prior five-year period
impact household well-being in a variety of ways:
(2000–04). As evidenced elsewhere, frequent crises coupled
by limiting food availability, weakening food access,
with an overreliance on food aid can lead to a breakdown
and negatively affecting future livelihoods through
of household resilience. Although emergency food aid can
income disruption and depletion of productive assets.
help address immediate food needs, it does little to help
rebuild household resilience and may induce higher rates 5
In February 2014, COMESA approved the extension for a further year of
of dependency and chronic malnutrition. As such, it also Kenya’s special safeguard arrangement for sugar, thus allowing Kenya to main-
can increase the cost of managing future crises. tain a 350,000-ton ceiling on duty-free sugar imports from COMESA.
Kenya: Agricultural Sector Risk Assessment xvii

Chronically vulnerable groups with high exposure to systems on which their livelihoods and the country’s food
risks experience a disproportionately large impact from security depend:
adverse events and typically lack coping mechanisms » To better optimize rainfall and soil moisture
available to other groups. Understanding these and in marginalized production areas, promoting com-
other risk dynamics is key to developing appropriate risk munity-driven investments in improved
management responses that can help reduce production soil and water management measures such
volatility, safeguard livelihoods, and put the sector and as terracing, water harvesting pans, roof and rock
the broader economy on a firmer footing for growth. catchment systems, subsurface dams, and micro-
Effective strategies can also make a meaningful contri- irrigation systems
bution to poverty reduction efforts. » To curb soil erosion, increase soil fertility
and water retention, and enhance the produc-
Management of agricultural risk is not new to Kenya, tivity6 and biodiversity of smallholder systems
and the GoK has a long track record of investment in across Kenya, promoting broader awareness and
risk mitigation, transfer, and coping mechanisms. Mov- adoption (via farmer field schools and other par-
ing forward, Kenya’s Vision 2030 recognizes the need to ticipatory extension approaches) of conservation
strengthen existing risk management systems, and the agriculture practices such as zero tillage, mulch-
GoK has launched a range of new initiatives to confront ing, composting and use of organic fertilizers, crop
the most severe threats facing the country. In 2011, it diversification and rotation, intercropping, and
established the Drought Risk Management Authority to integrated pest management (IPM)
better coordinate preparedness and speed up response » To strengthen certified seed production and
measures. It also launched the Disaster Risk Reduction distribution systems, build their credibility, and
Program, the National Climate Change Action Plan, stimulate demand for improved seeds and fertiliz-
and the National Hunger Safety Net Program. These ers by smallholders, investing in capacity building
and other initiatives by the GoK and its development and training to strengthen monitoring and
partners are already helping to safeguard livelihoods, enforcement of quality standards and reduce
promote adaptation, and strengthen resilience against incidences of counterfeiting, adulteration,
impacts from natural disasters and a changing climate. and other abuses that dampen farmer demand and
Yet as revealed in this report, Kenya’s agricultural sup- productivity
ply chains remain highly vulnerable to myriad risks that » To reverse degradation of water, soil, and
disrupt the country’s economic growth, cripple poverty vegetation cover, safeguard the long-term
reduction efforts, and undermine food security. The cur- viability of Kenya’s arid and semiarid range-
rent study highlights the need for a more targeted and land ecosystems, and ensure access to suf-
systematic approach to agricultural risk management in ficient grazing land, promoting: (1) use of contour
Kenya. erosion and fire barriers, cisterns for storing rain-
fall and runoff water, controlled/rotational graz-
Based on an analysis of key agricultural risks, an evalua- ing, grazing banks, homestead enclosures, residue/
tion of levels of vulnerability among various stakeholders, forage conservation, and other sustainable
and the filtering of potential risk management measures, land management practices; and (2) innova-
this assessment makes the following recommendations tive rangeland comanagement (state and local
for the GoK’s consideration. The proposed focus areas community) approaches that leverage customary
of intervention encompass a broad range of interrelated,
mutually supportive investments that together—aligned
with Livelihoods Enhancement goals within Vision 2030—hold 6
Conservation agriculture allows yields comparable with modern intensive agri-
strong scope to strengthen the resilience of vulnerable culture but in a sustainable way and with lower production costs (time, labor,
farming and pastoralist communities and the agricultural inputs). Yields tend to increase over the years with yield variations decreasing.
xviii Agriculture Global Practice Technical Assistance Paper

forms of collective action and economic instru- market prices (input/output), agricultural research
ments to reward sound pasture management and advice, and so on
» To strengthen drought resilience among » To further objectives of the devolution process, pro-
vulnerable pastoral communities in target moting institutional and organizational capacity
ASAL counties and better safeguard the viability building and technical training at county and
of animal herds during shortages, supporting the national levels to promote standardized collec-
development of feed/fodder production and tion and management of agricultural data
storage systems, animal health, market (in line with recently developed national guidelines)
and weather information, and other critical
services The purpose of this study was to help policy makers,
» To mitigate growing pressures on rangelands in Ministry of Agriculture, Livestock and Fisheries (MoALF)
ASALs and increasing vulnerability of smaller live- and other GoK officials, and the wider development com-
stock (<50 animals) owners, in particular, putting munity better understand the most important risks fac-
in place supportive policies and livelihood devel- ing Kenya’s agriculture sector. It is hoped that the study’s
opment programs (targeted credit schemes, findings will inform ongoing and future policy planning
skills training, public sector investments in labor- and programming to ensure sustainability of agricul-
intensive infrastructure projects, cash for work) to tural investments and enhanced agricultural resilience
facilitate their engagement in alternative liveli- over time. It is also hoped that the findings will lead to
hood and income-generating activities improved decision making and successful implementation
» To strengthen fiscal management and over time of a comprehensive, integrated, and ultimately
reduce the GoK’s budget volatility (and diver- responsive risk management framework for Kenya’s agri-
sion of development resources caused by ex post culture sector.
crisis response), better safeguard rural liveli-
hoods, and increase resilience, deepening Several of the recommendations proposed in the report
investments in agricultural insurance mechanisms are already being considered or presently undergoing
and markets (in partnership with the private sec- implementation. Some may well already constitute an
tor), with an initial focus on asset protection integral part of existing risk management systems. Once
(via early warning triggers and expedited payouts) the GoK has defined its priorities, Phase II will focus on
among vulnerable pastoralist communities identifying: (1) pathways for scaling-up successful inter-
and area yield index insurance for smallholder ventions to encompass a greater number of beneficiaries
maize farmers and (2) existing gaps that need to be addressed. This will
» To facilitate improved, evidence-based deci- entail an in-depth review of Kenya’s current risk manage-
sion making among farmers, pastoralists, and pol- ment landscape to assess the effectiveness of various inter-
icy makers and to mitigate price volatility, investing ventions, principal barriers, and challenges, and leverage
in integrated data and information systems points to enhance more stakeholders’ access to risk man-
build-out for more robust, cost-effective, and agement mechanisms. Phase II’s anticipated outcome will
reliable collection, management, and dis- be development and implementation of a risk manage-
semination (via terrestrial surveying, geographic ment implementation and monitoring road map, one that
information systems [GIS], information and com- will reduce the vulnerability and strengthen the resilience
munications technology [ICT], short message of Kenya’s agriculture sector and the millions of house-
service [SMS]) of crop production, agro-weather, holds that depend on it for their livelihoods.
Kenya: Agricultural Sector Risk Assessment xix

CHAPTER ONE
INTRODUCTION
Despite myriad challenges, Kenya has emerged in recent years as one of Africa’s
“frontier economies,” with headline growth in the most recent decade propelling the
country toward middle-income status. Poverty rates have declined, while gross domes-
tic product (GDP) per capita ($943 in 2012) has more than doubled. Average real GDP
growth was 5.1 percent during 2010–13. Spurred by its dynamic business commu-
nity, strong communication and transport links, and relatively well-developed financial
and services sectors, Kenya is today among the top five destinations for foreign direct
investment in Sub-Saharan Africa.7 Yet despite recent gains, poverty remains a major
challenge. Moving ahead, the Government of Kenya (GoK) has set ambitious eco-
nomic growth and poverty reduction targets; the economy is expected to expand by
6.3–6.5 percent during 2014–16 (IMF 2014a). Achieving these targets will depend to a
large extent on the future performance of Kenya’s agriculture sector.
A principal source of employment and major contributor to GDP, agriculture remains

vital to the Kenyan economy. Nearly three in four Kenyans live in rural areas and are
actively engaged in the production, processing, and marketing of crop, livestock, fish, and
forest products. The sector accounts for an estimated 75 percent of informal employment
and is the principal source of rural income and livelihoods. It also generates nearly two-
thirds (65 percent) of merchandise exports and roughly 60 percent of foreign exchange
earnings (World Bank 2013). In the five years ending in 2012, the sector’s annual contri-
bution to GDP averaged 27.3 percent (29.9 percent in 2012). Not surprisingly, Kenya’s
GDP growth is highly correlated with agriculture sector growth (figure 1.1).
Launched in 2008, Kenya’s Vision 2030 strategy identifies agriculture as one of six
priority sectors critical to delivering on the GoK’s economic growth target of 10 per-
cent per annum. The second Medium Term Plan (MTP-II) of Vision 2030 covers
the period 2013–2017 and looks to build on successes achieved in MTP-I (2008–12).
Under MTP-II, objectives include maintenance of a stable macroeconomic environ-
ment, modernization of infrastructure, and diversification and commercialization
7
Kenya was ranked as the fifth and fourth most popular destination for foreign direct investment in terms of new
projects in 2011 and 2012, respectively, according to Ernst & Young (2013).
Kenya: Agricultural Sector Risk Assessment 1

FIGURE 1.1. AGRICULTURAL GDP VERSUS NATIONAL GDP GROWTH
(% change), 1968–2012
12 Agriculture GDP growth GDP growth
10
0
68–72 73–77 78–82 82–87 88–92 92–97 98–02 02–07 08–12
Source: WDI 2014 (http://data.worldbank.org/data-catalog/world-development-indicators).
Note: Based on five-year averages.
of agriculture. The five-year framework targets average sistence into a more competitive and commercially ori-
annual real GDP growth of 8.2 percent between 2013 ented sector. Covering the period 2010–20, the ASDS is
and 2017, with double-digit growth by 2017. Achiev- anchored in two strategic thrusts: (1) increasing produc-
ing these targets will require a significant acceleration in tivity, commercialization, and competitiveness of agri-
agricultural growth, which averaged 3.5 percent during cultural commodities and enterprises; and (2) developing
1997–2012 (IMF 2014a). and managing key factors of production (GoK 2010b).
In addition to boosting growth, near-term targets include
Considering the notable variability in year-on-year sec- reducing the share of the population living below the
tor performance (figure 1.2), new and better ways must be absolute poverty line to less than 25 percent and cut-
found to strengthen agricultural supply chains and make ting food insecurity by 30 percent. The ASDS calls for
them more resilient to downside risks. Extreme volatility increased investments to, inter alia, promote the uptake of
characterized Kenya’s agriculture sector’s annual growth new technologies, exploit irrigation potential, undertake
over the period 1980–2012, particularly during the most crucial sector policy reform, improve institutional govern-
recent two decades. Shifting weather patterns, popula- ance, and ensure more sustainable management of natu-
tion growth, changing demographics, increasing market ral resources.
integration, political instability, and other domestic and
external pressures are making Kenyan agriculture more Between 2009 and 2013, Kenya allocated an average of
vulnerable while exposing it to higher levels and incidences 4.6 percent of its national budget to agriculture—less
of risk. Adverse impacts from droughts, floods, pest, and than half of the Maputo9 target. Looking ahead, MTE-II
disease outbreaks, and other shocks repeatedly disrupt sec- commits the GoK to increasing public spending on agri-
tor activities, jeopardizing incomes, hobbling sector growth, culture to 8 percent of the budget by 2020 (IMF 2014b).
and handicapping livelihoods. They also contribute to food For the current fiscal year, the government scaled back its
deficits and diversion of development resources to ex post agriculture budget by 29 percent, or $447 million versus
emergency response and recovery measures. $627 for the previous year.10 A portion of this was to be
The GoK’s Agricultural Sector Development Strategy

(ASDS)8 incorporates the growth objectives of Vision 2030
9
Within the framework of the Comprehensive Africa Agriculture Development
by seeking to transform Kenyan agriculture from sub-
Programme’s (CAADP) Maputo Declaration, Kenya has committed to spend-
ing 10 percent of its national budget on agriculture.
8
ASDS is a revision of the Strategy for Revitalizing Agriculture (2004–2015), 10
See “Kenya falls short of Maputo Declaration on Agriculture,” by Kibiwott
incorporating Vision 2030 objectives. Koross, The Star, September 3, 2013.
2 Agriculture Global Practice Technical Assistance Paper

FIGURE 1.2. AGRICULTURAL VALUE ADDED (annual % growth),
1980–2013
14
12
10
8
6
4
2
0
–2
–4
–6
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: WDI; 2013 growth estimate of 2.9 percent taken from 2014 Economic Review.
reallocated from development expenditure to meet emer- The ASDS recognizes that farmers’ high risk exposure
gency food needs. impedes sector growth. In efforts to enhance the resilience
of the agriculture sector, safeguard food security, and pro-
In recent years, the GoK has had to channel increas- tect livelihoods, the GoK placed drought management and
ingly more resources into emergency response measures climate change mitigation and adaptation at the center
amid mounting concerns over food security. In 2013, of its agricultural and economic development strategy.
Kenya ranked 79 out of 107 countries, lagging behind Among key initiatives, it established the National Drought
countries like Ghana, Uganda, and Cote d’Ivoire, on the Management Authority (NDMA) in November 2011 to
Global Food Security Index, which measures the afford- better coordinate drought mitigation, contingency plan-
ability, availability, and quality of food (Alarcon, Joehnk, ning, and response activities and resources at the national
and Koch 2013). The country faces a structural deficit in level. In March 2013, the GoK launched the National
some basic food staples, including maize, wheat, rice, and Climate Change Action Plan (NCCAP). NCCAP’s pri-
sugar. Stagnant productivity, the high cost of farm inputs, mary objective is to implement Kenya’s National Climate
and poorly developed storage are often cited as common Change Response Strategy (NCCRS), which seeks to drive
causes. Addressing these and other growth constraints investments in, inter alia, water harvesting, early warning
has long been the focus of sector development programs. systems, food storage facilities, broader use of drought-
In addition, adverse shocks such as drought, disease out- tolerant crops such as millet and cassava, and promotion
breaks, and volatile market prices continue to disrupt of conservation agriculture. To support the livestock sec-
and debilitate increasingly vulnerable crop and livestock tor, NCCRS recommends breeding animals better able to
production systems and the livelihoods they support. In cope with drought stress, improving vaccination programs
response, public spending on emergency food aid has and disease surveillance, and establishing emergency fod-
increased markedly in recent years. The number of Ken- der banks, among other initiatives.
yans requiring food assistance rose from 650,000 in late
2007 to almost 3.8 million in late 2009 and early 2010. Although responding to threats posed by climate change
Recurrent food insecurity remains an ongoing challenge and natural disasters is important, the GoK also recog-
in Kenya.11 nizes the need to better manage other risks that adversely
impact agriculture. A better understanding of risk
occurrences and their frequency and impacts is essential
11
During 2007–11, Kenya received roughly $933 million in emergency food
aid. This compared to an estimated $466.2 in emergency response assistance for developing appropriate strategies, interventions, and
during the entire 16-year period 1990–2005. policies for improved agricultural risk management.

It is within this context that the World Bank, with sup- resiliency of agricultural supply chains and the liveli-
port from the G-8 and the U.S. Agency for International hoods they support.
Development (USAID) and in collaboration with Ken-
ya’s Ministry of Agriculture, Livestock and Fisheries The analysis presented in this report is based on a meth-
(MoALF), commissioned the present study. It is one of odology for assessing risks in agricultural supply chains
a series of agriculture sector risk assessments that the designed by the Agricultural Risk Management Team
World Bank agreed to conduct within the framework of the World Bank’s Agriculture and Environmental
of the G-8’s New Alliance for Food Security and Nutri- Services department. It offers a conceptual framework
tion and in close partnership with partner countries. and set of detailed guidelines for conducting a more
The objective of this assessment was to assist the GoK system-wide assessment of risk, risk management, and
to (1) identify, analyze, quantify, and prioritize principal vulnerability within agricultural supply chains. The
risks (i.e., production, market, and enabling environ- methodology contains logical steps within four consecu-
ment risks) facing Kenya’s agriculture sector; (2) analyze tive phases (figure1.3). Phase I, for which this study is the
the impact of these risks; and (3) identify and prioritize primary deliverable, focuses on identifying, quantifying,
appropriate risk management (i.e., mitigation, transfer, and prioritizing the major risks that cause adverse shocks
coping) interventions that might contribute to improved to the sector. Key steps of the analysis include (1) identi-
stability, reduced vulnerability, and increased resilience fying and characterizing risks across production systems
of agricultural production and marketing systems in and market systems and within the enabling environ-
Kenya. This report presents a summary of the assessment; (2) prioritizing these risks based on a quantifica-
ment’s key findings. tion of their indicative impacts over time; (3) assessing
stakeholder vulnerability and the effectiveness of exist-
The study focuses on a select basket of priority crops and ing risk management strategies and instruments; and
livestock products including maize, wheat, dry beans, tea, (4) identifying priority investments and needed policy
coffee, sugarcane, cut flowers, and meat and dairy. These and institutional changes that can strengthen agricul-
together accounted for roughly four-fifths of the value of tural systems’ resilience.
gross agricultural output in 2012 (FAOSTAT). The rela-
tive effectiveness of existing risk management measures Following in-depth analysis of baseline data, the study
was also assessed via (1) an appraisal of public interven- team conducted broad-based, in-country consultations
tions in the rural sector; (2) discussions with rural stake- with stakeholders in January–February 2014. These
holders directly involved in risk management; and (3) a included individual farmers, farmer groups, input suppli-
technical consultation on the relative benefits of various ers, market traders, food processors, and representatives
risk mitigation interventions. of the government and research and academic institutes
in and around Nairobi and in major production zones
Chapter 2 provides an overview of Kenya’s agricul- and markets across Kenya’s eastern, northeastern, cen-
ture sector and a discussion of key growth constraints. tral, Rift Valley, and western regions. The mission team
Chapter 3 assesses the main agricultural risks (produc- organized a wrap-up roundtable consultation at the Min-
tion, market, and enabling environment). Chapter 4 istry of Agriculture, Livestock and Fisheries (MoALF) on
analyzes the frequency and severity of the major risks February 7, 2014, to share preliminary results and solicit
identified and assesses their impact. Chapter 5 pre- feedback. Participants were asked to prioritize possible
sents some stakeholder perceptions of these risks and future interventions by ranking a long list of risk manage-
the potential to improve their management. Chapter 6 ment solutions.
concludes with an assessment of priorities for risk man-
agement and a broad discussion of possible risk man- The results of this assessment provide the conceptual
agement measures that could help to strengthen the basis for Phase II, which will focus on identifying the

FIGURE 1.3. AGRICULTURE SECTOR RISK MANAGEMENT PROCESS FLOW
PHASE I PHASE 2 PHASE 3 PHASE 4
Client demand
Risk Solution Development of risk Implementation and

assessment assessment management plan risk monitoring
RM plan development
Desk review Desk review Implementation
by stakeholders
Stakeholder In-country
Monitoring risks
consultations assessment mission Incorporation into
existing govt.
programs and
Stakeholder development plans
Finalize analysis Refining RM strategy
workshop
Source: World Bank.
solution areas and related risk management interven- comprehensive risk management framework. It is hoped
tions best suited to manage the priority risks identified. that the outcome of this assessment will serve to inform
By the end of this activity, the World Bank, in close col- ongoing and future GoK agricultural policy and plan-
laboration with the GoK and sector stakeholders, will ning, help ensure sustainability of agricultural invest-
develop and validate a matrix of priority interventions ments, and enhance long-term agricultural resilience
related to risk mitigation, transfer, and coping within a and growth.

CHAPTER TWO
AGRICULTURE SECTOR IN KENYA
To inform the analysis and discussion of agricultural risk in Kenya, this chapter
presents an overview of the country’s agriculture sector.12 Sector characteristics
most pertinent to risk are given particular attention. Analysis primarily covers the
33-year period from 1980 to 2012 to assess the frequency and severity of the most
important risks.
Kenya is endowed with diverse physical features, including its low-lying arid and semi-
arid lands (ASALs), an extensive coastal belt, plateaus, highlands, and the lake basin
around Lake Victoria. Yet Kenya’s agricultural resource base is best characterized by
the limited availability of productive land. An estimated 17 percent of the country
receives average annual rainfall of more than 800 mm, the minimum required for
rainfed agriculture. The remaining land (83 percent) is arid or semiarid, generally
unsuitable for rainfed farming or intensive livestock production. Cropland occupies
approximately 31 percent, with grazing land (30 percent), forests (22 percent), and
game parks, urban centers, markets, homesteads, and infrastructure accounting for
the rest (GoK 2010b).
Three main land tenure systems exist in Kenya, each of which influences produc-
tion systems in different ways: communal lands, government trust lands, and privately
owned lands. The communal land ownership system is based on traditional customary
rights, in which individuals have a right to use but not sell land. Privately owned lands
are registered; the owner holds the title under a freehold or leasehold system. In pasto-
ral areas, trust land is the dominant tenure arrangement.
Agriculture in Kenya covers small-, medium-, and large-scale farming, with small-
holder farmers accounting for more than three-quarters of total production. Produc-
tion is heavily reliant on rainfed systems. An estimated 7 percent is irrigated.
12
Broadly, the sector comprises six subsectors: cash crops, food crops, horticulture, livestock, fisheries, and forestry. This
study focuses on cash crops, food crops, horticulture, and livestock.

TABLE 2.1. AGRO-ECOLOGICAL ZONES AND RAINFALL CHARACTERISTICS IN KENYA
Agroclimatic Moisture Index Annual Rainfall Land Area Land Area
Zone Classification (%) (mm) (%) (km2)
I. Agro-Alpine Humid >80 1,100–2,700
II. High Potential Subhumid 65–80 1,000–1,600 12 68,297
III. Medium Potential Semihumid 50–65 800–1,400
IV. Transitional Semihumid to 40–50 600–1,100 5 28,457
semiarid
V. Semiarid Semiarid 25–40 450–900 15 85,371
VI. Arid Arid 15–25 300–550 22 125,211
VII. Very arid Very arid <15 150–350 46 261,804
Source: Modified from Sombroek, Braun, and van der Pouw 1982.
Livestock production plays an important socioeconomic livestock are concentrated in the ASALs. These house-
role in many areas across Kenya. The livestock subsec- holds depend mainly on extensive livestock production
tor accounts for roughly 40 percent13 of agricultural gross systems (ranching and pastoralism), often supplemented
domestic product (GDP) and as much as 13 percent of by low-input, low-output cropping. Kenya’s high- to
national GDP (GoK 2012a), and employs about 50 per- medium-potential areas, which receive more than 1,200
cent of the national agricultural workforce. In the coun- mm of rainfall annually, produce a large variety of crops
try’s ASALs, it accounts for as much as nine-tenths of such as tea, coffee, sugarcane, maize, wheat, potatoes,
employment and family income. The key livestock subsec- fruits, and vegetables. Figure C.2 in Appendix C pro-
tors are beef and dairy cattle, sheep, goats, camels, pigs, vides a breakdown of Kenya’s major farming systems
and poultry. and livelihood zones.
AGROCLIMATIC CONDITIONS RAINFALL PATTERNS

Factors such as climate, hydrology, and terrain determine AND TRENDS
Kenya’s agricultural productivity. Climatic conditions
The country’s climate is influenced by proximity to the
in Kenya vary from humid, tropical regions along the
equator, topography, the Indian Ocean, and the Inter-
coast, to very humid highlands in the central and west-
Tropical Convergence Zone (ITCZ). The ITCZ’s influ-
ern regions, to arid inland areas in the north and east.
ence is modified by the country’s diverse topography,
Kenya has a total land area of 569,140 km2 (excluding
which contributes to high spatial variance in seasonal
surface water). Of this, 83 percent is classified as ASAL,
rainfall distribution due to the altitudinal differences.
lying in agro-ecological zones V to VII (table 2.1; see
Annual rainfall in Kenya follows a strong bimodal sea-
also figure D.1 in Appendix D). Predominantly located
sonal pattern. Figure 2.1 and figure D.3 in Appendix D
in the northern and eastern portions of the country, the
illustrate average cumulative rainfall amounts and sea-
ASALs are generally unsuitable for rainfed agriculture
sonal patterns in 12 rainfall zones across Kenya during the
due to low and erratic rainfall. Roughly 20–30 percent of
period 1981–2011. Generally, the long rains occur from
Kenya’s population and 50–70 percent of the country’s
March to May, while the short rains occur from October
to December. Mean annual rainfall ranges from approxi-
13
A joint Intergovernmental Authority on Development/Kenya National mately 200–300 mm in the north and northeast to nearly
Bureau of Statistics study completed in 2011 demonstrated that livestock’s
1,400 mm in the central and southwestern highlands. The
contribution to Kenya’s agricultural GDP was more than two-and-a-half times
larger than the official estimate for 2009, or about $4.54 billion versus $5.25 onset, duration, and intensity of rainfall vary considerably
billion for arable agriculture (ICPALD 2013). from one year to the next. However, analysis of rainfall

FIGURE 2.1. AVERAGE CUMULATIVE RAINFALL (mm) BY RAINFALL ZONE,
1981–2011
1,600
1,400
1,200
1,000
800
600
400
200
–
Lodwar Mandera Garissa Voi Makindu Nyahururu Narok Dagoretti Malindi Eldoret Mombasa Kisumu
Source: Kenya Meteorological Department.
data since 1960 does not show statistically significant cent, respectively, of total production. This growing consol-
trends (McSweeney, New, and Lizcano 2012). idation of production toward maize and dry beans makes
Kenya increasingly vulnerable to food insecurity.
CROP PRODUCTION
In Kenya’s heavily populated, high rainfall areas—mainly
SYSTEMS in the west—farmers grow a wide range of rainfed food
Kenyan agriculture is predominantly carried out on a and cash crops, including cereals, pulses, coffee, tea, fruits,
small scale and mainly in high-potential areas. Average and vegetables. In Kenya’s transitional and semiarid areas,
farm sizes are 0.2–3 hectares (ha). Small-scale production which cover roughly a fifth of the country and where rain-
represents roughly 75 percent of the total agricultural fall is more variable, cropping diversity is less. In these
output and 70 percent of the marketed agricultural pro- areas, maize, pulses, roots, and tubers are important, with
duce. Smallholders account for over 70 percent of maize, many farming households raising livestock, mostly small
65 percent of coffee, 50 percent of tea, 70 percent of beef, ruminants, in mixed crop/livestock systems. In the arid
and 80 percent of milk production (GoK 2013a). Large- to very arid regions that cover roughly 68 percent of the
scale farming is practiced on farms averaging about 50 ha country, the land is not suitable for rainfed agriculture.
for crops and 30,000 ha for livestock ranches. The large- In these regions, extensive pastoralism is the main source
scale farming subsector, which accounts for 30 percent of of livelihoods, centered on cattle, small ruminants (mostly
marketed agricultural produce, mainly involves growing sheep and goats), and camels.
commercial crops such as tea, coffee, maize, sugarcane,
and wheat. Reliable statistics on livestock populations are difficult to
obtain. The last comprehensive livestock census was done
Agricultural production in Kenya is dominated by in 1969. As in many other African countries, livestock
maize (38.2 percent) and dry beans (18.7 percent), which populations in Kenya are estimated, and actual losses are
together cover well over half of total cropped area in 2012 difficult to calculate. The 2009 Kenya Population and
(figure 2.2). The remainder comprises more than 150 Housing Census included questions on livestock owner-
other food and cereal crops, with sorghum (3.9 percent), ship. Table 2.2 highlights considerable differences between
cowpea (3.8 percent), tea (3.4 percent), coffee (2.8 percent), FAO figures and the 2009 Census data, especially for spe-
wheat, potatoes, pigeon peas, and millet among the most cies commonly kept in the more remote ASAL regions.
important (FAOSTAT). This crop composition has been Even for dairy cattle, it was estimated that Kenya’s actual
fairly stable over time, with the exception of maize and dry cattle population in 2003/04 could be as many as three
beans, which in 1990 comprised 24.4 percent and 12.2 per- times the government’s estimated number (FAO 2011).

FIGURE 2.2. COMPOSITION OF CROP PRODUCTION
(area harvested, in thousand ha), 1990–2012
2,500
Maize
2,000
1,500 Beans, dry

1,000
Wh
Wheat
Whe
Whea
h at Te Cowpea
Tea So
Sorghum
orgh
orgh
hum
hum
500
Potato
Po
ot to
to
ssava Suga
Cass
Cas
Cassava Sugarr cane
Sugar c
0 Ban
Ba
Banana
anana
1990 1992 T
Tomato
To t Rice
Rice,
e, pad
paddy
1994 1996
1998 2000
2002 2004
2006 2008 2010 2012
Source: FAOSTAT.
TABLE 2.2. LIVESTOCK POPULATION IN KENYA, 2009 AND 2012

Chickens
Year Cattle Sheep Goats Camels Pigs Indigenous Commercial
2009 National Census data 17,467,774 17,129,606 27,740,153 2,971,111 334,689 25,756,487 6,071,042
2009 FAO data 17,467,800 9,903,300 13,872,300 947,200 334,689 31,827,000
Percentage (%) difference — –42% −50% −68% — —
2012 FAO data 19,129,800 18,171,000 29,409,100 3,065,400 354,600 32,865,000
Source: FAOSTAT, 2009 Kenya Population and Housing Census.
Note: —, not available.
TABLE 2.3. TRENDS IN CROP PRODUCTION,

1990–2012a
Area Production Yield
PRODUCTION TRENDS Food Change Change Change
Crops (%) (%) (%)
Crop production overall has grown steadily (see figure 2.2),
with an average annual increase in the crop production Bananas 1.4 11.7 88.7
index of 6.2 percent from 1990 to 2012. This growth was Beans, dry 55.6 22.2 −23.0
largely driven by area expansion, with the total cultivated Coffee 2.8 −61.2 −62.3
area increasing by 34.7 percent, or from 4.19 million ha Cowpea 273.8 236.8 123.2
in 1990 to 5.65 million ha in 2012 (FAOSTAT). Table Maize 39.6 17.3 −16.4
2.3 summarizes changes in area cropped, crop produc- Potatob 39.3 23.6 −11.7
tion, and yields for key food and cash crops. The area Rice, 58.9 60.8 −3.6
paddy
cultivated for food crops increased from as little as 10.7
Sorghum 51.5 9.6 −29.6
percent (bananas) to as much as 274 percent (cowpea),
Sugarcane 49.4 23.6 −17.5
with the exception of wheat, for which the area cultivated
Tea 96.4 114.8 9.9
decreased slightly. In the case of industrial crops, tea cul-
Tomatoes 110.3 399.5 142.6
tivation expanded the most rapidly, eclipsing that of cof-
Wheat –6.4 44.6 51.6
fee, which remained virtually unchanged. Yields for some
food crops increased, some considerably (cowpea, toma- Source: FAOSTAT.
a
Five-year average, 1986–90 versus 2008–12.
toes), while that of five others declined, by more than 10 b
For potato, Ministry of Agriculture, covering period 1990–2006, 5-year average,
percent, with the exception of rice. 1986–90 versus 2002–06.

FIGURE 2.3. FOOD CROP PRODUCTION (thousand MT), 1990–2012
4,000
Maize Wheat Potato Beans Rice, paddy
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.
FOOD CROPS 70 percent of total maize output in Kenya on an aver-

Kenya’s principal food staples are maize, wheat, Irish age of 2 hectares of land. They retain 60 percent of their
potatoes, and dry beans. Rice is an increasingly impor- output for home consumption and contribute roughly
tant food staple, particularly among urban households. a third to total marketed surplus. Almost three in five
Production growth for these crops was notably modest (58 percent) smallholder maize producers are net buyers
in recent decades. In fact, according to available data,14 of maize (Kirimi et al. 2011). The remaining 30 percent
potato is the only food staple for which the production of marketed maize is produced by a relatively small num-
increase exceeded the increase in the population during ber of commercial farmers, who operate over 20 hectares
the period 1990–2012. The area cropped to potato nearly on average and contribute 30 percent of total production.
doubled, and yields were more than four times higher in
recent years than in the earlier period. During the same Kenya boasts relatively high levels of adoption of hybrid
period, production of Kenya’s other principal food crops seeds (up to 80 percent), but a much smaller percentage
increased 17.3 (maize), 44.6 (wheat), and 22.2 (dry beans) of farmers regularly use fertilizer (41 percent). Commer-
(figure 2.3). During the same period, the Kenyan popula- cial farmers make good use of hybrid seeds as well as fer-
tion grew approximately 84 percent. tilizers and mechanization to attain high yields (Smale and
Olwande 2014). Yields among smallholders, who generally
Maize: According to FAO, maize production accounts forego investments in fertilizers and other improved produc-
for approximately four-fifths (80.3 percent) by volume tion practices, are significantly lower (1.6 tons/ha in 2012).
of Kenya’s total grain output. It is also the fourth most
important commodity (after milk, potato, and cattle meat) Maize production in Kenya, as elsewhere, is mainly
by value. Kenya produces between 37 and 40 million bags dependent on rainfall. As such, it is vulnerable to drought
per year against a national requirement of approximately and to year-to-year yield fluctuations. Average maize
42 million bags.15 Production is dominated by an esti- yields increased about 10 percent from the early 1980s to
mated 3 million smallholder farmers who produce roughly the mid-1990s, but have been declining since. Increases
in production since 1990 have been driven by a nearly
40 percent growth in land area under cultivation. Much
14
The analysis highlights some notable discrepancies in both national and FAO
of this expansion has been into marginal areas, where
data. According to data from the MoALF, potato yields and production in 2007
jumped by 215 percent and 255 percent, respectively, compared to the previous soils and rainfall are less favorable to maize production.
year, while area harvested increased by only 12 percent. According to official La Rovere et al. (2014) estimate that nearly one-fifth
data, annual output has since remained well above historical averages. During (19.5 percent) of Kenya’s maize production takes place in
the six-year period 2007–12, average output was 2.5 MT versus 0.96 MT dur-
areas with high rainfall variability, rated with a probability
ing the period 2001–06. Due to these inconsistencies, the analysis considers only
the period 1980–2006 for potato production. of a failed season (PFS) of between 40 and 100 percent.
15
Maize is packed and marketed in 90-kg bags. Average yield in these areas is 1.08 tons/ha versus the

TABLE 2.4. VALUE OF HORTICULTURAL PRODUCTIONa
Area Quantity Value Share by Value
(Thousand has) (Thousand tons) (K Sh Million) (%)
Vegetables 297 5109 95407 47
Fruits 168 3618 57582 28
Flowers 4 378 42086 21
Nuts 98 166 5524 2.7
Maps 9 57 1804 <1
Total 576 9328 202403 100
Source: Directorate of Crops.
a
Average 2010–12.
national average of 1.62 tons/ha. Another one-quarter rainfed conditions, according to the National Irrigation
(26.1 percent) of production is grown in areas rated with Board (NIB). Rice production is expected to increase
a PFS of 20–40 percent. These trends have contributed to in response to ongoing GoK initiatives to rehabilitate
higher levels of production variability, further amplifying and expand national irrigation schemes and growing
Kenya’s structural deficit in maize. Production is also con- adoption of New Rice for Africa (NERICA), a rela-
strained by underlying drawbacks such as soil acidification tively new, high-yielding seed variety (USDA 2013).
due to year-in, year-out usage of diammonium phosphate Despite anticipated productivity gains, however, Kenya
(DAP) fertilizer (USDA 2014) and a general decline in soil will continue to rely heavily on imports given expected
fertility. Much emphasis has been placed on the use of demand growth.
purchased inputs such as fertilizer and improved seeds,
but adoption has not been sufficient to maintain the high
yields achieved 30 years ago. HORTICULTURE CROPS
Comprising a range of product categories including veg-
Wheat: After maize, wheat and rice are Kenya’s most etables, fruits, flowers, nuts, and herbs/spices, Kenya’s
important cereal crops. Wheat is predominantly grown in horticultural subsector continues to expand. Among these
areas above 1,500 meters in the south and upper Rift Val- categories, vegetable production is the most important
ley (e.g., Narok, Nakuru, Uasin Gishu Counties) and in in terms of share of total agriculture output by value
Meru County in Eastern Province. Traditionally, Kenyan (38 percent in 2012), followed by fruits (22 percent) and
wheat has been grown by large- and medium-scale com- cut flowers (18 percent). The subsector directly and indi-
mercial farms using capital-intensive technology such as rectly employs an estimated 4 million people and makes
tractors, tillage equipment, and combines. Wheat is the a substantial contribution to household food needs. It also
only crop for which area under cultivation has dropped contributes substantially to Kenya’s agricultural export
in recent decades (table 2.3), and yield has become more earnings.
variable. This trend may be partly due to an ongoing shift
in the epicenter of production away from large farms in Vegetables account for nearly half (47 percent) of total
Upper Rift Valley to smaller-scale production in Narok production value (table 2.4). The leading vegetables by
County. Wheat stem rust, poor yields, the high cost of production volume and value are Irish potatoes, tomatoes,
farm inputs, and the shift in the 1990s toward more lib- and cabbage, all of which are widely consumed by rural
eralized markets are also likely to be among contributing and urban households. The bulk of vegetables are pro-
factors (Chemonics 2010; FAO 2013a). duced by smallholder farmers (estimated at 1.8 million).
Vegetables are grown in a wider range of areas across the
Rice: Irrigation schemes grow about 95 percent of all country than any other horticultural subgroup (World
rice produced in Kenya while the rest is grown under Bank 2012).

Irish potato: In Kenya, Irish potato is the second most security and rural incomes. Farming households consume
important food item after maize, with its importance about 24 percent of total output; the rest (76 percent) is
growing along with urbanization. It is grown mainly sold to markets (World Bank 2012).
by small-scale farmers as a cash and food crop, and is
therefore important for rural income and food security. INDUST RIAL CROPS
Potatoes are typically produced under rainfed condi- Tea, coffee, sugarcane, and cut flowers are among Kenya’s
tions during two seasons. Farmers intercrop potatoes with principal cash crops. Among these, tea is by far the most
maize and beans, and some plant potatoes after maize, important in terms of Kenya’s agricultural export earnings.
wheat, or barley. In places like Meru, Kiambu, and Nyeri
counties, where average farm sizes are smaller than 1 hec- Tea: At roughly 370,000 tons per year, Kenya stands as
tare, farmers grow potatoes on up to 40 percent of their the world’s third largest tea producer after China and
cropland, without rotation, which favors the emergence India. The highland tea-growing regions on either side
of pests and diseases (World Bank 2012). According to of the Great Rift Valley are endowed with the ideal cli-
MoALF statistics, potato production has grown by nearly mate for tea production. Production goes on year-round,
260 percent since 1990, while yields have more than dou- with two main peak seasons between March and June
bled (115 percent). However, the expansion of crop area and October and December, coinciding with the rainy
and yield is hampered by insufficient availability of high- seasons. Kenyan tea is grown without the use of insecti-
quality planting seed. cides or herbicides because at 1,500–2,700 meters above
sea level, the growing conditions act as a natural deter-
Banana: Fruit production (28 percent value share in rent to pests.
2012) is second only to vegetable production in terms
of the total value of horticultural production in Kenya. Tea production in Kenya has grown steadily over the
Within the fruit segment, banana is Kenya’s most impor- most recent decade mainly because of expansion in land
tant product, representing 37.6 percent of the total value area under cultivation (table 2.3). Kenyan tea is produced
of domestic fruit production (MoA 2013). The crop is under two distinct production systems: smallholder pro-
mainly grown by smallholder farmers under rainfed duction and commercial production by vertically inte-
conditions. According to Africa Harvest, approximately grated multinationals. The latter benefit from higher
390,000 banana farmers operate in Kenya, of which yields but lower-quality output due to more extensive use
approximately 84 percent are smallholder farmers (culti- of machinery for harvesting. According to the Tea Board
vating <0.2 hectares). Relatively affordable for the average of Kenya (TBK), the smallholder sector is growing in
rural and urban household, bananas are widely consumed importance and today accounts for roughly three-fifths
across Kenya. The crop is important in terms of both food (59 percent in 2012) of national tea production. A state
FIGURE 2.4. INDUSTRIAL CROP PRODUCTION (thousand tons),

1990–2012
450 Tea Coffee Sugar cane 7,000
400 6,000
350
5,000
300
Coffee/Tea
Sugarcane
250 4,000
200 3,000
150
2,000
100
1,000
50
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.

FIGURE 2.5. COFFEE PRODUCTION (tons), 1980–2012
90,000 Estate (tons) Co-operative (tons)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
–
1
1
/8
/8
/9
/9
/0
/0
/1
80
85
90
95
00
05
10
Source: CBK.
corporation prior to 2000, the Kenya Tea Development $540 million to the country’s GDP.16 It employs more than
Agency (KTDA) is now a farmer-owned limited liability 250,000 smallholder farmers who supply over 92 percent
company that procures, processes, and markets all small- of the sugarcane processed by nearly a dozen domestic
holder production in the country. It manages 67 process- sugar mills. The remainder is produced by factory-owned
ing factories serving over 600,000 growers organized in nucleus estates (KSB 2010; KSI 2009). Sugar production
Savings and Credit Cooperatives (SACCOs). The planta- is concentrated in four major areas, primarily located in
tion subsector operates 39 tea factories and employs about southern and southwestern Kenya. Increases in produc-
33,000 outgrowers. tion during the most recent decade were largely the result
of increases in total land planted while yields remained
Coffee: Coffee remains important to Kenya’s agricul- stagnant. Widespread use of poor-quality sugarcane
tural economy, but its importance is waning (figure 2.4). varieties, poor agricultural and land management prac-
Since production peaked in 1988 at nearly 128,000 tons, tices, and delayed harvesting of mature sugarcane (due to
yields and output have dropped by nearly half. Among weather and/or transportation problems) contributed to
contributing factors are Kenya’s aging tree stock (with poor yields over time.
high susceptibility to plant diseases) and declines in world
coffee prices during 1986–1992 and 1998–2002. These Cut flowers: Kenya’s floriculture industry was worth an
trends have had a substantial impact, particularly on estimated $490 million in 2012. Cut flowers are predomi-
smallholders. Figure 2.5 shows the performance of estates nantly cultivated under modern farming systems and are
and smallholders during 1980–2012. The latter suffered produced for export markets. Roughly 160 flower growers
a drastic reduction in output, from around 70,000 tons exist in Kenya. The majority of producers are medium- to
during the mid-1980s (before the coffee price crisis) to large-scale agribusinesses. However, 20–25 of these grow-
less than 30,000 tons currently. Over 600,000 smallholder ers are large to very large commercial enterprises that
producers are organized into about 550 cooperatives together account for roughly 75 percent of total flower
and about 3,300 large-scale, vertically integrated coffee exports. Such operations are highly capital intensive, best
estates. Smallholders account for 75 percent of the land characterized by their managerial and marketing sophis-
under coffee production but only slightly over half of pro- tication and sizable investments in advanced technology
duction, according to the Coffee Board of Kenya (CBK). and cultivation techniques (Hortiwise 2012). The leading
Average yields on the estates are nearly 1.5 times higher counties in horticultural production are Kiambu, Nakuro,
due to their more intensive use of fertilizers, pesticides, Meru, Nyandaru, Murang’a, Bungoma, and Makueni,
herbicides, and fungicides as well as irrigation. which together account for more than 57 percent of total
Sugarcane: Kenya’s sugar industry supports an esti- 16

See “Kenya: Poaching sugarcane” by Katrina Manson, Financial Times,
mated 2 million people and contributes an estimated January 21, 2014.

output value, with the first three counties accounting for Emerging from a significant downturn in the 1990s, Ken-
more than 30 percent (HCDA 2012). ya’s milk production sector is growing again. Valued at
$800 million, it contributes 7 percent to national GDP and
LIVESTOCK PRODUCTION 19 percent of agricultural GDP (KNBS 2009 in Macha-
ria 2013). Over 1 million households produce milk, with
SYSTEMS 80 percent of the 4 billion liters produced by small-scale
Several different livestock production systems are com- farmers. The sector provides more than 850,000 jobs
mon across Kenya, most notably extensive pastoralism, (FAO 2011). Government services were relatively effective
mixed crop/livestock farming systems, and intensive poul- in regulating production and trade until mid-1980s, but
try, pig, and dairy production. Each system faces different milk production started failing in the 1990s and collapsed
constraints and risks. Vulnerability to risks is considered in early 2000 due to corruption in the management of the
greater within extensive systems than within intensive cooperative sector. It was reinvigorated after being taken
ones for myriad reasons—a lower level for capacity to over by the new Kenya Cooperative Creameries (KCC) in
mitigate risks among pastoralist communities, punctu- 2004, and more than 30 registered processors are now in
ated by declining mobility and unpredictable access to operation (Macharia 2013).
and availability of water, pastureland, and other factors
of production. Thus, analysis of risks to extensive systems
was prioritized in this study.
VARIABILITY IN CROP
PRODUCTION
Approximately 50–70 percent of the country’s live- An analysis of production variability suggests that several
stock is produced under extensive systems, mostly in of Kenya’s main crops exhibit moderate to high levels of
the ASALs, where the subsector accounts for roughly interannual variation (see table 2.5). These crops include
nine-tenths of employment and animals provide the potatoes, rice paddy, coffee, bananas, sorghum, and cow-
vast majority of household income. This system mostly pea. Fluctuations in yield rather than area planted across
comprises indigenous races of cattle, camels, sheep, and the time series largely explain notable production variabil-
goats, which graze or browse natural forage. Land is usu- ity for potatoes and coffee, while fluctuations in both area
ally communally owned, although private or group ranch planted and yield account for observed variability in dry
systems also exist. Some feed supplementation occurs bean and cowpea production.
where there is mixed farming or irrigation using crop
residues and weeds. Mixed farming, a system involving
various food and cash crops integrated with a few cattle TABLE 2.5. COEFFICIENTS OF VARIATION
or sheep and goats, stretches from the southern parts of FOR CROP PRODUCTION,
the ASALs into Kenya’s high-potential agricultural pro- 1980–2012
duction areas. In highland areas, the animals are mostly
Production Area Yield
dairy cattle and sometimes pigs. These systems are often
accompanied by medium- or small-scale “backyard” Bananas 0.30 0.14 0.24
Beans, dry 0.28 0.27 0.23
poultry production.
Coffee 0.35 0.10 0.41
Intensive livestock production systems mostly consist of Cowpea 0.37 0.25 0.26
commercial poultry and pig production and a more lim- Maize 0.19 0.17 0.13
ited number of dairy farms. Commercial enterprises using Potatoes 0.77 0.30 0.55
intensive systems, especially for poultry, are normally Rice, paddy 0.38 0.32 0.20
established after undertaking their own risk assessments Sorghum 0.32 0.27 0.24
and are operated under high sanitary and biosecurity lev- Sugarcane 0.12 0.19 0.16
els with in-built mechanisms to avert or avoid risk. As a Tea 0.38 0.27 0.18
result, such systems were not considered as part of this Wheat 0.26 0.13 0.22
risk assessment. Source: FAOSTAT; MoALF.

FIGURE 2.6. CEREAL PRODUCTION TRENDS
(thousand tons), 1990–2012
4,000 Maize Wheat Sorghum Rice, paddy Beans
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.
Figure 2.6. illustrates historical trends in production for TABLE 2.6. CEREAL SUPPLY/DEMAND
five of Kenya’s major staple crops. Figures F.1 through BALANCE (thousand tons),
F.6 in Appendix F show individual production trends for
2013/14
six crops (i.e., maize, wheat, dry beans, tea, coffee, and
sugarcane). Higher levels of variability in maize and wheat Total
Wheat Rice Maize cereals
production over the last decade are apparent, as is a cor-
relation in some years with extreme drops in production, Cereal supply (‘000 tons)
suggesting covariance of shocks. In both cases, fluctua- Previous year 442 122 3,922 4,486
production
tions in yields are the strongest determinant of output
Previous five years 356 83 3,300 3,739
variability from one year to the next. Historical patterns
average production
for dry bean production suggest that both changes in yield
Previous year imports 1,000 405 506 1,911
and acreage planted have a strong influence on output.
Domestic 405 85 3,616 4,106
Among cash crops, variations in tea and coffee produc- availability
tion are most directly affected by fluctuations in yields. 2013 Production 390 190 3,489 3,994
For sugarcane production, changes in both yield and area Possible stock 15 10 127 152
planted appear to have a strong influence. drawdown
Utilization 1,505 505 4,456 6,466
FOOD SUPPLY AND DEMAND Food use 1,205 467 3,850 5,522
Nonfood use 300 25 606 931
Kenya currently suffers from a structural deficit in the
Imports 1,100 420 840 2,360
production of key staples, including maize, wheat, and
requirement
rice (table 2.6). Over the last decade, annual imports for
maize in particular fluctuated significantly, accounting Source: FAO 2014.
for between 6.2 and 32 percent of consumption depend-

ing on the year, with a 10-year average of 14.5 percent,
or 624,000 tons (FAOSTAT). Domestic production over yan households, with per capita consumption about 99
the last decade accounted on average for roughly half kg/year (FAOSTAT). It also accounts for roughly 40 to
(48.5 percent) and one-fifth (21 percent) of wheat and rice 50 percent of household food expenditures. While grow-
consumption, respectively. ing, maize production has not kept pace with population
growth over the last 30 years. During the period 1980–
Maize is the principal food staple in Kenya. It accounts 2012, production increased roughly 60 percent while the
for nearly one-third of the calories consumed by Ken- population grew by 153 percent. To address the deficit,

FIGURE 2.7. MAIZE PRODUCTION VERSUS DEMAND
(thousand MT), 2003/04–2013/14
4,500
Domestic production ('000 MT)
Domestic utilization ('000 MT)
4,000
3,500
3,000
2,500
2,000
2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14
Source: FAOSTAT.
the country continues to depend heavily on imports. In Rising consumer demand for wheat is largely fueled by a
2012–13, for example, Kenya imported 425,000 tons of growing preference among burgeoning urban consumers
maize for commercial and relief purposes. Maize con- who view wheat products as a convenience food. Conse-
sumption will continue to grow despite efforts to diver- quently, wheat imports are expected to remain above 1
sify to other foods. Limited volumes of lower-grade maize million metric tons (MT) annually. The Russian Federa-
go into the livestock feed industry. Deficits are offset by tion, Ukraine, Pakistan, Brazil, and Argentina remain the
imports from within the East African Community (EAC), largest suppliers to the Kenyan wheat market.
and imports from outside the EAC are subject to a steep
external tariff (currently at 50 percent ad varolem). Rice is the third most important cereal food crop after
maize and wheat. Irrigation schemes grow about three-
Projections by FAO for current-year imports were 800,000 quarters (74 percent) of all rice produced in Kenya (FAO
tons based on expected domestic output of 3.2 million 2012); the rest grows under rainfed conditions. The NIB
tons and strong, continued growth in demand (figure 2.7). estimates per capita rice consumption will rise to 11 kg
USDA (2014) forecasts were considerably lower at 2.8 mil- by 2015, up from 7 kg in 2013. The Ministry estimates
lion tons. The decline in production is attributed to poor annual consumption is increasing at a rate of 12 per-
yields due to below average rainfall. It is also due in part to cent compared to 4 percent for wheat and 1 percent for
delayed and inadequate supply of subsidized fertilizers17 maize. It is expected to more than double to 495,000 tons
and certified seeds, the spread of the MLND, widespread in 2014–15 (October 2014–September 2015) from about
infestation by the parasitic weed Striga, and declining soil 237,000 tons consumed in MY 2004–05 (Gitonga and
fertility. Shortages have also been aggravated by increased Snipes 2014).
postharvest losses linked to poor drying and storage prac-
tices and early sales of green maize. The former contrib- This trend is attributed to a progressive change in eating
utes to high incidences of aflatoxin contamination. habits, particularly among Kenya’s urban households.
Pakistan, Vietnam, Thailand, and India supply Kenya
Growing consumption of wheat and wheat-based prod- with most of the rice imports. Tanzania supplies a sub-
ucts far outstrips domestic production. Kenya’s wheat stantial amount through unrecorded cross-border trade.
imports grew at an annual average rate of 13.25 percent The ad valorem tariff for rice coming from outside the
between 2003/04 and 2012/13. In 2012/13, imports met region currently stands at 35 percent but can be as high
roughly 44.2 percent of national wheat requirements. as 75 percent.
Consumption of maize and wheat is expected to increase

17
Since 2007/08–2011/12, the GoK has allocated more than $117 million for
distribution of subsidized fertilizers to smallholders in the Rift Valley and west- because of population growth, increased urbanization,
ern Kenya via the National Cereals and Producer Board (NCPB). and growth in the food service sector. Imports to Kenya

are subject to external tariffs that range from 10 percent 60 percent of Kenya’s tea exports go to only three consum-
for wheat, to 35 percent for rice, to 50 percent for maize. ing countries (Pakistan, Egypt, and the United Kingdom).
Minimal exports of these staple commodities occur Kenyan horticultural exports to the European market
through cross-border trade. have dropped in recent years due to the economic crisis in
the European Union (EU) and difficulties among Kenya’s
Although consumption is relatively diversified, production smallholder farmers in adhering to strict EU regulations
is much more so. Maize, wheat, sugar, milk, and palm oil over agrochemical residues.
together make up nearly two-thirds of daily per capita
consumption. Maize accounts for the largest share of
FOOD CROPS
total daily staple food intake (65 percent) and total caloric
Due to Kenya’s open trade regime and highly integrated
intake (32 percent), with per capita consumption of
markets, domestic prices in Kenya for agricultural com-
about 99 kg/year. Wheat accounts for another 9 percent.
modities, including major staple foods, are relatively
Sugar, milk, and palm oil each contribute approximately
sensitive to both internal and exogenous pressures and
7–8 percent of calories and round out the top five con-
shifts in supply and demand. The following analysis of
tributors to calorie consumption.
price trends for key commodities (figure 2.8.) was based
on time-series data of producer prices in local currency
In Kenya, domestic beef consumption has more than (K Sh) for the period 1992–2011
doubled over the past two decades, and Kenyans’ rate
of milk consumption, one of the highest in the world for Overall, domestic cereal prices over the last two decades
developing countries (100 kg/capita/year), is still growing. were characterized by moderate levels of volatility. How-
Such local demand, and a growing export market for live ever, prices became more volatile in recent years due to
animals and products, is leading to increased intensifica- both external and internal dynamics. First, the surge in
tion of production. Intensification itself, particularly in a international food prices in 2006–07, and in 2009–11
farming sector largely dominated by arid areas, can lead (as measured by FAO’s Food Price Index), had a notable
further to increased risk. impact on domestic prices for rice and sorghum in par-
ticular. Domestic unrest surrounding the 2007 elections
AGRICULTURAL MARKETS likely contributed to increased levels of volatility. A ton
of sorghum cost nearly 86 percent more in 2009 than
AND PRICE TRENDS just two years earlier. A ton of rice paddy was nearly
Agricultural markets in Kenya are highly integrated due 71 percent higher, and maize, 53 percent higher. Domes-
to the country’s relatively well-developed road and com- tic prices for wheat followed similar patterns, with more
munications networks and sea ports and airports and its pronounced variability in recent years. Wheat and rice
open trade regime. Kenya benefits from robust and grow- are both routinely imported from world markets, and
ing trade with its regional neighbors, especially within the tariffs are generally effective in keeping domestic prices
framework of the EAC, and steady international demand high for producers.
for some of its key exports. Tea and coffee have tradition-
ally been Kenya’s top two agricultural export commodi- Maize and sorghum, on the other hand, are typically
ties. In recent years, cut flowers have overtaken coffee to imported duty-free from countries within the EAC and
become Kenya’s second most valuable export crop. Dur- COMESA (Common Market for Eastern and Southern
ing 2010–12, cut flowers accounted for 8.94 percent of Africa) regions and are only imported from world markets
total export value on average, after tea (20.27 percent) and under exceptional circumstances. Consequently, tariffs are
coffee (4.46 percent). Vegetables, fruits, and related prod- not always effective in keeping maize prices high for pro-
ucts accounted for an additional 4.5 percent (table 2.7). ducers. Given the importance of maize to Kenya’s food
The country relies on a limited number of export prod- security, the GoK intervenes in markets to regulate prices
ucts and trade partners, which makes Kenyan exports and ensure sufficient surplus stock. In low production
vulnerable to external pressures. For example, more than years, the government often suspends the 50 percent tariff

TABLE 2.7. VALUE OF AGRICULTURAL EXPORTS (US$ thousands), 2010–12
2010 2011 2012 Average share
(US$000) (US$000) (US$000) 2010–12 (%)
Tea 1,163,630 1,176,308 942,101 20.27
Cut flowers and flower buds for bouquets 396,239 454,349 597,716 8.94
Coffee 207,473 223,509 291,937 4.46
Leguminous vegetables, shelled or unshelled 75,037 152,903 188,834 2.57
Vegetables, fresh or chilled 150,251 57,652 36,696 1.51
Fruit and vegetable juices, unfermented 26,997 27,876 15,588 0.44
Other — — — 61.80
All products 5,169,112 5,853,310 5,169,142 100
Source: International Trade Centre.
Note: —, not applicable.
FIGURE 2.8. TRENDS IN CEREAL PRICES (K Sh/ton), 1991–2011

90,000 Maize Rice, paddy Sorghum Wheat
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
Source: FAOSTAT.
on grain imported from outside the EAC to hold prices local or the export market. They are also influenced by
down. During such periods, price volatility increases as the extent of government intervention and participation.
imported maize competes with domestic maize. In addi- The vast majority of tea and coffee produced is exported,
tion, the National Cereals and Produce Board (NCPB) while virtually 100 percent of the sugarcane produced in
purchases maize at fixed prices from large-scale farmers Kenya is refined and consumed domestically. Domestic tea
and from some smallholders in a few major surplus zones, and coffee prices are set via the major auctions in Mom-
particularly in the Rift Valley. It also distributes subsidized basa and Nairobi, respectively. Prices in both auctions, in
fertilizer to smallholder farmers in parts of the Rift Valley turn, are heavily influenced by prevailing prices in external
and western Kenya.18 markets. These include tea auction prices in Colombo and
Calcutta and other major tea-producing countries, and
CASH CROPS the New York “C” contract market for coffee. Since mar-
Domestic prices, supply chain governance, marketing, and ket liberalization in the early 1990s, the GoK has assumed
other market dynamics for Kenya’s key cash crops vary only a limited regulatory role in domestic tea and coffee
depending on whether the end product is destined for the industries through the TBK and the CBK. By compari-
son, Kenya’s sugar industry remains highly regulated, with
18
Some evidence shows that overreliance on DAP has contributed to excessive domestic prices directly influenced via import tariffs and
soil acidity, and hence, low yields. quota protections.

FIGURE 2.9. TRENDS IN CASH CROP PRICES (K Sh/ton), 1991–2011
700,000 4,000
Coffee Tea Sugarcane
600,000 3,500
Coffee/Tea (Khs/ton)
3,000
500,000
2,500
Sugarcane
400,000
2,000
300,000
1,500
200,000 1,000
100,000 500
0 0
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
Source: FAOSTAT.
Tea: The volume of Kenya’s tea exports increased over problem, as Kenyan coffee production has continued to
the last decade, with some relatively modest fluctuations, slide amid a rebound in global prices. Kenya’s aging trees
while the average value per kilogram in Kenyan shillings are increasingly susceptible to coffee leaf rust (CLR) and
(K Sh) has increased steadily since 2007 (figure 2.9). These coffee berry disease (CBD), serious biological threats that
trends led to rising export proceeds for the GoK over necessitate the use of costly fungicides. The rising value of
the most recent decade. In 2012, tea exports accounted land due in coffee-producing areas and competition with
for nearly one-fifth of Kenya’s total agricultural exports, other crops further contribute to this decline.
valued at $942 million. Exports are highly dependent on
three markets: Pakistan, Egypt, and the United King- The authority to regulate coffee sales and marketing in
dom. Together, these account for more than 65 percent of Kenya has been vested in the CBK. The Kenya Coffee
national tea exports. Pakistan alone imports 24 percent of Producers and Traders Association (KCPTA) manages
Kenya’s total tea exports. The loss or significant reduction the auction through which nearly all coffee marketed in
of demand from one or more of those markets is an ongo- Kenya is sold, with a small proportion sold through pri-
ing risk to the industry, as happened during 2005–06 when vate contract arrangements.19 Estates and cooperative
tea exports to Pakistan fell drastically. Slowing demand in societies employ one of eight licensed marketing agents
Egypt and Pakistan, and globally, and a glut in global pro- to represent them at the coffee auctions. Around 50
duction resulted in weaker prices for Kenyan teas in 2014. licensed coffee dealers purchase coffee from the auction
for export. However, a handful of buyers account for the
Coffee: Despite the popularity of and strong apprecia- vast majority of transactions. In this situation, these buy-
tion for Kenyan coffee globally, Kenya’s coffee industry ers exercise strong market power in maintaining favora-
is crumbling under the weight of mismanagement. The ble auction prices, while agents and others are paid on
importance of Kenya’s coffee crop as a major export has a fixed fee basis. The result is consistently low farm-gate
declined drastically since production and exports hit their prices that discourage on-farm investments. Figure 2.10
peak during the mid-1980s. Today, it accounts for less compares Nairobi auction prices and internal prices with
than 5 percent by value of Kenya’s agricultural exports. those received by the Roret Farmers Cooperative Society
An important factor explaining the decline in coffee 19

The Coffee Act (2001) was amended through the Finance Act of 2005 to
production and exports is the decline in world coffee allow for direct marketing of green coffee beans by producers. The direct sales
prices between 1986 and 1992. Prices recovered partially window, commonly referred to as the “second window,” allows estate grow-
ers, cooperative societies, and cooperative unions to self-market their coffee and
between 1993 and 1997, but declined again between
access foreign markets. However, since its inception in 2005, negligible volumes
1998 and 2002. After that, they increased consistently have been sold outside the auction due to stringent regulations and bank guar-
until 2014. The price decline only partly explains the antee requirements.

FIGURE 2.10. COFFEE PRICE COMPARISON ($/kg), 2005–13
8
Nairobi coffee exchange
7
International prices
6
Roret farmers co-operative society ltd.
5
4
3
2
1
0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Nairobi Coffee Exchange; International Coffee Organization; Roret Farmers Cooperative Society.
from 2005 to 2013. Farmers were paid about one-tenth of of which are privately owned. The largest mill, Mumias,
the Nairobi auction prices on average. is government owned. Outgrowers sell their product to
sugar mills that process the sugarcane into raw sugar,
These and the other dynamics outlined above have con- which is then sold to the local food industry and house-
tributed to the decline of Kenya’s coffee industry. The holds through wholesalers and retailers. Imported sugar
smallholder subsector, in particular, faces significant dis- is transported to major wholesale markets and retailers,
ease-related losses and limited incentives to invest in cof- where it competes directly with locally produced sugar.
fee production under Kenya’s current marketing system.
Kenya’s current sugar deficit is addressed through imports,
Sugarcane: Kenya’s sugar industry is closely linked to both formal and illicit. Significant volumes of refined
the government and is regulated via the Kenya Sugar sugar from outside COMESA countries are reportedly
Board (KSB). As a member of the COMESA Free Trade regularly smuggled into Kenya and can at times cause
Area, Kenya is obligated to allow duty- and quota-free significant distortions in the domestic market. Although
access for sugar and other products for member states. imports are regulated through quotas and tariffs, insuf-
Since 2000, however, the country has maintained a mar- ficient administration and high local retail prices allow
ket-access safeguard that was extended until March 2015. importer “syndicates” to obtain profit margins that can
This has allowed a range of protective measures to help be more than double those of local producers (Millen-
ease the sugar industry’s transition to full market liber- nium Cities Initiative [MCI] 2008). Poor administration
alization. Measures include tariffs and quotas20 under the of the quota system in years past resulted in heavy losses
COMESA quota protection protocol that are applied to to processors unable to compete with significant volumes
imports, effectively barring open competition between of cheaper imports, as happened in 2012.
Kenyan and COMESA sugar producers. These protec-
tions have kept domestic prices artificially high, benefit- Horticulture: Despite rapid growth in recent years,
ting local producers but making raw sugar and sugar fruit and vegetable exports currently account for less than
products more expensive for consumers. 5 percent of the total value of Kenya’s agricultural exports.
The EU is Kenya’s biggest market for vegetables, import-
The sector consists of more than 250,000 smallholder ing about 90 percent of all vegetables destined for export.
farmers, who supply over 90 percent of the sugarcane More than 90 percent of all fruit and vegetable produc-
processed by sugar companies, while the remainder is sup- tion is consumed domestically, either on-farm or through
plied by factory-owned nucleus estates and 11 mills, six domestic markets. Price trends across product segments
were relatively stable until 2007, when the food crisis and
other events led to increasing levels of volatility (figure
20
Under the Safeguard Clause, Kenya was allowed to impose (1) a quota of
200,000 tons annually on sugar imported from COMESA countries and (2) a 2.11.). In recent years, Kenya’s small-scale farmers in par-
tariff of 120 percent for any amount that exceeds the quota amount. ticular have been hit by rising production costs and the

FIGURE 2.11. TRENDS IN PRODUCER PRICES (K Sh/ton)
FOR FRUITS AND VEGETABLES, 1991–2011
60,000 Bananas Cabbages Potatoes Tomatoes
50,000
40,000
30,000
20,000
10,000
0
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Source: FAOSTAT.
EU’s stringent food safety regulations concerning agro- Kenya produces approximately 410,000 tons of beef
chemical residues. EU demand has also slumped, partly annually, worth approximately $1.1 billion, amid strong
as a result of the Euro-zone crisis. According to the Fresh growth in consumption, which doubled over the past
Produce Exporters Association of Kenya (FPEAK), over- two decades. Goats and sheep play a key role in the food
all exports of vegetables declined by 2.6 percent between security and incomes of pastoral households due to their
2011 and 2012, from $379 million to $369 million. Bean short-generation intervals, high adaptability, and versa-
sales dropped by 25 percent in January 2013 compared to tile feeding habits. The country is home to an estimated
January 2012, according to FPEAK. 29.4 million goats and 18.2 million sheep, which produce
about 50,000 tons of chevon and mutton annually, worth
LIVESTOCK PRODUCTION an estimated $128 million.
As noted earlier, a comprehensive livestock census has not

Milk production in Kenya is largely driven by the infor-
been done since 1969, so actual animal population figures
mal milk sector. An estimated 800,000 small-scale farm-
are not known.21 According to FAO data, total cattle stocks
ers and 350,000 small-scale milk vendors dominate the
were an estimated 19.1 million heads in 2012 (table 2.8).
milk marketing chain. Following more than a decade of
decline, the industry has rebounded in recent years since
21
The 2009 Kenya Population and Housing Census encompassed an account- the GoK restructured it. New dairy regulations since 2004
ing of livestock ownership and stock at household level. enabled small-scale milk traders to gain licenses and to
TABLE 2.8. LIVESTOCK POPULATIONS IN KENYA

Year Annual Growth Rate (%)
1980 1990 2000 2010 1980–1990 1990–2000 2000–2010
Livestock Group (‘000s)
Cattle 10,000 1,3793 11,444 17,862 3.79 −1.70 5.61
Sheep 5,000 9,050 7,939 17,562 8.10 −1.23 12.12
Goats 8,000 10,186 10,004 28,174 2.73 −0.18 18.16
Pigs 74 128 311 347 7.32 14.23 1.19
Camels 608 850 718 3,031 3.98 −1.56 32.24
Poultry 16,400 25,228 26,291 30,398 5.38 0.42 1.56
Source: FAOSTAT.

enroll for training in milk handling, processing, and mar- sufficient availability at stable, affordable prices for Ken-
keting. In 2012, milk production was roughly 5.1 billion yan consumers, especially in Nairobi, the major deficit
liters, with an estimated value of $1.16 million. Although market. NCPB is the primary implementing agency. The
Kenya remains self-sufficient in milk, output has declined board procures and maintains a strategic grain reserve
in recent years. Estimated annual per capita milk con- on the government’s behalf to buffer against food short-
sumption ranges from 19 kg in rural areas to 125 kg in ages, and facilitates the procurement, storage, mainte-
urban areas (FAO 2011). nance, and distribution of food aid to deficit areas under
the National Famine Relief Program. The GoK has also
Kenya has an estimated 31.8 million chickens, 80.2 per- provided input subsidies on a continuous basis, mainly
cent of which are indigenous while 19.8 percent are com- for fertilizer, in the form of direct payment to farmers,
mercial layers and broilers (GoK 2010a). Other poultry free distribution, or voucher programs. The longer-term
types (duck, turkey, pigeon, ostrich, guinea fowl, and policy focuses on increasing production through upgrades
quail) are becoming increasingly important. Annually, to research and extension.
the country produces about 21,600 tons of poultry meat
worth $39.6 million and 1.3 billion eggs worth approxi- CONSTRAINTS TO
mately $110 million.
AGRICULTURAL GROWTH
Agricultural production in Kenya is handicapped by a
FOOD SECURITY range of factors that limit producers’ ability to invest in
A series of poor cropping seasons in recent years has con- their farming enterprise and raise output. These con-
tributed to deterioration in Kenya’s national food security straints are well documented elsewhere and overcom-
status. The number of Kenyans requiring food assistance ing them has long been the focus of the GoK’s sector
rose from 650,000 in late 2007 to almost 3.8 million in late development planning and investments. They include
2009 and early 2010 (GoK 2011). In July 2011, an esti- the decreasing size of landholdings, limited access to pro-
mated 2.4 million Kenyans required food and nonfood ductivity-enhancing technology (including affordable and
aid assistance (KFSSG 2011). Aid agencies, the United timely inputs and input credit), declining soil health, weak
Nations, and the GoK indicated that more than 3.5 mil- extension services and low technology adoption, and poor
lion Kenyans faced starvation as the country struggled smallholder access to markets. These and other constraints
with what is believed to be its worst drought in 60 years. In are notable within the context of vulnerability to risks and
response, GoK policies and interventions focused increas- agricultural risk management. While dampening income
ingly on stop-gap emergency measures such as safety net growth and agricultural supply chains’ competitiveness,
programs (e.g., food distribution, food for work), short-term these constraints can also amplify the impacts of adverse
export bans or import tariff reductions, and input subsidies. shocks (e.g., drought, disease outbreak) by weakening
farmers’ and other stakeholders’ ability to manage risk
Agricultural policies in recent years are best character- events and recover in their aftermath. It is worth noting
ized by strong GoK presence and control of produce and here that many interventions that address risks can have
input prices for producers and a sustained focus on stimu- positive spillovers in addressing growth constraints. For
lating productivity. Perhaps the most prominent example example, improved soil and water management used to
is the price stabilization and producer support prices for mitigate drought risks can catalyze productivity and gains
maize. The major policy objective for maize is ensuring in farmers’ income.

CHAPTER THREE
AGRICULTURE SECTOR RISKS
The main sources of agricultural risk in Kenya are reviewed in this chapter. These
include production risks, market risks, and a general set of risks associated with the
enabling environment for agriculture. The incidence and implications of multiple or
successive shocks are also considered.
PRODUCTION RISKS
Based on analysis of available quantitative and qualitative data, the most common
risks to agricultural production in Kenya are drought, flooding, and crop and live-
stock pest and disease outbreaks. The incidence of these and other adverse events
is indicated in figure 3.1, based on reports of adverse events for the period 1980–
2012. Drought emerges as by far the most common source of production shocks, fol-
lowed by floods, which have a much lower impact on crop and livestock production.
Related risk events (e.g., pest/disease outbreaks, bushfires) may occur in isolation but
can also present as multiple, overlapping shocks, with far greater impacts and higher
associated losses.
DROUGHT
An agricultural drought22 occurs when a deficit of soil moisture significantly reduces
crop yields. It can occur in response to low overall annual rainfall or to abnormalities
in the timing and distribution of annual rainfall.
Table 3.1 and table 3.2 are based on analysis of annual rainfall data collected from
12 weather stations for which consistent and reliable information was available for the
period 1981–2011. It is worth noting that these weather stations are well distributed
22
Inadequate rainfall at key periods during the crop production cycle (seeding, flowering, and grain filling) affects crop
yields, even when overall rainfall is comparable to long-term norms. During these periods, a soil moisture deficit during
a period as short as 10 days can have a major impact on crop yields. Drought is typically defined relative to some long-
term average balance between precipitation and evapotranspiration, which is considered “normal” for a particular
location at a particular time of year. Drought is thus a relative concept in that suboptimal soil moisture levels and crop
yields in one agroclimatic area may be acceptable in another.

FIGURE 3.1. HISTORICAL TIMELINE OF MAJOR AGRICULTURAL
PRODUCTION SHOCKS, 1980–2012
14
Agriculture, value added (annual % growth)
12
10 Violence follows
Drought; elections;
8 floods,RF drought,
fever 2007
6 2006
4
2
Drought,
0 2011
Commodity
–2 La Nina drought, price shock,
1999–2000 2008
–4 Drought El Niño floods;
Drought Erratic rains,
1983–84 1.5 m affected; floods, Prolonged
–6 1991–93
RV fever, 2002 drought,
1997–98 2008–2009
–8
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT; authors’ notes.
across the country, and thus provide a reasonably indica- The combination of frequent severe droughts, high
tive footprint of rainfall at the national level. An analysis dependence on rainfed agriculture, and high poverty
of standardized cumulative rainfall provides insights into rates among smallholder farmers and pastoralists makes
the frequency and severity of rainfall events during the Kenya particularly vulnerable to the effects of droughts.
31-year period. For the purpose of this analysis, drought is A 2010 survey covering the country’s humid, temper-
defined as rainfall more than one standard deviation from ate, semiarid, and arid agro-ecological zones found that
the mean and extreme drought as rainfall more than two more than 80 percent of all households interviewed had
standard deviations from the mean. experienced drought over the last five years, regardless
of agro-ecological zone (Bryan et al. 2011). In addition
Based on the analysis, the country experienced 13 years to the immediate impacts, drought typically has long-
of widespread drought during the period under review; term consequences. It generally takes more than one
three of these were categorized as extreme droughts season for farmers to recuperate from seasonal droughts,
(1983, 1984, 2005). This equates to a drought event in as resources, including seeds, are not available for the
one out of every three years on average. The frequency following, nondrought season.
of more widespread and severe droughts has increased
since 2000, while less severe drought events have occurred Large numbers of people, mainly in the ASALs, have
in other years, impacting one or more regions simultane- personal knowledge of the impacts of drought, which
ously. Table 3.2 lists the years during which Kenya experi- have been widely documented (Aklilu and Wekesa 2002;
enced a drought event, with details on associated impacts Republic of Kenya 2012; Zwaagstra et al. 2010). In
referenced in media reports, GoK assessments, and the Kenya, drought has profound effects on the agriculture
literature. It suggests that drought is a nearly constant sector and is by far the biggest risk facing agricultural
dynamic that affects Kenya’s agricultural landscape with production, as its effects are typically felt over a wide
varying levels of severity. area impacting both crop and livestock production sys-
tems. For instance, the drought of 2009 affected nearly
The impacts of drought depend on three factors: the one-quarter of the population. Drought conditions
frequency of droughts, the degree to which the country also favor the emergence of other risks such as pests
depends on rainfed agriculture, and the ability of the pop- or diseases, while weakening plant and animal resist-
ulation to prepare for and adapt to drought conditions. ance to such threats. Resulting losses from crop failure

TABLE 3.1. FREQUENCY OF MAJOR DROUGHT EVENTS IN KENYA, 1981–2011
Year Lodwar Mandera Eldoret Nyahururu Garissa Kisumu Narok Dagoretti Makindu Voi Malindi Mombasa
1981 −1.03 1.14 −0.24 0.28 −0.33 −1.53 −1.16 0.67 0.40 0.92 −0.20 0.20 Drought
1982 3.31 0.50 0.86 1.48 0.42 0.57 0.18 0.65 1.69 0.69 2.52 1.81 Ext Excess
1983 −0.69 −0.87 1.63 −1.47 −1.34 −1.36 −0.50 −0.36 −1.49 −1.32 0.22 0.14 Ext Drought
1984 −1.08 −0.92 −2.18 0.40 0.17 −0.82 −1.50 −2.29 0.53 −0.22 0.67 0.20 Ext Drought
1985 0.01 −0.60 −0.60 −0.39 −1.02 −0.04 0.59 −0.80 −0.33 −0.62 −0.87 −0.63 Drought
1986 −0.32 −0.56 −1.43 0.10 −0.07 0.11 −1.30 −0.20 0.20 −0.08 0.13 0.05 Normal
1987 −0.15 −0.32 0.46 −1.26 −1.01 −0.41 0.69 −0.81 −1.26 −1.20 −0.10 −0.60 Drought
1988 1.40 −0.86 −0.28 0.50 0.16 0.41 0.49 1.28 0.63 0.22 −1.17 −0.24 Normal
1989 0.49 0.50 0.98 1.70 1.54 0.06 1.88 1.20 1.92 −0.45 −0.17 −0.11 Excess
1990 −0.89 0.68 −0.29 0.82 0.74 −1.13 −0.53 0.49 0.98 0.97 −0.80 −0.15 Normal
1991 −0.50 −0.11 −0.24 −0.51 −0.28 −0.52 −1.05 −0.39 −0.45 0.14 −0.32 0.17 Normal
1992 −0.97 −0.52 0.33 0.00 −0.21 −0.67 −1.48 −0.07 0.10 0.18 −1.16 −0.51 Drought
1993 −0.61 1.18 −1.84 −0.61 −0.14 −0.67 0.36 −0.42 −0.56 −0.17 −0.43 −0.81 Normal
1994 −0.51 −0.15 0.59 0.78 0.37 0.92 0.27 0.06 0.93 1.08 1.45 1.42 Excess
1995 −0.93 −0.08 −0.39 −0.99 0.27 0.71 −0.35 −0.19 −0.98 −0.73 −1.08 0.12 Normal
1996 −0.03 −0.92 0.17 −0.62 −1.26 1.15 0.45 −1.40 −0.57 −0.49 −0.71 −0.14 Drought
1997 1.26 4.08 0.79 0.91 3.23 1.60 1.45 1.02 1.07 0.79 2.41 3.51 Ext Excess
1998 −0.55 −0.54 2.42 1.72 1.69 −1.57 0.93 1.79 1.94 2.97 0.85 0.16 Ext Excess
1999 −0.73 −0.37 0.01 0.60 −0.33 0.97 −0.40 −0.11 0.74 −0.70 0.67 0.07 Normal
2000 −0.92 −0.39 −0.99 −0.37 −1.13 −1.07 −1.38 −1.58 −0.30 −0.33 −0.25 −0.28 Drought
2001 −0.75 −1.27 −0.18 0.40 −0.56 0.63 −0.02 1.80 0.53 −0.37 −0.68 −0.68 Drought
2002 0.95 0.18 −0.76 −0.38 0.95 1.72 1.85 0.37 −0.32 1.21 0.06 −0.07 Excess
2003 −0.03 −0.20 −0.56 −1.02 0.21 −0.42 0.37 −0.26 −1.01 −1.94 −0.42 −1.37 Drought
2004 −0.10 −0.20 0.06 −0.36 −0.88 0.41 −0.09 0.48 −0.29 1.10 −0.87 −0.90 Normal
2005 −0.18 −0.72 −0.49 −1.61 −1.25 −1.23 −1.26 −0.74 −1.65 −1.55 −0.99 −0.47 Ext Drought
2006 1.23 0.82 1.36 1.21 1.41 1.51 1.79 1.11 1.39 1.04 1.72 1.86 Ext Excess
2007 1.36 −0.15 0.44 −0.56 −0.29 −1.15 −0.15 −0.88 −0.51 −0.79 1.29 0.57 Normal
2008 −0.52 −0.80 −0.32 −0.90 −0.44 −0.82 −0.63 −0.96 −0.88 −0.73 −0.28 −0.70 Drought
2009 −0.30 −0.11 −1.03 −1.20 −0.43 0.42 −0.80 −0.97 −1.20 0.10 −0.59 −1.24 Drought
2010 0.43 0.61 1.44 −0.75 0.25 0.85 0.22 1.39 −0.71 −0.41 −0.47 −0.35 Normal
2011 1.37 0.95 0.28 2.08 −0.44 1.37 1.11 0.12 −0.58 0.67 −0.44 −1.02 Excess
Source: Kenya Meteorological Department; authors’ calculations.
and animal mortality can be substantial, especially in ern and central Kenya, the country’s agricultural heartland,
extreme drought years. severely impacting tea and coffee production. Tea output
dropped by an estimated 15 percent during the three-year
As an example, the GoK estimated that total damages and period (Rice 2006). This prolonged drought is estimated
losses resulting from the 2008–11 drought were $12.1 bil- to have cost the Kenyan economy around $2.5 billion
lion, equivalent to a drag on economic growth of 2.8 per- (CERF 2008), accounting for approximately 20 percent of
cent per year on average (GoK 2012a). An estimated the country’s GDP at the time (IMF 2008). In 2005–06,
85 percent of damages and losses were to agriculture another severe drought affected 3.5 million people, mostly
(13 percent) and livestock (72 percent). GoK estimates of nomadic pastoralists in northeast Kenya. An estimated
resources required for recovery and reconstruction were an 70 percent of the livestock in affected areas died (CERF
additional $1.77 billion. During 1999–2002, an estimated 2009). The same drought reportedly caused heavy losses to
23 million people were affected by severe drought in west- the tea industry. The TBK reported that black tea produc-

TABLE 3.2. DATES AND IMPACTS OF DROUGHT EVENTS IN KENYA, 1980–2011
Year Regions Affected Impacts
1980–81 Lodwar, Kisumu, Narok 400,000 people affected
1983–84 Nyahururu, Garissa, Kisumu, Makindu, Voi, 50–75 percent cattle mortality in the northern rangelands;
Lodwar, Eldoret, Narok, Dagoretti, severe food shortages in Eastern
1987 Nyahururu, Garissa, Makindu, Voi province
1991 Lodwar, Nyahururu, Kisumu, Narok, Lodwar, 1991–92: 1.5–2.7 million people affected; pastoralists forced to
Mandera, Narok, Malindi, Mombasa move out of ancestral lands. Substantial numbers of livestock
lost
1995–96 Lodwar, Nyahururu, Makindu, Voi, Malindi, 1995–96: Est. $2.8 billion in damages from the loss of crops
Mandera, Garissa, Dagoretti, and livestock, etc.
1999–2000 Lodwar, Voi, Garissa, Kisumu, Narok, Dagoetti 23 million people affected; est. $80 million from animal
losses; 3.3 million affected households; maize harvest drops by
one-third; maize/bean prices 30–50 percent above five-year
average
2003–04 Eldoret, Nyahururu, Makindu, Voi, Garissa, Long rains began late and were poor in many areas; est.
Malindi, Mombasa 3 million households need food assistance
2005 Nyahururu, Garissa, Kisumu, Narok, Makindu, 3.5 million people and 37 of 78 districts affected;
Voi est. $450 million in losses; $197 million in GoK and
international humanitarian aid
2008–09 Mandera, Nyahururu, Kisumu, Dagoretti, 3.8 million people affected; $423 million in GoK and
Makindu, Voi, Malindi, Mombasa, Eldoret international humanitarian aid; cattle and sheep mortality
rates in six ASAL districts ranged from 57 to 65 percent.
2011 Mombasa 4.3 million people affected; food prices 130% higher than
normal; from 2008 to 2011, est. $630 million in animal losses,
other losses valued at $7.22 billion
Source: EMDAT (Emergency Events Database); UN International Strategy for Disaster Reduction ; media and GoK reports; authors’ notes.
Note: ASAL, arid and semiarid land; GoK, government of Kenya.
tion fell by 20 percent in the first half of 2006 compared down of traditional coping mechanisms. In recent years,
to the same period in 2005. Extended dry periods mostly these trends have contributed to an increasing reliance on
affect crops in marginal tea production areas, and some emergency aid in the ASALs. Drought can also exacer-
losses can occur when the dry period coincides with frost. bate market risks related to price volatility and the afford-
ability of concentrate feeds and fodder.
According to the literature and anecdotal evidence
collected for this study, the main risk for northern pasto- The impacts of past drought years on the livestock sector
ralists remains drought (see Chapter 5). Livestock herders are summarized below23:
used to anticipate major droughts once every 10 years. » 1983/84: 50–75 percent of cattle reported to have
This cycle allowed farmers to recover and rebuild their died in the northern rangelands
livestock and crops before the next drought. In recent » 1999/01: Death of animals led to direct losses of K
years, however, the frequency of drought has increased Sh 6 billion ($80 million) (Aklilu and Wekesa 2002)
to once in every three to four years, leaving less time » 2005/06: Drought caused losses of $450 million
for recovery and for rebuilding stocks of food and live- » 2008–11: Drought caused death of animals valued
stock. The impact of weather variability is likely much at K Sh 56.1 billion ($630 million)
greater in recent times due to rapid population growth
and demographic change, contributing to an increasing 23
More details on mortality rates are available in Aklilu and Wekesa (2001,
loss of mobility and access to grazing areas, and a break- 2002); Zwaagstra et al. (2012); and Fitzgibbon (2012).

In addition to a perceived increase in the frequency of Although certain global climate models predict increasing
dry years, pastoralists believe that the rains themselves rainfall trends for the region as a whole, the risks of future
are getting shorter; the long rains used to last three droughts should not be underestimated given anticipated
months, but now last only two to three months. Droughts increases in climate variability linked to climate change.
result in reduced pasture and reduced recharge of wells, A 2011 rainfall analysis by the International Food Pol-
and thus to water shortages and reduced feed for ani- icy Research Institute (IFPRI) highlighted a noteworthy
mals. Drought obliges pastoralists to use boreholes increase in the frequency and persistence of dry events
instead of shallow wells; the boreholes are not only in recent years (IFPRI 2013). The same study also found
quickly overloaded but the surrounding grazing land is through crop water production modeling that water stress
rapidly depleted and eroded. As animals weaken and caused by insufficient rainfall plays a significant role in
lose value, the price of staple food items has a tendency rainfed maize production, a finding that has substantial
to increase. In the 2008–11 drought, terms of trade implications for Kenya’s food security situation.
(TOT) for pastoralists dropped to 50–60 percent of the
five-year average (GoK 2012a). An analysis of market
FLOODS
risks (see section, “Market Risks”) finds similar adverse
Extreme rainfall causing localized flooding of cropland
movements in TOT.
and/or pastureland is a common weather phenomenon
in Kenya. Perennial floods affect low-lying regions of the
Beyond the problem of drought, erratic rainfall (includ- country such as river valleys, swampy areas, lakeshores,
ing late rain onset, rains ending early, and extended dry and the coastal strips that are unevenly distributed in the
periods during the rainy season) has become a significant country’s five drainage basins. Geographically, the west-
problem for Kenyan farmers. Historically, farmers could ern, northern, eastern, central, and southeastern parts of
count on rains arriving the last 10 days in October (short the country are quite susceptible to seasonal floods during
rains) and the last 10 days of March (long rains). In recent the two rainy seasons. The Lake Victoria Basin in western
years this has been less certain, and farmers find they do Kenya is the most flood-prone region, while the country’s
not know when they will have enough moisture for the ASALs are also prone to floods, despite their low average
planted seed to survive. Planting late results in poor yields rainfall of only 300–500 mm.
or outright crop failure, while planting too early results
in the need to replant, perhaps several times, and higher Table 3.3 shows years during which Kenya was affected
costs. Farmers also report a higher incidence of years by excessive rainfall during the period 1981–2011. Based
when rains end early or a dry spell occurs during the rainy on the analysis, the country experienced eight years dur-
season and compromises yield. Maize farmers reported ing which the amount of rainfall was significantly higher
significant losses due to this phenomenon in 2011 in than the norm; four of these were categorized as extreme
particular. In some areas, such as the Eastern Province, rainfall events (1982, 1987, 1988, 2006). This suggests that
farmers indicated that they could only get a good maize floods occur roughly once every four years on average.
harvest once every six to eight seasons. Yet many continue
to plant maize every season. Despite the relatively frequent occurrence of flooding in
many regions, resultant losses to crops or livestock are
Significant amounts of rainfall in the dry season (Janu- rarely extensive at an aggregate level as impacts tend be
ary–February) can cause losses in coffee quality because isolated locally. An exception to this was the 1978/98 El
of anticipated flourishing. Likewise, extended rainfall Niño event, which resulted in severe floods after major
after the long rains (March–May) can encourage higher rivers in the country attained record peaks. Flooding
incidences of coffee-related pests and diseases, necessitat- caused loss of lives and significant damage to infrastruc-
ing treatment, lowering yields, and upping the costs of ture and other assets, with one estimate placing losses at
production. As stated by farmers during the mission field 11 percent of national GDP. Widespread floods in 2006
visits, erratic rainfall can cause yield losses in coffee of up affected large swaths in Coast Province and parts of
to 20–40 percent. North Eastern Province, in which the most affected dis-

TABLE 3.3. FREQUENCY OF SURPLUS RAINFALL EVENTS, 1963–2012
Year Lodwar Mandera Eldoret Nyahururu Garissa Kisumu Narok Dagoretti Makindu Voi Malindi Mombasa
1981 −1.03 1.14 −0.24 0.28 −0.33 −1.53 −1.16 0.67 0.40 0.92 −0.20 0.20 Drought
1982 3.31 0.50 0.86 1.48 0.42 0.57 0.18 0.65 1.69 0.69 2.52 1.81 Ext Excess
1983 −0.69 −0.87 1.63 −1.47 −1.34 −1.36 −0.50 −0.36 −1.49 −1.32 0.22 0.14 Ext Dry
1984 −1.08 −0.92 −2.18 0.40 0.17 −0.82 −1.50 −2.29 0.53 −0.22 0.67 0.20 Ext Dry
1985 0.01 −0.60 −0.60 −0.39 −1.02 −0.04 0.59 −0.80 −0.33 −0.62 −0.87 −0.63 Normal
1986 −0.32 −0.56 −1.43 0.10 −0.07 0.11 −1.30 −0.20 0.20 −0.08 0.13 0.05 Normal
1987 −0.15 −0.32 0.46 −1.26 −1.01 −0.41 0.69 −0.81 −1.26 −1.20 −0.10 −0.60 Drought
1988 1.40 −0.86 −0.28 0.50 0.16 0.41 0.49 1.28 0.63 0.22 −1.17 −0.24 Normal
1989 0.49 0.50 0.98 1.70 1.54 0.06 1.88 1.20 1.92 −0.45 −0.17 −0.11 Excess
1990 −0.89 0.68 −0.29 0.82 0.74 −1.13 −0.53 0.49 0.98 0.97 −0.80 −0.15 Normal
1991 −0.50 −0.11 −0.24 −0.51 −0.28 −0.52 −1.05 −0.39 −0.45 0.14 −0.32 0.17 Normal
1992 −0.97 −0.52 0.33 0.00 −0.21 −0.67 −1.48 −0.07 0.10 0.18 −1.16 −0.51 Normal
1993 −0.61 1.18 −1.84 −0.61 −0.14 −0.67 0.36 −0.42 −0.56 −0.17 −0.43 −0.81 Normal
1994 −0.51 −0.15 0.59 0.78 0.37 0.92 0.27 0.06 0.93 1.08 1.45 1.42 Excess
1995 −0.93 −0.08 −0.39 −0.99 0.27 0.71 −0.35 −0.19 −0.98 −0.73 −1.08 0.12 Normal
1996 −0.03 −0.92 0.17 −0.62 −1.26 1.15 0.45 −1.40 −0.57 −0.49 −0.71 −0.14 Normal
1997 1.26 4.08 0.79 0.91 3.23 1.60 1.45 1.02 1.07 0.79 2.41 3.51 Ext Excess
1998 −0.55 −0.54 2.42 1.72 1.69 −1.57 0.93 1.79 1.94 2.97 0.85 0.16 Ext Excess
1999 −0.73 −0.37 0.01 0.60 −0.33 0.97 −0.40 −0.11 0.74 −0.70 0.67 0.07 Normal
2000 −0.92 −0.39 −0.99 −0.37 −1.13 −1.07 −1.38 −1.58 −0.30 −0.33 −0.25 −0.28 Drought
2001 −0.75 −1.27 −0.18 0.40 −0.56 0.63 −0.02 1.80 0.53 −0.37 −0.68 −0.68 Normal
2002 0.95 0.18 −0.76 −0.38 0.95 1.72 1.85 0.37 −0.32 1.21 0.06 −0.07 Excess
2003 −0.03 −0.20 −0.56 −1.02 0.21 −0.42 0.37 −0.26 −1.01 −1.94 −0.42 −1.37 Drought
2004 −0.10 −0.20 0.06 −0.36 −0.88 0.41 −0.09 0.48 −0.29 1.10 −0.87 −0.90 Normal
2005 −0.18 −0.72 −0.49 −1.61 −1.25 −1.23 −1.26 −0.74 −1.65 −1.55 −0.99 −0.47 Ext Dry
2006 1.23 0.82 1.36 1.21 1.41 1.51 1.79 1.11 1.39 1.04 1.72 1.86 Ext Excess
2007 1.36 −0.15 0.44 −0.56 −0.29 −1.15 −0.15 −0.88 −0.51 −0.79 1.29 0.57 Normal
2008 −0.52 −0.80 −0.32 −0.90 −0.44 −0.82 −0.63 −0.96 −0.88 −0.73 −0.28 −0.70 Normal
2009 −0.30 −0.11 −1.03 −1.20 −0.43 0.42 −0.80 −0.97 −1.20 0.10 −0.59 −1.24 Drought
2010 0.43 0.61 1.44 −0.75 0.25 0.85 0.22 1.39 −0.71 −0.41 −0.47 −0.35 Normal
2011 1.37 0.95 0.28 2.08 −0.44 1.37 1.11 0.12 −0.58 0.67 −0.44 −1.02 Excess
Source: Kenya Meteorological Department; authors’ calculations.
tricts were Mombasa, Kwale, Kilifi, Isiolo, Turkana, and 2012. Floods affecting only a single region were recorded
Moyale. Even though potatoes are highly susceptible to in another two years. Floods typically do not impact as
flooding and water logging, these risks are not commonly much area or as many farmers as a drought, although
faced by growers because the crop is predominantly cul- the impact on those directly affected may be quite severe.
tivated in the highland areas of Rift Valley, Central, and Adverse impacts from floods were not evaluated for this
Eastern Provinces, which are not prone to these risk fac- study as the agricultural damages associated with them
tors. Tomatoes and some other vegetables are susceptible, are not as significant as those compared to drought. In
but farmers generally do not consider flooding to be a the ASALs, other climatic events such as cold or out-of-
major risk. season heavy rain and flash floods can cause severe losses
to herds, especially those weakened by disease or lack of
Based on observable records, an estimated nine major feed. These events and their impacts are often localized,
flood events affected various regions between 1980 and however.

FROST rains will make it increasingly difficult to plan sowing and
Frost mostly impacts crop production at higher altitudes. harvest times, causing lower maize yields in some major
Tea is most susceptible to frost. Tea farmers near Keri- production zones, and greater food insecurity. Also, incre-
cho who provided input for this study reported that frost mental changes in temperature and rainfall patterns are
events have become more frequent in recent years. Frost expected to contribute to biodiversity loss and emergence
exposure does not typically result in plant death but can of new pests and diseases.
reduce productivity for several months while affected
plants recover. Although damages from frost exposure at Some crops are expected to experience more favorable
the aggregate level have been negligible historically, in growing conditions as a result of climate change, whereas
January 2012 the industry reportedly lost an estimated 20 others will find future climatic conditions intolerable.
million kg of green leaf, valued at US$11.4 million, from Equally, some regions (the mixed rainfed temperate and
frost in what the KTDA reported as the worst case of frost tropical highlands) are projected to experience an increase
to ever hit the country. in crop yield, whereas others (the ASALs) are projected
to witness a significant decline in crop yield and livestock
numbers as water resources become increasingly scarce.
OTHER WEATHER-RELATED RISKS
In addition to droughts, floods, and frost, Kenyan agricul-
ture is affected by weather events such as hailstorms and
PESTS AND DISEASES
windstorms (often accompanying heavy rain or hail). How- As in other countries, pests and diseases are a permanent
ever, such weather-related risks tend to affect smaller areas fixture of both crop and livestock production systems in
with only negligible impacts on aggregate production. Kenya. The majority of pest and disease threats are man-
ageable, but farmers and livestock herders do not always
practice prevailing control measures or avail themselves
CLIMATE CHANGE of available technologies, due to lack of information,
Kenya is ranked as one of the countries (#13 of 169) access to needed inputs, or financial resources. This sub-
most vulnerable to physical climate impacts from extreme section presents a discussion of some of the most notable
weather, according to the Center for Global Develop- pest and disease risks in Kenyan agriculture. The main
ment. In all of Africa, only Somalia (#7), Sudan (#9), biological threats and the crops they affect are summa-
Malawi (#11), and Ethiopia (#12) are ranked higher. rized in table 3.4.
Across Kenya’s economic landscape, the agriculture sec-
tor is by far the most vulnerable to impacts from climate
change. CROP PESTS AND DISEASES
Outbreaks of African armyworm (Spodoptera exempta) are
The climate predictions of IFPRI (2013) and others for commonplace across Kenya. The armyworm attacks all
Kenya highlight a number of risks and impacts for the graminaceous crops and is a significant and perennial
agriculture sector.24 These include more frequent extreme concern for farmers and livestock herders. Uncontrolled
events such as prolonged drought and flooding, leading to outbreaks can cause total crop loss, with millions of hect-
a decrease in reliable cropping days and higher incidences ares of farmland and pastureland affected in bad years.
of crop failure. Increased frequency of drought will likely Normal rainfall following drought often precipitates large-
contribute to more frequent water shortages for domestic scale infestation. According to CABI Africa, outbreaks of
use and crop and livestock agriculture. Unpredictable pre- armyworm in mid-2008 were reported in 24 districts in
cipitation during both the short and long rains, together Kenya, damaging 10,324 ha of crops and 41,435 ha of
with extreme events, particularly increased frequency of pasture. Existing control measures are generally effective.
drought, may cause a decline in agricultural productiv- These are managed via a national forecasting unit that
ity. In addition, changes in the timing of long and short monitors previous outbreaks and meteorological data to
predict broadly where outbreaks might occur in the near-
term and an early warning system network of more than
24
See Appendix A for a synopsis of recent climate change impact analyses.

TABLE 3.4. PRINCIPAL PEST AND 400 pheromone traps operated by extension agents and
DISEASE RISKS IN KENYAN the Plant Protection Services.
AGRICULTURE
Maize: Maize is particularly vulnerable to a wide range
Pest/Disease Crops/Animals Affected
of pests and diseases. Practically speaking, weeds are a
Crops
constant threat to maize production. Effective control
Maize Streak Virus (MSV) Maize
requires the use of significant labor or expensive herbi-
Disease
cides. Striga is a parasitic weed reported to infest 210,000
Maize Lethal Necrosis Disease Maize
(MLND)
hectares in western Kenya alone (AATF 2006). Accord-
Large Grain Borer Maize ing to the African Agricultural Technology Foundation,
Maize Weevil Maize Striga costs African farmers across the continent about $1
Stem/Stalk Borer Maize, wheat, sugarcane billion per year.
Ratoon Stunting Disease Sugarcane
Sugarcane smut Myriad insects are also a constant threat to maize produc-
Termites Maize, sugarcane tion (e.g., stemborer) and storage (e.g., larger grain borer,
Armyworm, bullworm Cereals, root crops, sugarcane, weevils), while others pose a more sporadic threat. Com-
vegetables, pasture grasses mon insect pests are categorized into three general groups:
Thrips, Aphids, Mealybugs, Maize, coffee, tea, sugarcane, (1) moths, which include cutworms, earworms, stemborer,
Nematodes vegetables, fruits and grain moths; (2) beetles, including rootworms, wire-
Coffee Leaf Rust (bacterial Coffee worms, grubs, grain borers, and weevils; and (3) disease vec-
blight) tors, most notably leaf hoppers, thrips, and aphids. Many
Coffee Wilt Disease pests and diseases can be controlled with good crop hus-
Coffee Berry Disease bandry and chemical treatments, but these are often costly,
Cassava Mosaic Disease (CMD) Cassava
and farmers hesitate to pay the cost of treating for pests or
Cassava Brown Streak Disease
diseases not expected to be a serious problem. Some farm-
(CBSD)
ers’ reluctance to respond to low-level threats also contrib-
Banana Xanthomonas Wilt (BXW) Bananas
utes to periodic outbreaks of known pests and diseases.
Black Sigatoka Leaf Spot
(BSLS)
Panama Disease Maize is susceptible to a long list of fungal (e.g., rust, spot,
Yellow Sigatoka blight, smut) and viral diseases (e.g., maize streak virus).
Bacterial Wilt Potato, tomato Pests and diseases will typically lower yields but not cause
Late/Early Blight Potato, tomato substantial losses, as most farmers are aware of and know
Potato Leaf Roll Potato how to manage them. The real problem is the emergence
Weevils, beetles Sweet potato of a new threat. A recent example is the appearance of
Red Spider Mite Tomato the maize lethal necrosis disease (MLND), first reported
Striga Cereals in June 2011 in Bomet, Naivasha, and Narok Counties
Livestock in the Southern Rift Valley (Wangai et al. 2012). Since
East Coast Fever Cattle then, additional outbreaks of MLND have been reported
Rift Valley Fever in parts of the North Rift Valley as well as in the south.
Anthrax Cattle According to KEPHIS (Kenya Plant Health Inspectorate
Foot and Mouth Disease Cattle, pigs Services), the disease is now widespread in Chepalungu,
Contagious Bovine Sotik, Transmara, Bureti, Nakuru, Konoin, South Narok,
Pleuropneumonia (CBPP) Mathira East, Imenti South Districts, and Nyeri. Inci-
Pestes des Petits Ruminants (PPR) Goats, sheep dence in the field ranges from 40 to 100 percent of the
Newcastle Disease Poultry crop, and over 80 percent crop loss has been reported in
Source: Authors’ notes. some cases.

MLND has been the greatest pest/disease threat in Sugarcane: Sugarcane smut, caused by the fungus Usti-
recent years in Kenya because there is no cure and lago scitaminea, is considered the most important disease
resistant varieties have yet to definitively emerge from impacting sugarcane production in Kenya. It is endemic
research. The main transmission route is insect vec- across Kenya’s sugarcane production zones. Yield losses
tor (thrips and beetles), but transmission via seeds also of 21–38 percent were documented recently through
seems likely. Chemical treatment to limit disease vectors field research by the Kenya Sugar Research Foundation
is believed to help control its spread, but many farm- (KESREF). These and other findings suggest that varie-
ers in parts of the Southern Rift Valley have reportedly ties previously rated as resistant or immune are becom-
switched to other crops after suffering severe crop losses. ing increasingly susceptible and that new strains of the
The GoK has ramped up research and distributed sor- fungus may have evolved (KESREF 2011). Ratoon Stunt-
ghum, finger millet, cassava, and sweet potato seeds to ing disease is another common threat, but yield losses are
farmers from areas previously affected with MLND to thought to be much lower. Among pests, stock borer and
grow as alternatives to maize (Kamau 2013). Kenya termites are common threats.
Agricultural Research Institute (KARI), KEPHIS, and
the International Institute for Topical Agriculture (IITA)
LIVESTOCK PESTS AND DISEASES
are leading the search for effective ways to combat the
East Coast fever (ECF) is considered the most serious
disease, but the process of breeding resistant varieties
livestock disease and is present on several of Kenya’s bor-
will likely take three to six years.
ders. Tick-borne, ECF can kill large numbers of calves
in pastoralist herds. Spraying the ticks can be an effective
Potato: The biggest threat to potato production in Kenya method of control if maintained, but this is expensive.
is bacterial wilt (caused by Ralstonia solanacearum) The dis- With ECF present in neighboring countries, controlling
ease is prevalent in all potato-growing areas in Kenya, ECF is difficult given Kenya’s open borders; emergency
affecting over 70 percent of potato farms and causing fodder provision and climate change have also expanded
yield losses of between 50 and 100 percent (World Bank the areas affected by ECF as the tick specie responsible
2012). Late blight is another common threat affecting an has spread.
estimated two-thirds of all potato crop farms.
Rift Valley fever is similarly hard to control in Kenya. It
Coffee: Unlike tea, which is relatively resistant to pests could be considered a constraint rather than a risk as its
and diseases, Kenya’s coffee industry is threatened by two strong, positive correlation with heavy rainfall and flood-
major diseases: CBD (Colletotrichum kahawae) and CLR ing makes it relatively predictable. The risk is that very few
(Hemileia vastatrix). Both are major diseases of Arabica cof- animals are vaccinated, because vaccination frequently
fee that, left untreated, can cause significant losses. Severe leads to abortion in pregnant animals; even if mortality
rust incidence may lead to loss of foliage (up to 50 per- is relatively low, the losses are high when outbreaks occur
cent) and berries (up to 70 percent) (Alwora and Gichuru and vaccination takes place.
2014). CBD infects all stages of the crop, from flowers to
ripe fruits, and can cause up to 50–80 percent yield loss Foot and mouth disease (FMD) is endemic in Kenya and
if conditions are favorable and no control measures are can cause high mortality rates, especially in improved
adopted (Gichimu and Phiti 2012). Both CBD and CLR breeds. Vaccination is effective and provides short-term
are manageable via adoption of good cultural practices, immunity, but since cost recovery was introduced in the
such as planting resistant varieties and applying contact late 1980s, coverage has fallen to around 10 percent. FMD
and systemic fungicides. Chemical control of these dis- is especially damaging when it coincides with drought and
eases is expensive (up to 30 percent of total production animals are weak and stressed. Over a 93-day quaran-
costs), however. Control measures also focus on the devel- tine and observation period due to FMD in 2001, a study
opment and dissemination of coffee varieties resistant to on a large Kenyan dairy farm recorded costs and losses
CBD and CLR, but farmer access and the replanting of that included milk losses (42.0 percent), purchase of addi-
improved varieties remains limited. tional feeds (13.6 percent), culling of milk cows that devel-

TABLE 3.5. FREQUENCY AND IMPACT OF LIVESTOCK DISEASE OUTBREAKS IN KENYA,
1980–2013
Year Description
Early 1980s Animals worth K Sh 230 million lost to FMD
1996 1.47 million, 2.48 million, and 1.15 million animals vaccinated after FMD, Rinderpest, and CBPP outbreaks, respectively
1997 105 and 106 reported outbreaks of FMD and Rift Valley fever
1999 139 reported outbreaks of FMD; 0.65 million animals vaccinated
2000 95 cases of FMD; 0.46 million animals vaccinated; 16 cases of CPB and 1.1 million animals vaccinated
2001 54 FMD outbreaks, 0.76 million animals vaccinated; 1.96 million animals vaccinated against CPB (18 outbreaks);
11 cases of Newcastle disease
2002 48 FMD reported cases; 19 cases of CBPP; 21 cases of lumpy skin disease; 10 cases of Newcastle disease
2003 87 reported FMD outbreaks; 21 reported CPB outbreaks; 16 reported cases of Infectious bursal disease
(Gumboro disease)
2004 95 FMD outbreaks; 46 cases of fowl typhoid; 24 cases of infectious bursal disease
2007 First outbreak of PPR, causing 1,500 animal deaths in Rift Valley; 37 cases of Rift Valley fever across 29 of 69
administrative districts in six of eight provinces
2011 4 reported severe outbreaks of African Swine fever in 16 districts
Source: OIE database; HANDISTATUS II; media reports; GoK reports.
Note: FMD, foot and mouth disease; contagious bovine pleuropneumonia (CBPP).
oped chronic mastitis (12.5 percent), extra labor inputs during the period 1980–2013. Incidences of unreported
(8.9 percent), veterinary fees (3.3 percent), transport outbreaks are undoubtedly considerably higher. The lack
(3.0 percent), deaths (3.0 percent), drugs (2.9 percent), abor- of information on losses associated with these outbreaks
tions (1.4 percent), and chemicals (0.5 percent). Quarantine makes it difficult to quantify their impacts.
and lack of sales of other livestock (pigs) and commodi-
ties (hay) on the farm led to overall short-term, farm-level MARKET RISKS
direct and indirect losses of approximately $16,026.25 An
Among the most common market risks presented in this
earlier FMD outbreak in the 1980s was estimated to have
section are price variability for crops and inputs, exchange
caused K Sh 230 million in losses (GoK 2009a).
rate and interest rate volatility, counterparty risks, and
livestock theft.
Other animal diseases that are potentially most serious
during a drought include small ruminant pest (PPR), con-
tagious bovine pleuropneumonia (CBPP), and catarrhal CROP PRICE RISK
fever. Anthrax is a serious, yet localized threat, and a new Price fluctuations are inherent in agricultural markets,
respiratory disease in camels is a source of concern. Animal and some level of variability is to be expected. This is
disease is especially dangerous when drought and disease partly due to supply and demand dynamics and the
are covariant, as is often the case, as even common day-to- unpredictability of weather patterns and harvest yields.
day levels of infection by normally mild diseases (e.g., orf, However, extreme price volatility deters producers from
pox) or internal or external parasites can become fatal. making productivity-enhancing investments and can
weaken food access among poorer households. It can
Table 3.5 provides some details on reported pest and dis- also lead to lost income. The analysis of producer price
ease outbreaks affecting Kenya’s livestock populations variability is based on interannual price variability for
the period 1991–2011, measured by CVs. Nominal
prices in $/ton are used for the analysis of domestic
25
The Kenya Veterinarian (2001); see http://www.ajol.info/index.php/kenvet
/article/view/39523 and http://www.flockandherd.net.au/other/reader producer prices. Annual producer price data are drawn
/fmd%20kenya.html from FAOSTAT.

FIGURE 3.2. AVERAGE MONTHLY WHOLESALE MARKET PRICES
(K Sh/90 kg), 2005–13
8,000 Maize Cowpeas Sorghum Irish potatoes Tomato Wheat
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Source: MoALF.
Note: Potato price is based on 110 kg unit; tomato price is based on 64 kg unit.
TABLE 3.6. INTERANNUAL CROP PRICE remain relatively stable (19 percent). Maize price volatil-
VARIABILITY (CV), 1991–2011 ity, in particular, is a critical issue for the GoK, given the
importance of maize to household consumption and to
Coefficient of Variation
food security. In Kenya, maize prices increased sharply in
Cereal Crops Other Cash Crops
2008–2009, fell in 2010, and rose again in 2011 and 2012.
Maize 0.33 Cowpea 0.42a Tea 0.29 During the first half of 2011, maize prices jumped by
Wheat 0.33 Dry beans 0.32a Coffee 0.53 145 percent. This followed a sharp increase (39 percent)
Sorghum 0.49 Potato 0.28 Sugarcane 0.23 in the commodity food price index and a near doubling of
Rice (Paddy) 0.75 Banana 0.28 U.S. maize prices during the period June 2010–February
Source: FAOSTAT. 2011.26 In general, domestic maize prices tend to be more
a
Prices for cowpea and dry beans cover 1999–2011. volatile than international maize prices, as domestic prices
are highly sensitive to constant speculation in projected
and real annual output.
Based on CV analysis, producer prices in Kenya for key
Government procurement programs regularly exert pres-
crops are subject to moderate to high levels of inter-
sure on normal market price developments and contrib-
annual price variability (table 3.6). Among crops, rice
ute to higher intra-annual price volatility for maize and
paddy, coffee, sorghum, and to a lesser extent, cowpea,
other major staples. For farmers, maize prices invariably
exhibit the highest levels of year-on-year price volatility.
collapse at the peak of the harvest season. The GoK inter-
In the case of rice and coffee, this suggests that domes-
venes by announcing a pan-territorial price for all maize
tic prices are highly influenced by imports and changes
bought by the NCPB for replenishment of the strategic
in international market prices. It also suggests that rice
grain reserve. The intervention invariably pushes up
and coffee producers in Kenya are highly exposed to
prices in the short term. In 2013–14, the pan-territorial
significant swings in farm-gate prices from one year to
price for maize was K Sh 33,000 ($385) against an aver-
the next.
age market price of K Sh 30,000 ($347) per ton. When
significant shortages occur, the Kenyan government can
Figure 3.2 shows monthly fluctuations in wholesale prices
also waive the 50 percent duty on extra-COMESA maize
for six key crops during the period 2005–13. Tomato,
maize, and Irish potato exhibit the highest levels of vari-
ability, with CVs of 35–38 percent, while wheat prices 26
According to Index Mundi at indexmundi.com. Data accessed May 2014.

FIGURE 3.3. PRICE OF TEA AT MOMBASA AUCTION ($/kg), 1980–2012
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: TBK.
FIGURE 3.4. INTERNATIONAL COFFEE PRICES ($/lb),* 1988–2013

3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jan-88
Oct-88
Jul-89
Apr-90
Jan-91
Oct-91
Jul-92
Apr-93
Jan-94
Oct-94
Jul-95
Apr-96
Jan-97
Oct-97
Jul-98
Apr-99
Jan-00
Oct-00
Jul-01
Apr-02
Jan-03
Oct-03
Jul-04
Apr-05
Jan-06
Oct-06
Jul-07
Apr-08
Jan-09
Oct-09
Jul-10
Apr-11
Jan-12
Oct-12
Jul-13
Source: International Coffee Organization.
Note: *New York cash price, ex-dock New York; ($/lb).
imports, as happened in 2008. When implemented, this of the average tea selling price at the auction (excluding
measure exerts considerable and rapid downward pres- marketing, processing, and transport costs). Total farmer
sures on prices. payments are typically above 70 percent of the auction
price, which is considered to be a relatively good incen-
No universal reference market exists for tea prices as for tive to maintain good crop husbandry and carry out farm
other major commodities. Instead, domestic prices are investments. Multinational companies operating in Kenya
influenced by prevailing auction prices in other major make just one payment to their outgrowers. During cer-
tea-producing countries, such as those in Colombo and tain seasons, their buying practices promote side-selling
Calcutta. The Mombasa Auction average yearly prices among KTDA farmers who prefer immediate payment in
have increased since 2002, with notable inflexions during full. Whatever the extent of volatility, price risk is primar-
2007–09 and 2011–12 (figure 3.3). The interannual vari- ily borne by individual tea farmers and cooperative socie-
ations are not very pronounced. In effect, the CV of the ties, and KTDA’s dual payment system has come under
average annual auction price is 27 percent (1980–2013), increasing pressure in recent years as farmers demand
relatively modest compared to the average annual inter- better price transparency.
national price of coffee (41 percent CV in the period
1988–2013) based on the New York market. Coffee prices in the international market have historically
been highly volatile. During the period 1988–2013, inter-
Smallholder suppliers to KTDA factories are paid a fixed annual fluctuations in coffee prices were subject to a CV
price during the whole year per green leaf kilogram (K of 0.43 (figure 3.4). The level of variability has decreased
Sh 14/kg in 2013–14). In addition, farmers receive a markedly as prices have slid from their record peak in
supplemental year-end bonus, determined on the basis April 2011. Price risk faced by buyers of Kenya coffee is

FIGURE 3.5. WEEKLY BEEF CATTLE PRICES (K Sh/kg)
IN VARIOUS MARKETS, 2006–11
40,000 Garissa Isiolo Moyale Dagoretti
35,000
30,000
25,000
20,000
15,000
10,000
5,000
–
Jan-06
Jul-14
Jan-07
Jul-14
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Source: MoALF.
largely managed via hedging on futures. Agents and other Figure 3.6 and figure 3.7 compare real prices and TOT
downstream actors in the supply chain mostly work on between maize and beef cattle in six major market cent-
commission and fixed fee–based rates, so face little to no ers, including Nairobi and Mombasa, for the period
price risk. For the country’s farmers, their major concern January 2006 to January 2011. The TOT are calculated
is consistently low prices at farm-gate rather than intra- as the number of 90-kg bags that can be purchased by
or interannual variability of prices. During periods where selling one cow. Variations in average monthly prices and
coffee prices are low, these households are often highly TOT ranged between 40 and 77 percent within years.
vulnerable to food insecurity due to limited resources The sample years include the drought years of 2008–11.
employed for food production. A depression in prices and especially in TOT is clearly
seen as drought occurs. However, the highest varia-
tion in TOT occurred in nondrought years rather than
LIVESTOCK PRICE RISK
drought years, when cattle prices often bottom out. Mar-
Seventy percent of Kenya’s cattle are located in the
ket dynamics in Nairobi, the major cattle market sink,
ASALs, and the income they generate is essential to resi-
show more stability than those in pastoral areas, espe-
dents’ livelihoods. Livestock marketing has been liberal-
cially in Isiolo Market (figure 3.7) where price drops are
ized, and no livestock trade policies or regulations directly
most visible. In other centers such as Garissa and Moyale,
affect domestic prices (FAO 2013b). However, this analy-
the variation may be less, as these are border towns with
sis showed that cattle producers receive substantially less
greater flows of cattle from neighboring countries. The
than equivalent world market prices. The first reason for
data clearly show how vulnerable livestock owners are to
this is the nature of the markets themselves.
price and market dynamics.
Livestock prices are variable across both seasons and
years; cattle prices are the most variable (see figure 3.5). Livestock marketing is poorly regulated and quite disor-
Drought triggers adverse trends in prices both of animals ganized. Sellers are often exploited by traders and mid-
and of the commodities that pastoralists consume, espe- dlemen, and significant inefficiencies exist. Producers face
cially food items, such as maize and beans, that they do substantial market price disincentives despite Kenya’s
not produce themselves. At early signs of low rainfall, pas- status as a net exporter of cattle (Makooha et al. 2013).
toralists start to sell animals and market prices fall because These arise from market structure (traders’ high profit
few buyers exist. At the same time, farmers and traders margins and heavy government fees and taxes imposed on
begin storing food in the expectation of future price rises, cattle trekkers). The distortions are in part due to informa-
pushing up the price of food staples. Combined with the tion asymmetry. Additional graphs showing the variation
falling price of animals, pastoralists are caught in a classic in TOT for each of the individual markets are provided in
price scissors situation. Appendix E (figures E.2–E.7).

FIGURE 3.6. BEEF CATTLE VERSUS MAIZE TOT IN SIX MAJOR MARKETS,
2006–11
Garissa Isiolo Moyale Dagoretti Wajir Mombasa
25
No. bags (90kg) maize
20
15
10
0
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Source: MoALF.
FIGURE 3.7. CATTLE VERSUS MAIZE TOT IN ISIOLO MARKET, 2006–11

18
16
14
12
10
8
6
4
2
0
Jan-06
Mar-06
May-06
Jul-06
Sep-06
Nov-06
Jan-07
Mar-07
May-07
Jul-07
Sep-07
Nov-07
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Source: MoALF.
INPUT PRICE VOLATILITY EXCHANGE RATE VOLATILITY

As elsewhere, high prices inhibit broad farmer utilization Kenya’s heavy reliance on cereal and other agricultural
of fertilizers in Kenya. Since 2008, the GoK has imported imports means that movements in exchange rates between
roughly 60,000 MT of planting and top-dressing fertiliz- the Kenyan shilling and major trading currencies represent
ers annually through NCPB to stimulate production and a potential source of market risk. Any volatility also affects
enhance food security. Yet fluctuating prices can impose exporters of agricultural products such as cut flowers, tea,
added risk on farmers, making it difficult for them to plan coffee, and horticultural crops Available data from 1995
ahead. An analysis of average annual prices across key to 2013 show that significant monthly nominal exchange
agricultural fertilizers during the period 1998–2007 sug- rate fluctuations occurred between May 2007 and April
gests that while prices increased, producers faced only 2009, and then again from January 2011 to March 2012
moderate levels of year-on-year price volatility. Among (figure 3.9). The exchange rate actually rose from a low of
nine fertilizers for which historical price information was K Sh 61.96 per U.S. dollar in May 2008 to a high of K
available, only one (Urea, with a CV of 34 percent) exhib- Sh 101.16 per U.S. dollar in October 2011. This drastic
ited higher than normal levels of price variability over the currency depreciation was due in part to Kenya’s growing
10-year period (figure 3.8). A further analysis of interan- trade imbalance and its sizable current account deficit,
nual prices for six fertilizers during 2008 showed limited which was above 10 percent of GDP in 2011, one of the
variability, with CVs ranging from 15 to 24 percent. The highest in the world. The gradual depreciation has damp-
analysis suggests that farmers face limited risks from input ened Kenya’s capacity to import essential food and energy
price risk volatility. commodities, while making its exports more competitive.

FIGURE 3.8. DOMESTIC FERTILIZER PRICES, 1998–2007
2,500 SSP TSP DAP MAP ASN SA UREA NPK* CAN
2,000
1,500
1,000
500
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Agri-Business Directorate.
FIGURE 3.9. EXCHANGE RATES ($/K Sh), 1995–2013

110.0000
100.0000
90.0000
80.0000
70.0000
60.0000
50.0000
40.0000
January 1995 January 2000 January 2005 January 2010
Source: OANDA.
FIGURE 3.10. COMMERCIAL BANKS’ INTEREST RATES* (%), 1992–2013

35
30
25
20
15
10
0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: Central Bank of Kenya.
* Weighted monthly average lending rate.
INTEREST RATE VOLATILITY During the same period, volatility was relatively high,
Analysis of monthly interest rates on commercial bank with a CV of 30 percent. Variability declined markedly
lending for the period 1992–2013 shows that rates have over the last decade (2004–13), with the exception of a
declined markedly since their peak in 1994 (figure 3.10). sudden spike beginning in late 2011 when inflationary

pressures, tighter monetary policy, and unexpected vola-
tility in exchange rates drove up lending rates by nearly
ENABLING ENVIRONMENT
one-third (31.7 percent) over a two-month period. This RISKS
analysis suggests that volatility in the cost of credit could Other sector risks arise from both internal and external
pose a risk. Considering Kenya’s narrow agricultural changes in the broader political and economic environment
credit markets, which accounted for a mere 3.6 percent in which agriculture operates. Agriculture sector policy and
of total lending in Kenya in 2013 (CBOK 2014), any ex regulation are a source of risk when public involvement
post impacts are considered negligible at the aggregate in sector activities has unexpected, adverse consequences.
level. Other risks include general insecurity as a result of domes-
tic social unrest or transboundary conflict that disrupts
agricultural production systems and livelihoods.
COUNTERPARTY AND DEFAULT RISKS
Counterparty risk refers to the risk that one or more
POLICYMAKING
parties participating in a transaction will not live up
Ongoing implementation of Kenya’s 2010 Constitution
to, or will otherwise default, on their obligations. Most
will continue to have major consequences for agriculture
stakeholders across Kenya’s agricultural supply chains
sector policies and programs. It requires a drastic reduc-
(including producers, wholesale traders, processors, and
tion by at least half in the number of ministries and a
banks) have only limited means to effectively manage
substantial consolidation and reorganization of ministe-
such risks. With few alternatives, many actors prefer to
rial functions. It also calls for consolidation of more than
minimize their exposure by operating on a limited vol-
100 overlapping pieces of legislation into four new laws:
ume, cash-and-carry basis. For rural banks, microcredit
the “Agriculture, Fisheries and Food Authority Act,” the
institutions, and other credit lenders, repayment failure
“Livestock and Fisheries Act,” the “Crops Act,” and
is a constant problem and a significant disincentive to
the “Kenya Agricultural and Livestock Research Act.”
lend to farmers, especially smallholders, who represent a
The first three were passed in January 2013 and are
substantial and hard-to-manage default risk. In fact, the
now undergoing implementation. The new constitution
inability to manage such risks is a principal factor limit-
also mandates devolution of sector service delivery to
ing farmers’ access to credit and driving up the cost of
Kenya’s 47 counties.
agricultural credit.
Such drastic changes raise the spectre of uncertainty over
Side-selling is another form of nonpayment risk that is planning and support to the sector in the near to medium
particularly common among sugarcane and, to a lesser term. In many cases, experienced District Agricultural
extent, tea producers in Kenya. Come harvest time, Officers are being replaced by new graduates from the
small-scale sugarcane farmers often sell their crops to local area, a process that will potentially reduce the qual-
impromptu roadside buyers rather than honor contracts ity of the civil service officers available and the extension
with millers who regularly provide inputs in exchange services they provide. Anecdotal evidence suggests that
for the crops they help finance. The practice is known counties have a growing tendency to raise taxes collected
locally as “cane poaching.” Mumias Sugar Company, on local agricultural production and to collect taxes again
Kenya’s largest miller, reportedly made pre-tax losses of on any products in transit across their territory. This may
$26 million in 2013 as a result of the combined impact significantly increase the cost of transporting grain and
of illegal imports and cane poaching. In the same way, other staples from surplus to deficit areas, especially if
smallholder farmers who are members of KTDA often they must cross several counties to get there.
sell to estate companies, attracted by their spot payment
arrangements and, depending on the market, attractive Another source of risk within the sector’s enabling envi-
prices. This has been a problem for some KTDA facto- ronment stems from the government’s active role in
ries, which have operated well below their potential due regulating domestic food markets. These risks are most
to an insufficient supply of green leaf tea. notable in the maize and sugar subsectors. In the case

of maize, uncertainty over the scope and timing of GoK in the fertilizer market has created a number of challenges
interventions in grain markets poses a considerable risk to including (1) uncertainty over the timing of delivery and
maize producers, traders, and other stakeholders across year-on-year support; (2) poor targeting of subsidies; (3)
the maize supply chain. The common wisdom is that a late planting and high farmer dependency; and (4) lack of
lack of storage prevails at the farm level and in rural com- a clear exit or sustainability strategy.
munities. An alternative view is that strong disincentives
exist to storing grain. This is because government policy In Kenya’s sugar industry, the unpredictability of cur-
can cause unexpected adverse price shocks, such as tem- rent policy27 with regard to import regulations and
porary suspension of the 50 percent tariff on non-EAC exceptions to the COMESA rules poses considerable
maize imports or the release of grain from the Strategic risk to mills, cane producers, and other stakeholders. It
Grain Reserve. In part because farmers and first buyers also impedes investments. Sizable unrecorded imports
have no interest in storing grain that will enter commer- of refined sugar from outside the region pose yet another
cial channels, little consideration is given to moisture con- risk to the industry. Imported sugar slated for industrial
tent and quality. Rather, value chain participants each try use has been known to find its way into domestic markets
to sell the grain before it deteriorates, leaving the responsi- for household consumption. In any case, prices can fall
bility for drying and quality to the next buyer in the chain. precipitously when the market becomes saturated and
Thus, much of the grain entering commercial channels is mills are unable to compete. For example, in 2002, the
unfit for storage and subject to significant losses and qual- industry suffered considerable losses due to import surges
ity deterioration (including aflatoxin contamination). and the failure among sugar millers to make payments to
cane farmers and other suppliers. As a result, the entire
Moving forward, it is unclear how Kenya will be able to sugar sector accumulated heavy debts. The high level of
overcome recurrent maize production shortages, which indebtedness of state-owned mills, reportedly five times
can jeopardize food security. Amid increasing import vol- more than their current assets combined, has helped stall
umes, uncertainty exists over whether imports will be able needed reforms.28
to fill the gap in light of Kenya’s 50 percent ad valorem
tariff for non–COMESA sourced maize, its import ban on Overregulation, lack of transparency, and asymmetric
genetically modified (GM) maize, and inadequate supplies governance in Kenya’s coffee supply chain threaten the
of non–GM-exportable maize in the COMESA region. coffee industry’s long-term viability. International buyers
This is especially true in light of episodic export bans for and marketing agents wield excessive market power while
maize in Tanzania, Malawi, and Zambia. Supply markets farmers are forced to absorb an oversized share of mar-
have also been thinned in recent years by the growing ket as well as production risks. As a consequence, farm-
attractiveness of the South Sudan market for Ugandan gate prices are consistently low, leaving farmers with scant
maize exporters and of DRC markets for Tanzanian incentives to maintain proper crop husbandry within the
maize exporters. context of aging trees, widespread disease, and declining
productivity.
Another major risk is government intervention in input
Kenya’s livestock subsector has long been underfunded
markets, such as for fertilizer. Kenya’s fertilizer market
and faces a range of challenges ahead. Since most of
was liberalized during the early 1990s when price and
Kenya’s livestock herds are found in the ASALs, which
marketing controls, licensing arrangements, import per-
are both more exposed to impacts from natural disasters
mits, and quotas were eliminated. The bulk of fertilizers
(e.g., droughts, conflict) and more vulnerable than other
are imported and distributed by the private sector. Since
2008, however, the government through the fertilizer sub-
sidy program has procured about 494,000 MT of fertilizer
27
In February 2014, COMESA approved the extension for a further year of
Kenya’s special safeguard arrangement for sugar, thus allowing Kenya to main-
in support of the agriculture sector. In 2015, the govern-
tain a 350,000-ton ceiling on duty-free sugar imports from COMESA.
ment is projected to import and distribute 143,000 MT of 28
See “COMESA approves 1-year extension of Kenyan sugar safeguards,” Agri-
fertilizers through NCPB. This government involvement trade, May 11, 2014.

BOX 3.1. KENYA’S DAIRY SECTOR—A CASE STUDY OF MARKET AND ENABLING
ENVIRONMENT RISK
Kenya’s dairy sector has only recently fully recovered from a 15-year crisis caused in part by mismanagement. Government ser-
vices to the sector were reliable until the mid-1980s, but started failing in the 1990s and collapsed in early 2000 due to corruption
and mismanagement in the cooperative sector. This caused a decline in milk handling of 266 million liters (estimated value $43
million). A failure to pay producers for milk in 1994 alone caused a loss in excess of $16 million. Amid failing public services,
privatization of the sector and service delivery began in 1993, including artificial insemination. With privatization and recession
in the sector, concentrate feed production also dropped during 1993–94. Counterparty risk in the milk sector due to manipulation
of Kenya Cooperative Creameries (KCC) board members led to delays and failures in payment. In 2008, livestock concentrate
and fodder (hay) prices increased by 40 percent and 100 percent, respectively, due to postelection violence and impacts from the
global financial crisis, and in 2010, a substantial surplus in milk production caused market glut and farmer distress.
FIGURE B3.1.1. MILK PRODUCTION IN THE FORMAL SECTOR

(millions of liters), 1984–2008
450 Government intervention
400
350
300
250
Nonpayment
200
150
100
50
0
84
85
86
87
89
91
93
94
95
96
97
98
99
01
02
03
04
05
06
07
08
19
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
Source: FAO 2011.
livelihood zones, public support to the sector often comes test and graze quarantined animals no longer exist or have
in response to emergencies rather than to modernizing and become dysfunctional. A review of such policies and the
restructuring the livestock sector. Thus, Kenya’s northern broader legal and regulatory framework is required.
rangelands continue to suffer from insufficient infrastruc-
ture, low education levels, and poor delivery of health care Another enabling environment risk to Kenya’s agriculture
and other services. And some policies in place remain out- sector is linked to the country’s growing dependence on
dated. Health quarantine laws, for example, hinder live- food aid (figure 3.11). During 2006–11, Kenya received
stock trade as many of the facilities originally in place to $1.92 billion in emergency response aid, up from $150
FIGURE 3.11. HUMANITARIAN ASSISTANCE TO KENYA

(US$, millions), 2000–11
$500
$400
$300
$200
$100
$0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Central Bank of Kenya.
Note: Weighted monthly average lending rate.

million during the prior five-year period (2000–04). As contest the rights of the first group to exclude strangers.
evidenced elsewhere, frequent crises coupled with overre- Disputes of this sort have arisen and continue between
liance on food aid can lead to a breakdown of household Somali and Boran pastoralists in northern Kenya, and
resilience. This happens as household capital (i.e., savings, can give rise to extended conflict. Such conflict is most
assets) is depleted to finance emergency coping mecha- likely to arise in a drought or other period of stress on
nisms. When affected communities have insufficient time people and animals, when access to water and pasture is
to rebound and replenish their resources, subsequent essential, and herds have to leave their normal grazing
shocks further weaken their capacity to cope and with- areas to find them.
stand future shocks. Although emergency food aid can
help address immediate food needs, it does little to help
CONFLICT AND INSECURITY IN ASALS
rebuild household resilience and may induce higher rates
Kenya’s low-density, sparsely populated northern coun-
of dependency and chronic malnutrition. In this way, it
ties and long borders provide both opportunities and
can also increase the cost of managing future crises, and
risks. Conflicts over natural resources, normally con-
is thus not a sustainable way to manage food crises. For
tained by customary rules, become much more difficult
example, the cost of humanitarian aid needed to respond
to settle when government staff, members of the armed
to the famine in Niger in 2010 was twice that needed in
forces, and wealthy businessmen become involved. The
2005 (Michiels, Blein, and Egg 2011).
presence of jihadist fighters on the border with Somalia
and nearby across the Gulf of Aden in Yemen adds a
INSTABILITY complicating factor.
Internal and cross-border conflict is a significant source
of risk for Kenyan agriculture. The violence and civil In a regional drought, cattle prices are low but variable,
unrest surrounding the December 2007 presidential elec- providing traders with an opportunity to provide a useful
tions resulted in large-scale displacement and crop losses arbitrage service. Such arbitrage occurs for animals from
as farming communities abandoned their fields. It also Somalia, Djibouti, Ethiopia, and northeastern Kenya.
delayed land preparation and planting in the next season. The main problem for such traders is insecurity. Traders
Partly as a result, losses in maize production alone were who buy animals cheaply in Somalia need an escort to
an estimated $101 million, or more than 1.0 percent of get them to Kenya. This escort needs to be a local per-
the value of agriculture GDP in 2008. According to a son from each place—locality or larger area—who is well
study by the Centre for the Study of African Economies known and can persuade local people in each area to
(CSAE) at Oxford University, impacts from the postelec- guarantee safe passage, provide protection, and provide
tion violence in 2007–08 on the Kenyan flower industry contacts for the sale of the animals, all of which adds sub-
reduced flower exports across the country by an estimated stantially to the cost.
24–38 percent. Political instability and conflict in neigh-
boring Somalia can adversely impact agricultural markets, Interethnic conflict has occurred at a large scale during
particularly livestock production and trade across Kenya’s elections since the early 1990s and up to those of 2007–
northeast region. Since Kenya’s military intervention in 08. Clashes also occur regularly over water, grazing, and
Somalia in 2011, Kenya has seen a rising incidence of land control in various counties, particularly in the ASALs
attacks by the Somalia-based Al-Shabaab group, which but also in parts of the more fertile Rift Valley. Clan and
claimed more than 14 bombings or armed attacks in 2012 tribal conflicts are frequent along borders (e.g., Pokot and
alone. Kenya also witnessed a resurgence of interethnic Turkana districts, and Moyale in 2013).
violence between August and December 2012.
The insecurity triggered by jihadist movements in Soma-
Customary land tenure systems are another source of lia has created a serious risk for all members of society in
conflict, particularly in the ASALs, either when disagree- Kenya. The direct risk to life and livelihoods from jihad-
ment arises within the system between different rights- ists is as likely to affect city dwellers in Nairobi and Mom-
holders or when members of a different ethnic group basa as it is livestock owners in northern Kenya. In border

areas, animal health services can be disrupted due to Cattle rustling has long existed among pastoralists in the
threats to Kenyan government staff, carjacking, and so on, region. Losses can be large or small, and local mechanisms
and some traders, suppliers, and transporters may avoid for recovering stolen livestock and the resulting fines are well
traveling to border areas. Livestock owners and traders developed within pastoralist communities. The risk of cat-
are affected by the impact of antiterror operations and tle rustling has grown as it has become more commercial-
tensions along the Somali border due to the Al-Shabab, as ized and protected by politically connected elites, rendering
transaction costs, restrictions, and harassment by security traditional resolution mechanisms obsolete and ineffective.
personnel are likely to increase. Well-organized, “commercial” cattle rustling has emerged
since the early 2000s and was a notable problem especially
during the election periods in the Rift Valley.
CROP THEFT AND CATTLE RUSTLING
Farmers and traders face the risk of both crop and cattle
theft. The increase in market prices in recent years has MULTIPLICITY OF RISKS
encouraged growing incidences of crop theft, particularly An important feature of agricultural risk is the high degree
in maize-growing areas across Kenya. The risk is greatest of covariance of the main risk components. For example,
around harvest time when harvested maize is left in the drought and animal disease commonly occur together
fields for drying, but many farmers have reported losing when animals weakened by lack of feed and water subse-
their crops to thieves even before harvest. Partly to save quently travel long distances and become more susceptible
harvesting, drying, and storage costs, but also to protect to infection. In so doing, they end up spreading infections
themselves from theft risk, some farmers sell green maize. over long distances. This happened, for example, in 2008–
As happened in 2012, this practice can result in significant 10, when rinderpest returned to Kenya from South Sudan
drops in farm-gate prices for both fresh and dried maize. and Somalia, where internal conflict had halted disease
It also contributes to maize shortages by reducing the vol- control. Similarly, drought and price volatility and market
ume of maize reserves. and enabling policy risks are often highly interrelated.

CHAPTER FOUR
ADVERSE IMPACTS OF AGRICULTURAL RISKS
The frequency, severity, and costs of adverse events are analyzed in this chapter
as the basis for prioritizing the various sources of risk. The conceptual and meth-
odological basis described below is applied to production, market, and enabling
environment risks. The various sources of risk are then reviewed to discern the
most critical ones.
CONCEPTUAL AND METHODOLOGICAL

BASIS FOR ANALYSIS
For the purposes of this study, risk is defined as an exposure to a significant financial
loss or other adverse outcome whose occurrence and severity is unpredictable. Risk
thus implies exposure to substantive losses over and above the normal costs of doing
business. In agriculture, farmers incur moderate losses each year due to unexpected
events such as suboptimal climatic conditions at different times in the production cycle
and/or modest departures from expected output or input prices. Risk within the con-
text of the current analysis refers to the more severe and unpredictable events that
occur beyond these smaller events and that result in substantial losses to assets and
livelihoods at the aggregate, sector level.
This concept differs from the common perception of “risk” by farmers and traders
based on year-to-year variability of production and prices. It should also be distin-
guished from constraints, which are predictable and constant limitations to productiv-
ity and growth faced by farmers and other agricultural stakeholders. In Kenya, these
constraints include poor access to farm inputs, limited access to markets, limited credit,
poor infrastructure, and the decreasing size of landholdings.
LOSS THRESHOLDS
As agricultural production is inherently variable, the immediate step for analysis is to
define loss thresholds that distinguish adverse events from smaller, interannual variations
in output. This is achieved by first estimating a time trend of “expected” production
in any given year, based on actual production, and treating the downside difference

TABLE 4.1. COST OF ADVERSE EVENTS FOR CROP PRODUCTION, 1980–2012
Indicative loss value
US$, Percentage
Year Description millions (%) GDP
1980 Regional droughts; 400,000 people affected; 728 MT maize loss −304.9 −3.2
1984 Drought in Lodwar, Eldoret, Narok, Dagoretti regions; 274 MT maize loss −258.3 −2.7
1993 Regional droughts in Eldoret; low rainfall in Lodwar, Nyahururu, Kisumu, Mombasa −243.2 −2.6
1996 Widespread drought in ASALs; 1.4 million people food insecure; 323K MT maize lost −291.9 −3.1
1997 El Nino floods; Rift Valley fever outbreaks; 1.5 million people affected (1997–98); −383.2 −4.0
157,000 MT maize loss
1998 El Nino floods; Rift Valley fever outbreaks; 1.5 million affected (1997–98) −266.6 −2−.8
2000 La Nina drought hits Garissa, Kisumu, Narok, Dagoretti; maize harvest drops by one-third −359.3 −3.8
2001 Drought in Mandera; poor rainfall in Lodwar, Malindi, Mombasa −223.2 −2.4
2002 Erratic rainfall; floods −242.6 −2.6
2004 Regional droughts in Gariss, Malindi, Mombasa; estimated 3 million households require food aid −255.9 −2.7
2009 Widespread drought across Eldoret, Nayhururu, Makindu, Mombasa; 592,000 MT maize loss −395.3 −4.2
2011 Regional drought in region of Mombasa −231.5 −2.4
2012 −284.0 −3.0
Note: Cowpea losses were included from 1989 to 2012 due to data availability. Potato losses were calculated from 1980 to 2004 due to inconsistencies in data thereafter.
ASAL, arid and semiarid land; MT, metric ton.
between actual and expected production as a measure DATA SOURCES

of loss. A loss threshold of 0.33 standard deviations Analysis of this nature requires a consistent set of data on
from trend is then set to distinguish between losses due both production and prices for an extended time period.
to adverse events and those that reflect the normal costs Of the various sources of data available, FAOSTAT’s
of doing business. Those below threshold deviations from data series on the value of gross agricultural production
trend allow estimation of the frequency, severity, and cost (1980–2012) and crop production (1980–2012) were con-
of loss for a given time period (see Appendix H for illus- sidered the most suitable. These data allow the analysis of
trations of indicative crop loss estimates). The frequency risk over a 33-year period.
and severity of losses derived in this manner were also
verified against historical records to ensure consistency
with actual adverse events.
CROP PRODUCTION RISKS
Measured in terms of gross agricultural value,29 crop pro-
duction in Kenya was significantly reduced by adverse
THE INDICATIVE VALUE OF LOSSES events 13 times during the period 1980–2012, for an over-
Available data on actual losses due to adverse events are all frequency rate of 39 percent (table 4.1). All of these
not always accurate or consistent enough to facilitate the crop loss events on aggregate resulted in a drop in agri-
comparison and ranking of losses. The analysis was thus cultural GDP of 2 percent or more. Losses ranging from
based on estimates of the “indicative” value of losses, 3 to 4.2 percent occurred in six years. Indicative losses
which provide a more effective basis for comparison. were substantial for these events, as would be expected,
Indicative loss values are also compared to the value of whether measured in value of lost production or as a per-
agricultural GDP in the relevant year to provide a relative centage of agricultural GDP. They amounted to nearly
measure of the magnitude of loss. These estimates draw
on actual data as much as possible, but it is emphasized Gross aggregate value is the total value of volume of production for each crop
29
that they represent indicative, not actual, losses. multiplied by the producer price.

FIGURE 4.1. INDICATIVE PRODUCTION LOSSES AND FREQUENCY FOR KEY
CROPS, 1980–2012
1,200
Maize
1,000
800
Banana Tea
600
Coffee Potato
Bea
400
Sugarcane
Sorghum Wheat
200
Ric
Cowpea
0
0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5
–200
Note: Cowpea calculations were made using data from 1989 to 2012 due to data availability. Losses for tea and potatoes were calculated
for the periods 1998–2012 and 1980–2004, respectively, due to inconsistencies in available data.
TABLE 4.2. COST OF ADVERSE EVENTS BY their frequency. Maize accrued by far the biggest losses
by value over the period, accounting for roughly one-fifth
CROP, 1980–2012
(19.8 percent) of total indicative losses. Coffee and tea also
Total
incurred substantial losses due to their high market val-
Total Losses
Frequency Losses (US$, ues. Sugarcane and maize recorded the highest losses by
Crop Rate (tons) Millions) volume, followed by banana and Irish potato. In terms of
frequency, wheat production was adversely impacted on
Maize 0.33 −3,752,514 1012.4
average every two to three years but in only two of these
Rice, paddy 0.24 −140,325 115.1
years (1993, 2009) did associated losses amount to the
Wheat 0.39 −691,113 250.9
equivalent of a 3 percent loss to agricultural GDP. Other
Sorghum 0.33 −293,452 155.3
crops such as maize, sorghum, and cowpea were affected
Beans, dry 0.36 −986,993 651.1
by adverse events on average every third year, with the
Cowpeaa 0.33 −129,216a 83.9a
Potato+ 0.40 −1,360,331 556.5
exception of rice paddy, potato, and coffee, which experi-
Tea 0.39 −233,408 663.7
enced notable shocks every four years on average.
Coffee, green 0.24 −132,596 630.4
Given the importance of maize production and the diverse
Banana 0.33 −1,923,262 668.1
agroclimatic conditions in which Kenyan maize is grown,
Sugarcane 0.36 −8,195,675 310.9
it is not surprising that maize is so vulnerable to produc-
Total −17,435,580 5,098.3
tion shocks, or that aggregate losses are substantial. How-
ever, of the 11 risk events observed, three catastrophic
a
Cowpea calculations were made using data from 1989 to 2012 due to data
availability. Losses for tea and potatoes were calculated for the periods 1998– event years (1980, 2008, 2009) accounted for nearly half
2012 and 1980–2004, respectively, due to inconsistencies in available data. (47 percent) of the total aggregate losses for maize over
the 33-year period (figure 4.2). Estimated indicative losses
$5.10 billion, or roughly $154.5 million on an average
in 1980 (723,133 tons) and 2009 (605,926 tons) were likely
annual basis, during the 33-year period.
caused in large part by the severe droughts that affected
Table 4.2 and figure 4.1 show the indicative costs of major maize production areas across Kenya in those years,
adverse events by crop for the period 1980–2012 and while the postelection violence in 2008 is undoubtedly a

FIGURE 4.2. INDICATIVE CROP LOSSES FOR MAIZE, 1980–2012
2.5
Yield (MT/ha) Trend 0.3 trend
2.0
Yield (MT/ha)
1.5
1.0
0.5
Linear (Yield (MT/ha))
0.0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
FIGURE 4.3. PRIORITIZATION OF RISKS TO KENYA’S LIVESTOCK SECTOR
Drought
Severity of impact
Price volatility
ct,
Disease
theft, rustling
Erratic
rainfall Floods
Frequency/Probability
Source: Authors’ calculations.
major factor behind the 386,792-ton observed loss in that Figure 4.3 provides a risk profile based broadly on the
year. assessment team’s estimation of how frequently such vari-
ous risks events have occurred over the period 1983–2011,
LIVESTOCK RISKS and the severity of their impacts. Severity is measured on
a hypothetical scale of 1–5 (where 5 is very high impact)
The key risks in terms of probability and impact to
and estimated based on how widespread the impact might
Kenya’s livestock sector were identified as severe drought,
be in terms of geographic spread or losses, bearing in
price volatility, and cattle rustling. Animal diseases (such
mind that cattle rustling and theft might be highly local-
as FMD, Rift Valley fever, and anthrax) and floods were
ized, while price volatility may occur frequently but can
important but considered a lesser priority. Some of these
have both positive and negative impacts among different
risks are more relevant to ASAL production systems than
stakeholder groups. The dearth of information on the
to Kenya as a whole. Drought-induced price shocks, dis-
impact of diseases, floods, off-season or erratic rains, and
ease and resultant quarantine restriction movements,
cattle rustling unfortunately limits a more precise prioriti-
theft, and counterparty risk are more likely to threaten
zation of risks based on actual financial losses.
highland and mixed farming systems.

CHAPTER FIVE
STAKEHOLDER VULNERABILITY ASSESSMENT
Agricultural shocks are one important factor driving chronic poverty and food inse-
curity in Kenya. Shocks impact household well-being by limiting food availability,
weakening food access, and negatively affecting monetary well-being through the
depletion of productive assets. Chronically vulnerable groups with high exposure
to hazards experience a disproportionately large impact from adverse events and
lack coping mechanisms available to other groups. In this context, vulnerability is
a useful lens through which to examine agricultural shocks because it allows policy
makers to determine which groups are most affected and to target risk management
solutions accordingly.
GENERAL TRENDS IN VULNERABILITY

Some general considerations and trends concerning human development and vulner-
ability in Kenya are as follows:
» Levels of human development, poverty, and food insecurity vary widely between
regions.
» Exposure to extreme weather events is highly correlated with being poor and
being food insecure.
» About 70 percent of Kenya’s poor live in the central and western regions, in
areas that have medium to high potential for agriculture (IFAD 2013).
» Poverty and food insecurity are acute in the country’s ASALs, which have been
severely affected by recurrent droughts.
LIVELIHOODS AND AGROCLIMATIC

CONDITIONS
Especially in rural areas, patterns of livelihood activities are strongly influenced by
the prevailing agroclimatic conditions, which determine planting calendars, soil qual-
ity, and crop suitability. Approximately 80 percent of Kenya’s land area lies in the

FIGURE 5.1. HUMAN DEVELOPMENT INDEX SCORES, BY PROVINCE
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Nairobi Central Rift Valley Eastern Coast Western Nyanza North Nation
Eastern
Source: UNDP 2009.
ASALs, home to more than 30 percent of the population and minimal nonfood items. Of these 17 million people,
and 75 percent of the country’s livestock (GoK 2011). more than 85 percent live in rural areas. Spatial dispari-
ASAL districts have the highest incidence of poverty in ties in both the incidence and depth of poverty are pro-
the country, contain 18 of Kenya’s 20 poorest constituen- nounced: Poverty incidence at the district level ranges
cies, and are predominantly inhabited by pastoralists and from 94 to 12 percent, and the poverty gap ranges from
agro-pastoralists (GoK 2009c). Pastoralist districts con- 70 to 2 percent. According to an econometric analysis of
sistently rank below the national average in terms of the district-level poverty data, stark spatial variations in the
Human Development Index (HDI), as well as on other incidence and depth of poverty arise from differences in
indicators of well-being (figure 5.1). These communities agroclimatic conditions and income-earning opportuni-
are among the most chronically food insecure in the counties, as well as unobserved factors (World Bank 2008). In
try and typically experience the highest rates of severe other words, household location is an excellent predictor
malnutrition. Several underlying factors increase pastoral of livelihood activity, poverty status, and household con-
communities’ vulnerability, including land fragmentation, sumption level (figure 5.2).
population growth, low literacy and education provision,
poor infrastructure, and weak market integration. These Districts with high levels of poverty and food insecurity
chronic weaknesses undermine pastoralist groups’ capac- are also characterized by a high frequency of extreme
ity to respond to shocks like drought and livestock disease weather events. Households in the bottom expenditure
outbreaks, which occur frequently in the ASALs. In turn, quintile are the most likely to experience a weather-
the increasing frequency and simultaneous occurrence related shock. By virtue of their location, poorer house-
of multiple shocks erode the effectiveness of traditional holds experience a variety of natural hazards more
coping mechanisms, creating a vicious cycle of crisis and frequently compared to better-off and richer households,
underdevelopment. and are less able to mobilize productive resources to
respond to shocks.
POVERTY AND Figure 5.3 shows the percentage of severely food insecure
VULNERABILITY households as of May 2013 in areas where the World Food
In 2005–06, approximately 17 million Kenyans, or 47 per- Programme (WFP) operates. The graph reflects the food
cent of the population, were too poor to buy enough food security status of nonbeneficiary households, as opposed
to meet the recommended daily nutritional requirements to WFP-beneficiary households.

FIGURE 5.2. MAP OF KENYA’S LIVELIHOOD ZONES
KE01 - Northwestern Pastoral Zone
KE02 - Turkwell Riverine Zone
KE03 - Northwestern Agropastoral Zone
KE04 - Lake Turkana Fishing Zone
KE05 - Northern Pastoral Zone
KE06 - Marsabit Marginal Mixed Farming Zone
KE07 - Northeastern Agropastoral Zone
KE08 - Mandera Riverine Zone
KE09 - Northeastern Pastoral Zone
KE10 - Grasslands Pastoral Zone
KE11 - Southeastern Pastoral Zone
KE12 - Coastal Low Potential Farming Zone
KE13 - Coastal Marginal Agricultural Mixed Farming Zone
KE14 - Tana Delta - Irrigated Zone
KE15 - Coastal Medium Potential, Mixed Farming Zone
KE16 - Southern Pastoral Zone
KE17 - Southeastern Marginal Mixed Farming Zone
KE18 - Southeastern Medium Potential, Mixed Farming Zone
KE19 - Southern Agropastoral Zone
KE20 - Central Highlands, High Potential Zone
KE21 - Western Medium Potential Zone
KE22 - Western High Potential Zone
KE23 - Western Lakeshore Marginal Mixed Farming Zone
KE24 - Lake Victoria Fishing Zone
KE25 - Western Agropastoral Zone
Source: FEWSNET 2011.
FIGURE 5.3. PERCENT OF SEVERELY FOOD INSECURE, NON-WFP

BENEFICIARY HOUSEHOLDS BY LIVELIHOOD ZONE
62
45
41
35
32
21 21
16
Coastal Eastern Grassland NE Northern NW SE Southern Western

marginal pastoral pastoral pastoral pastoral pastoral marginal pastoral agropastoral
Source: WFP 2013.
that preclude access to resources for individuals, house-

VULNERABILITY AMONG holds, or livelihood groups. The groups identified below
LIVELIHOOD GROUPS are especially vulnerable to agricultural shocks:
Certain population groups and certain types of house-
holds are more vulnerable to agricultural shocks than
others, depending on their level of exposure to risks, sus- PASTORALISTS
ceptibility, and capacity to respond and/or recover from » Pastoralist households are more likely to be poor
adverse events. In many cases, patterns of vulnerability and more likely to be food insecure than nonpasto-
reflect underlying inequalities and social marginalization ralist households.

» Up to a fifth (15–20 percent) of households in the
Northern Pastoral Zone engage in begging, a rate
RISK MANAGEMENT
much higher than in any other livelihood zone. CAPACITY
» The highest rates of global acute malnutrition are The capacity to manage risks among different stakehold-
in the Northeastern and Northwestern Pastoral ers varies widely, based on myriad factors. These include
Zones (WFP 2013). prevailing production systems, household income levels,
and diverse income sources. Assessing levels of vulnerabil-
ity among specific groups thus requires an understand-
FEMALE-HEADED HOUSEHOLDS ing of their level of exposure and their risk management
(FHHS)
capacity. This includes their capacity to cope with and
» FHHs are 13 percent less likely to be food secure
recover from resulting losses.
than male-headed households (MHHs).
» FHHs, on average, have smaller farm sizes and
About 84 percent of Kenyan farmers own less than 3 ha
lower education levels compared to their male
of land, and 45 percent own less than 1 ha (World Bank
counterparts.
2012). This statistic is supported by findings in panel sur-
» Roughly 49 percent of the total cultivated land
veys by the Tegemeo Institute, which found that 69 per-
owned by MHHs is good to medium fertile land
cent of smallholder farmers cultivate 1.5 or less (Tegemeo
compared to 39 percent of land owned by FHHs
2010). It is difficult to grow enough food crops on these
(Kassie et al. 2012).
small farms to feed a family for an entire year and/or
produce enough income to meet the household’s basic
UNSKILLED/CASUAL WAGE LABORERS needs. Most families on these small farms do not achieve
» Casual wage laborers are considered particularly subsistence, but must sell their labor or find other sources
vulnerable to food price, production, and labor of income. Many end up selling a portion of their food
shocks since they purchase almost all of their food crops to obtain income for critical needs (sickness, school
from the market. fees, debts, and other social obligations). Many maintain
» During the 2008 food crisis, labor demand and livestock as an additional source of revenue. If they have
wage rates stagnated as food prices rose by up to access to a reliable market, many grow some horticultural
50 percent (KFSSG 2008). crops, which can be sold at prices that tend to be higher
than those for cereals.
VULNERABILITY AND RISK With regard to subsistence, most smallholder farmers in

MANAGEMENT Kenya are net buyers of maize (Buy only + Net buyer in
table 5.1). Since maize is the most important food crop,
The distribution of losses among stakeholders within a
this strongly supports the contention that the majority of
supply chain is to a great extent a function of supply chain
smallholder households do not achieve subsistence. A very
governance and stakeholders’ capacities and opportunities
high proportion of Kenyan farmers (possibly as high as
for risk management. The way stakeholders are affected
80 percent) are resource-poor, low-input, low-output crop
depends greatly on their level of vulnerability, as defined
and livestock producers. Thus a majority of smallholder
by their socioeconomic situation, gender, and location,
farmers are net buyers of food staples and are highly
among other factors. All actors along a supply chain are
dependent on the market for the purchase of food items.
exposed to the variability in primary farming production.
However, smallholder farmers and their families are par-
ticularly and very strongly affected by production risks. VULNERABILITY IN ASALS
They are the weakest segment in the supply chain, and Pastoralist communities in arid lands long ago devel-
the prevalence of risks contributes to the tightening of the oped their own drought-coping and adaptation strate-
vicious cycle of poverty. gies, but those are no longer effective. One reason is

TABLE 5.1. HOUSEHOLD CHARACTERISTICS ACCORDING TO POSITION IN THE MAIZE
MARKET, 1997, 2000, AND 2004 (nationwide sample of small-scale households
in Kenya)
Household market position (% of households)
Neither Buys
Sell Only Buy Only Net Seller Net Buyer Net Equal nor Sells Total
Characteristic (n = 781) (n = 2052) (n = 467) (n = 242) (n = 18) (n = 412) (n = 3972)
% of total sample 19.7 51.7 11.8 6.1 0.5 10.4 100
Land Cultivated (Ha) 3.0 1.1 1.9 1.2 1.0 1.5 1.6
Source: Kirimi et al. 2011.
that drought intensity and frequency have increased, TABLE 5.2. HOUSEHOLDS’
while political marginalization and chronic underde- PRIORITIZATION OF
velopment of pastoralist communities, characterized by
RISKS IN ASAL COUNTIES
lack of basic education, infrastructure, and health, have
Importance
greatly reduced their capacity to adapt and their resil-
Threat (weighted score)
ience to shocks.
Drought 21
Pastoralists’ and other livestock keepers’ ranking of their Animal disease 11
main risks is largely shared by administrators. A rapid Market disruption 17
informal survey by the National Drought Management Conflict 8
Authority (NDMA) in four pastoral counties (Turkana, Predation 3
Kitui, Kajiado, and Laikipia) in 2013 showed that some Wild fire 2
variant of the four most important threats—drought, ani- Floods 2
mal disease, market disruption, and conflict—was cited in Policies and institutions 2
all ASAL counties, although their priorities differed (GoK Source: NDMA; authors’ calculations.
Note: Impacts weighted as follows: catastrophic, 5; critical, 4; consid-
2013b). A simple weighting procedure shows how these
erable, 3; moderate, 2; negligible, 1. Maximum possible score is 40.
risks are assessed against each other (table 5.2).

CHAPTER SIX
RISK PRIORITIZATION AND MANAGEMENT
RISK PRIORITIZATION
This assessment has highlighted the Kenyan agriculture sector’s key inherent risks,
which are both numerous and complex. They manifest with varying levels of fre-
quency and severity and can result in substantial losses to crops and livestock,
which can have profound short- and long-term impacts on income and livelihoods.
Putting in place effective risk management measures can help to reduce agricul-
tural stakeholders’ vulnerability and the impacts of related shocks to production
and marketing systems. In resource-constrained environments, however, it is virtu-
ally impossible to address all risks at once. Thus, a prioritization of interventions is
needed to address the risks that occur most frequently and that cause the greatest
financial losses.
Chapters 3 and 4 identified priority risks using quantitative measures and anecdo-
tal evidence collected directly from crop and livestock subsectors stakeholders. Due
to the paucity of data, some risks could not be quantified so the assessment team
relied more on qualitative measures. Based on the team’s combined quantitative
and qualitative assessment, figure 6.1 prioritizes the most important risks for focus
crop and livestock subsectors. These were validated at a roundtable at MoALF in
Nairobi on February 7, 2014. The figure shows a summary of the agricultural risks
sorted on the basis of the probability of each event and its anticipated financial
losses. The grayer the area, the more significant is the risk. Overall, this prioritiza-
tion identified the most important risks facing Kenya’s agriculture sector to be (1)
severe drought, affecting both crop and livestock production; (2) price volatility; and
(3) crop and livestock diseases. Erratic rainfall, floods, cattle rustling, and conflict
were also deemed important, but to a lesser extent.

FIGURE 6.1. PRIORITIZATION OF KEY AGRICULTURAL RISKS IN KENYA
Severity of impact
Negligible Moderate Considerable Catastrophic

q y probable
– Striga (M) – Erratic rainfall

– Power outages (C) – Stemborer (M)
p
– Foot & Mouth Disease

Hiqhly
– Cattle rustling
– Hailstorms (T) – Erratic inputs (i.e., quality) – Severe drought

– Stalk borer (S) – Unpredrictability of – Price volatility
Probability of event
Probable
– Termites (S) SGR release (M) – Crop/livestock diseases

– Theft (M, C, T) – Lifting import tariff (M,S)
– Foot & Mouth Disease (L) – CLR/CBD (C)
– Policy risk (S)
– Regional drought
– Frost (T) – Flooding – Maize lethal necrosis

Occassional
– Untimely input credit (C) – Sugarcane mosaic virus – Maize streak virus
– Power outage (C) – Maize chlorotic virus – Ratoon stunting disease
– Maize dwarf – Theft (M,L)
mosaic virus – Price shock
– Drought (S) – Conflict
Remote
– Windstorms (M, W, S, B) – Anthrax (L)

– Thrips (tea)
Key: Maize, Wheat, Beans, Cowpeas, Irish Potato, Tea, Coffee, Sugarcane, Cut flowers, Bananas, Livestock
Source: World Bank.
nisms typically trigger compensation in the case of

RISK MANAGEMENT a risk-generated loss (e.g., purchasing insurance,
MEASURES reinsurance, financial hedging tools).
No single measure can manage all risks. Effective risk 3. Risk coping (ex post): Actions that will help
management requires a combination of coordinated affected populations overcome crises and build
measures. Some are designed to remove underlying con- their resilience to future shocks. Such interven-
straints. Others are designed to directly address a risk or tions usually take the form of compensation
a subset of risks. Available resources are often a limiting (cash or in-kind), social protection programs, and
factor, but integrated risk management strategies are often livelihood recovery programs (e.g., government
more effective than one-off or stand-alone programs. Risk assistance to farmers, debt restructuring, contin-
management measures can be classified into the following gent risk financing).
three categories:
1. Risk mitigation (ex ante): Actions designed Table 6.1 highlights potential interventions that could
to reduce the likelihood of risk or to reduce the help address the key risks identified by this assessment,
severity of losses (e.g., water harvesting and irriga- classified by the three types of risk management meas-
tion infrastructure, crop diversification, extension). ures described above. The list is by no means exhaustive,
2. Risk transfer (ex ante): Actions that will trans- but it is meant to illustrate the type of interventions that,
fer the risk to a willing third party. These mecha- based on the analysis, have good potential to improve

TABLE 6.1. INDICATIVE RISK MANAGEMENT MEASURES
Mitigation Transfer Coping
Drought Promote diversification toward more Macro-level crop Facilitate temporary migration or permanent
(crops) drought-tolerant crops (e.g., cassava) insurance relocation
Establish community-level food banks Farm-level crop Develop cash-for-work and food-for-
insurance work programs to support soil and water
conservation
Promote adoption of soil and water Expand social safety net programs (e.g., food-
conservation/natural resource management for-work)
techniques
Improve availability of existing drought- Use weather index for triggering early
resistant seed varieties warning and response
Strengthen input delivery systems and Use a decentralized disaster contingent fund
ensure quality inputs for rapid response to local emergencies
Improve farming techniques (e.g., Promote household/community savings and
conservation agriculture, intercropping) informal credit
Promote water harvesting and irrigation
Strengthen early warning systems and
response
Drought Develop effective and environmentally Sovereign Buy fodder, crop residues; supplementary
(livestock) appropriate systems of water harvesting, agriculture risk feed, emergency stores
management, and irrigation financing
Link early warning system to rapid reaction Index-based Ensure emergency water supply; use fuel
and relevant response (e.g., tracking strategy livestock subsidies and repair boreholes
and LEGS1 programming) insurance
Improve access to emergency grazing Build water pans (via safety net programs)
Invest in climate proof livestock sector Support exceptional livestock movements
infrastructure
Promote haymaking and storage, reserve Support conditional parks grazing/wildlife/
grazing/standing pastures; irrigated fodder livestock coexistence
(and food) production incorporating
stakeholder and pastoralist ownership and
interests
Enforce tougher screening at international Develop multiyear food and cash mechanisms
borders based on early warning and food security data
Develop plan for long-term subsector support Support livestock destocking–commercial and
and new livelihood growth program GoK purchases for a fixed price, with animals
slaughtered and meat distributed among most
needy households/communities
Support conditional parks grazing/wildlife Reconstruct destroyed assets with improved,
livestock coexistence climate-resilient standards
Promote herd diversification
(continued)

TABLE 6.1. INDICATIVE RISK MANAGEMENT MEASURES (continued)
Mitigation Transfer Coping
Pests and Where relevant, adapt policy to arid lands and Warehouse Conduct strategic livestock vaccination in
diseases ensure appropriate, affordable service delivery receipts systems response to outbreaks
(crops and
livestock)
Establish private, quality, comprehensive Strengthen quarantine measures/mechanisms
animal health care facilities
Intensify and strength disease surveillance Implement proven and approved veterinary
response interventions (LEGS, OIE)
Improve animal health through increased Promote farmer group-operated storage
uptake of vaccination campaigns centers
Train (farmers and local officers) on IPM,
fumigation, and pre- and postharvest
management
Apply/enforce moisture and grain quality
standards
Promote use of hermetically sealed storage
sacks and silos
Price Improve producers’ access to market Commodity Improve efficiency of emergency grain reserve
volatility information hedging
(crops and
livestock)
Raise the levels of strategic food reserves to Warehouse Promote market subsidies and commercial
stabilize maize prices receipt systems destocking
Develop and expand livestock markets Use transport subsidies
Improve market infrastructure Destock livestock
Develop policy on livestock marketing to fit
global standards and local conditions (farm to
fork)
Train and build capacity of producers and
officers towards market orientation and
opportunity
Conduct international and regional planning
Exploit value chain niche markets and develop
cross-sector linkages
Link different sectors of the value chain
Cattle Promote good governance and implement Restock livestock
rustling existing laws
Address conflict: reinforce customary Support social safety nets
mechanisms and create joint customary/
formal mechanisms
Support community peacekeeping programs
Source: Authors’ notes.
1
The Livestock Emergency Guidelines and Standards (LEGS) provide a set of international guidelines and standards for the design, implementation, and assessment
of livestock interventions to assist people affected by humanitarian crises. Established in 2005, the LEGS Project is overseen by a Steering Group of individuals from
the EU, FAO, the International Committee of the Red Cross, the Feinstein International Center at Tufts University, the World Society for the Protection of Animals,
and Vetwork UK.

agricultural risk management in Kenya. Unlike drought In 2009, Kenya pioneered a drought management contin-
or livestock diseases, which have a generally negative gency planning system, managed by the newly established
impact on almost everyone, price risk may affect certain NDMA, which consists of (1) an early warning system;
stakeholder groups differently. For example, the release (2) a rapid reaction capability, including contingency
of maize stocks by NCPB can be considered both a risk funding for urgent mitigation activities such as destock-
to traders with large inventories and a windfall for rural ing and emergency food aid; and (3) a recovery program
and urban households. It is also worth noting that many to assist those most affected to get back on their feet and
of these interventions, if implemented concurrently, can strengthen their resilience to future droughts. The NDMA
help address multiple risks at once, with positive spillover provides a platform for long-term planning and action,
effects across the sector. as well as a mechanism for coordination across GoK
agencies and with other stakeholders. For financing early
mitigation efforts to reduce the time between warning of
ILLUSTRATIVE RISK drought stress and responses at district and national levels,
MANAGEMENT MEASURES the GoK and its donor partners established a multidonor
The following section provides a brief description of basket fund, the National Drought and Disaster Contin-
broad areas of intervention (encompassing some of the gency Fund (NDDCF).
measures highlighted above) with scope to address the
most important risks impacting Kenya’s agriculture sector. The economic case for early reaction to impending
drought in the ASALs is strong. In a modeling exercise,
STRENGTHENING RESPONSE AND various mitigation activities were costed against the ben-
RESILIENCE TO DROUGHT efits that would accrue (Venton et al. 2012). The results
Drought sets off a vicious cycle of adverse socioeco- were encouraging. For example, the benefit-cost ratio for
nomic impacts. It begins with crop-yield failure, unem- destocking was 390:1; that is, every U.S. dollar spent on
ployment, income disruptions, depletion of assets, commercial destocking generated $390 in benefits (meas-
worsening of living conditions, and poor nutrition. It ured in food aid and animal losses avoided). The ratio for
often ends in decreased coping capacity among affected building resilience—via ensuring that pastoralists have
communities, and thus, increased vulnerability to sub- access to functioning livestock markets, veterinary care,
sequent shocks. Early warning and early response cou- and adequate feed and water—was also positive, although
pled with effective coordination and coherence in both to a much lesser extent (2.9:1). According to the study, a
short- and long-term efforts to safeguard livelihoods full package of livestock interventions that build resilience
and promote future resilience are critical to effective would result in $5.5 of benefits for every $1 spent. Addi-
drought risk management. tional benefits such as improved functioning of livestock
markets and more effective animal health would likely
Many drought mitigation activities have been tried over accrue in nondrought times as well.
the years in northern Kenya, beginning in the colonial era
when government-sponsored destocking of vulnerable Scope now exists to review Kenya’s recent experience in
stock took place on a large scale through the activities of responding to drought emergencies under the NDMA
the Livestock Marketing Division (LMD). More recently, regime. The objective of such a review would be to identify
this approach was superseded by more limited, ad hoc existing operational, institutional, and financial barriers
responses designed to mitigate the impact of drought via that impede more rapid and effective response measures.
the provision of ex post emergency assistance to affected It could also identify potential synergies with other pro-
communities. Such measures are often poorly coordinated grams and avenues for more effective data monitoring,
at the local or national level. Until recently, few measures information sharing, and coordination of interventions in
have been taken to improve pastoral communities’ self- the future and innovative ex ante approaches to building
sufficiency or to assist development of community-man- resilience. Efforts to strengthen existing drought manage-
aged drought mitigation activities. ment systems might include development and adoption of

a common approach to using triggers to better ensure that In northern Kenya, customary systems of land use persist.
decision makers know exactly what they ought to be doing These can be quite simple, with a minimum of rules to
as the situation deteriorates and the consequences if they be followed, but all customary grazing systems have rules
fail to act. Ideally these triggers should be developed with about who may graze what area of land in what season,
input from all stakeholders, be context specific to account and under what conditions. The most sophisticated of
for different livelihood zones, and avoid facilitating inter- these sets of rules is probably that of the Boran pastoral-
ventions that undermine communities’ existing and future ists in northcentral Kenya; it includes detailed rules for
capacity to cope. pasture use in different seasons, the preservation of emer-
gency drought pastures, and access to wells and water use,
Future initiatives might also expand on existing Food-for- as well as rules for dealing with strangers and passers-by.
Assets (FFA) and Cash-for-Assets (CFA) projects, currently The Boran have been able to preserve the key features
led by the WFP, designed to promote food security and of this system of natural resource management, but the
reduce levels of vulnerability. These activities range from system is under constant pressure from the rest of Kenya,
rainwater harvesting for human and livestock use and soil where customary resource management systems of that
and water conservation, to rehabilitation of degraded complexity are rare and not well understood, and where
agricultural land and production of drought-tolerant land privatization is extensive. Similarly, large water and
crops. Through new or rehabilitated assets and develop- oil resources have recently been found in pastoral areas;
ment of relevant skills, communities can improve their it is vital that exploitation of these resources takes into
resilience to weather-related shocks and invest in a more account local needs and that stakeholder participation is
sustainable future. included in future planning.
IMPROVING LIVESTOCK MOBILITY Finally, as cross-border movement and trade are sig-
Drought’s effects are exacerbated by a number of fea- nificant and vital to Kenya’s livestock sector, regional
tures associated with the local livelihood system and approaches and mechanisms for policy implementation
national policy. Land tenure is among the most impor- must more effectively ensure that livestock owners have
tant of these. Policy on land ownership and tenure, and ready access to cross-border markets and services. The
user rights, must take note of the likely continued need for proposed Regional Pastoral Livelihoods Resilience Pro-
mobility in ASAL livestock systems. The erosion, and in ject (RPLRP) is a step in the right direction. In Kenya,
places destruction, of traditional grazing systems creates the project is being implemented in 14 ASAL counties
new risks where there were fewer before. In the Maasai (Lamu, Isiolo, Laikipia, Mandera, Marsabit, West Pokot,
areas of southern Kenya, subdivision of previously com- Turkana, Tana River, Garissa, Baringo, Samburu, Narok,
munally held land, and in many places sale of land, has Samburu, and Wajir), all of which have transboundary
had a powerful influence on the way livestock are grazed. stock routes linking pastoral communities on either side
Some Maasai have been able to preserve seasonal pastures of the border with Somalia, Ethiopia, and the Sudan.
which they use in rotation, including dry season reserves. Meetings of officials from both sides and technical peo-
In areas where fencing of subdivisions of former Maasai ple, together with pastoralist leaders, can help stakehold-
grazing land has gone quite far, a new risk has been cre- ers avoid problems and conflicts.
ated: because of the fences, herders are unable to move
their animals away at the first sign of pasture or water STRENGTHENING PASTORALISTS’
shortage. Movement away from a risk is a key response in LIVELIHOODS
drought; pastoralists move to their own reserve pastures, Livelihood development initiatives in the ASALs should
to the land of kin and allies, and to government land. The be based on proven, evidence-based research carried
places pastoralists move to in times of crisis need to be out over a reasonable time frame (three to five years) to
better protected and managed. Stronger recognition of ensure sustainability and economic viability. Too often,
the importance of mobility is a key part of any pastoral academic or modern innovations for temperate or tropi-
drought management and development policy. cal animal production are imposed on extensive mobile

systems, and most tend to fail as they are not suitable. produces quality products for value-added market oppor-
Governments, organizations, and farmers have all suf- tunities. Innovative ways to protect the TOT of livestock
fered losses due to failure to test new approaches in and staple foods and services in the pastoralist system must
the pastoral sector context. To ensure successful policy be investigated. Price variations regularly reach 100 per-
making and wide uptake at the grassroots level, it is rec- cent even in normal years due to seasonality and market
ommended that customary law be considered in policy supply and demand. TOT can drop by 300 percent or
mechanisms. Full stakeholder participation and owner- more in shock years, which regularly occur every three to
ship are encouraged in the formulation and implementa- four years, and preventative measures are needed to avoid
tion of policies and strategies. price collapse and food insecurity. Market information
systems (MISs) for enhanced price transparency could be
developed. Effective actions include collective cereal or
IMPROVING ANIMAL HEALTH AND commodity storage, credit systems, insurance, and early
VETERINARY SERVICES marketing. Years of underinvestment and neglect mean
Private sector provision of affordable, quality veterinary
that much more needs to be done to establish or improve
services is economically infeasible, especially in exten-
the infrastructure essential to markets, especially road,
sive production systems in remote arid regions, due to a
transport, and communication systems. This includes
number of well-documented constraints. Efforts must be
ensuring adequate resources and qualified personnel are
made, supported by reforms where necessary, to ensure
availed to the livestock marketing and animal production
nascent private sector initiatives are allowed to prosper.
departments of MoALF and innovative but proven qual-
To succeed, any approach will have to include the decen-
ity services are provided.
tralized Community-Based Animal Health Worker sys-
tem. Efforts should be explored to support and strengthen
the system with the use of vouchers or via partnerships IMPROVING SECURITY IN ASALS
with the private sector in emergency relief. The veterinary Laws and legal frameworks already exist for dealing with
department must be assured of adequate resources and theft and cattle rustling. Due to corruption and ineffi-
qualified personnel so that quality and timely services are ciency, however, a sense of impunity and a breakdown
available when needed. In remote areas, it is often difficult of law and order prevail in Kenya. Reported incidences
for a young graduate veterinarian or livestock professional in which members of the security services and armed
to operate at the level at which he or she has been trained, forces have been involved in livestock theft and reports
as local resources and basic services are limited. This is of political protection facilitating large-scale or “commer-
a source of demotivation and leads to lack of field pres- cial” cattle raiding during past elections do little to con-
ence, access to farmers, and service provision. As needs vince livestock owners that a solution or response to theft
are great and government services are likely to remain is imminent. The solution lies in good governance and
overstretched and underfunded in many remote counties, ensuring that police and security forces are adequately
the GoK should establish an enabling environment to equipped and motivated to fulfill their duties and pro-
incorporate proven and recognized animal health service vide services as intended. As the majority of government
providers (e.g., SIDAI franchisees) to provide services at services are city or town based, it is recommended that
scale even during emergencies. community involvement in ensuring security and peace-
building is incorporated and expanded in more remote
or rural areas where feasible. Kenya’s northern borders
IMPROVING LIVESTOCK MARKET with other ASAL countries are far too long to be effec-
INFRASTRUCTURE tively policed by the army or the police force. They can
Markets are increasingly important for livestock enter- be watched, however, by pastoralists living in border areas
prises. An efficient pastoral livestock marketing system and legitimately occupying territory that they know better
needs to be developed, where stock can be finished on than anyone else. In the process of rehabilitating pastoral
feedlots or ranches and dividends paid to producers to livelihoods, it would be easy to design this role, for which
encourage a more commercial market orientation that pastoralists could be compensated.

STRENGTHENING EXTENSION SERVICES production risks drives their ex ante decisions and dis-
Reliable farmer access to extension services is an integral courages them from investing in fertilizers, improved
part of any agricultural risk management strategy. It can seeds, and better crop husbandry practices. Irrigation
also produce positive spillovers. Adoption of improved infrastructure build-out is costly and not suitable for many
practices (e.g., conservation agriculture, IPM), drought- areas where long-term access to ground-water is uncer-
and disease-resistant seeds, and other innovations can at tain. Alternatively, water harvesting and improved soil
once help farmers lower their risk exposure and their costs management offer a sustainable and cost-effective way to
while enhancing their productivity. Figures vary on the favor investments in nutrients and other yield-enhancing
proportion of Kenyan farmers accessing public extension practices. Water harvesting alone—via water pans, roof
services. The World Bank estimates that 50 percent of and rock catchment systems, subsurface dams, and other
farmers now have access, but anecdotal evidence collected means—has been reported to provide between a 1.5- to
during this study suggests that in some districts, at least, 3-fold increase in yields in Kenya, as elsewhere in Burkina
access is much lower. The government currently allocates Faso and Tanzania (Hatibu et al. 2006; Kayombo, Hat-
roughly 25 percent of its agriculture budget to extension ibu, and Mahoo 2004; Ngigi et al. 2005; Rockstrom, Bar-
services—a relatively high amount compared to other ron, and Fox 2002).
African countries. Yet service delivery is still recognized as
inadequate. The increased reliance on private extension The Kenya Rainwater Association (KRA) has been work-
providers means that extension services are often skewed ing to promote rainwater harvesting and complemen-
toward well-endowed regions, bypassing poorer farm- tary technologies since the mid-1990s. These and other
ers, and can lack sufficient state funding to ensure their initiatives such as MoALF’s Water Harvesting for Food
effectiveness in meeting farmers’ needs. Paying for ser- Security Programme (WHFSP) should be supported and
vices is beyond the reach of most poor farmers. Moving expanded to assist more farmers in mitigating risks asso-
to “demand-driven” services requires further state invest- ciated with erratic rainfall and drought. Low-head drip
ment in building farmer’s organizations’ capacity, because irrigation offers farmers a flexible system that is relatively
the poorest farmers are not currently organized and are easy and affordable to install, operate, and maintain. This
poorly positioned to demand and/or pay for services. and other systems can be scaled up in size to accommo-
date larger dimensions and enable farmers to gradually
Strong scope exists within the framework of Kenya’s increase their crop production over time. Through the
National Agricultural Sector Extension Policy (NASEP) to Kenya Horticulture Competitiveness Project, KRA with
explore broader use of new information and communica- its partners has trained 2,200 growers in eastern Kenya
tion technologies (ICTs) to disseminate targeted information in water-harvesting techniques and has established 60
and knowledge more cost-effectively and provide needed water ponds that are proving reliable water sources for
training to more farmers. The ICTs can amplify the efforts more than 4,750 farmers in the region. Likewise, better
of extension and advisory services providers in disseminat- soil management through increased use of organic mat-
ing agricultural information to remote locations and diverse ter, composting, demi-lunes, zero tilling, and other conser-
populations. They can greatly facilitate the delivery of near vation agriculture techniques can help to increase water
real-time information on weather, market prices, disease retention capacity while restoring soil nutrients and soil
and pest outbreaks, and the availability of services, allowing health. These and similar initiatives should be promoted
farmers to make more informed decisions on what to grow more widely via public and private extension to benefit
and how best to grow it. In doing so, they can also help build more farmers.
farmers’ capacity to manage production and other risks.
STRENGTHEN SEED DISTRIBUTION
IMPROVED WATER AND SOIL SYSTEMS
MANAGEMENT Farmer adoption of improved drought- and other stress-
In Kenya, where access to irrigation remains limited, tolerant maize varieties can go a long way toward reduc-
farmers are at the mercy of rainfall. Perception of high ing weather-induced production risks, but farmers should

also be encouraged to invest in other yield-enhancing consider them too risky. This study notes how agricultural
inputs and practices. More broadly, these practices could insurance, when combined with other, more traditional
help improve Kenya’s food security situation by lowering risk mitigation and coping measures, can greatly reduce
the country’s year-on-year maize production variabil- the immediate losses and long-term development setbacks
ity. Broad farmer adoption depends on access, however. farmers absorb from agricultural risks. Insurance can also
Maize seed research in Kenya as elsewhere in the region help to lower borrowing costs, thereby enhancing farm-
is ongoing, and new drought-resistant varieties are find- ers’ access to needed credit.
ing their way into the market. The Drought Tolerant
Maize for Africa (DTMA) Project, funded by the Bill and The GoK is committed to expanding farmers’ access to
Melinda Gates Foundation, promotes the development agricultural insurance. Recognizing the importance of
and dissemination of drought-tolerant, high-yielding, Kenya’s livestock sector, MTPII (2013–17) calls specifi-
locally adapted maize varieties in Kenya and a dozen cally for establishment of a National Livestock Insurance
other countries in Africa. During 2007–12, participants Scheme. This initiative will build on the experience of
marketed or otherwise made available 60 drought-tol- two innovative insurance programs already underway in
erant hybrids and 57 open pollinated varieties to small- Kenya. Kilimo Salama is an insurance scheme that pro-
holder farmers. Such efforts should be further supported tects farmers’ investments in seeds, fertilizers, and other
and scaled up. inputs via payouts when experts monitoring local weather
conditions and rainfall determine that crops have become
The International Wheat and Maize Improvement unviable. In northern Kenya, the ILRI-led Index Based
Center reports that the drought-tolerant maize germ- Livestock Insurance (IBLI) uses satellite images of veg-
plasm developed for Africa in collaboration with IITA etation to determine when scarce pasture is likely to lead
allows a yield increase of 40 percent over commercial to animal mortality, triggering automatic payments to
varieties, under severe stress, and an equal yield level insured livestock keepers.
under optimal cropping conditions (Cenacchi and Koo
2011). In addition to drought tolerance, the new varieties The GoK has already expressed interest in setting up a
and hybrids also possess desirable traits such as resistance public-private partnership (PPP) platform to scale up pro-
to major diseases (e.g., maize streak virus, Turcicum leaf grams for livestock insurance that will enhance the resil-
blight, and gray leaf spot) and superior milling or cook- ience and reduce the vulnerability of small-scale pastoral
ing quality. Despite these advances, adoption rates among farmers. With support from the World Bank’s Agriculture
Kenya’s maize farmers remain low due to limited avail- Insurance Development Program (AIDP), IRLI, and oth-
ability and farmer awareness. To have an impact, seeds ers, the State Department of Livestock (SDL) is explor-
must be available at the right time, at the right place, and ing scope for the development of a macro-level livestock
at the right price. Ways to incentivize new investments Normalized Difference Vegetation Index (NDVI) insur-
in seed duplication, marketing, and training services, ance program in the ASALs. Under the proposed scheme,
coupled with initiatives to stimulate farmer demand, are targeted beneficiaries would receive fully supported insur-
needed to strengthen seed supply networks and improve ance, purchased on their behalf by the GoK, while wealth-
farmers’ access. ier households would be able to purchase the product on
a voluntary basis. It is envisaged that the macro livestock
LIVESTOCK INDEX INSURANCE insurance product will aim at offering asset protection
Today, few Kenyan farmers have access to risk transfer (i.e., covering the impact of pasture degradation on risk
instruments to help them mitigate their exposure to price, reduction expenditures such as relocation, destocking, or
weather, and other risks. Kenya’s rural credit and agricul- purchase of fodder) versus asset replacement (i.e., cover-
tural insurance markets are as yet underdeveloped. Aside ing livestock mortality). Payouts would be made at the
from the adverse effects of weather shocks on farmers’ onset of severe drought, thus reducing livestock mortality
livelihoods, farmers’ high risk exposure limits their access and asset depletion. Appendix E provides more details on
to credit as banks and other formal lending institutions the proposed initiative.

REVIEW OF COFFEE SECTOR Decision filters can be used as an alternative approach to
Kenya’s coffee sector is in decline, in large part due evaluate and prioritize among a lengthy list of potential inter-
to aging trees, falling productivity, a weak cooperative ventions. This can aid decision makers in making rational
sector, and competition from other economic activities resource allocation decisions in lieu of a detailed cost-benefit
offering higher returns. The decline is also due to inef- analysis. The following decision filters were developed and
ficient regulation and a marketing structure that handi- used by the World Bank team. The study team applied these
caps smallholder farmers’ and cooperatives’ ability to filters to facilitate a rapid assessment to obtain a first order of
cope within the context of low returns and high risks. approximation, based on its assessment of the situation on
Under Kenya’s marketing system, price risk and mar- the ground. The team presented preliminary results and the
keting costs are transferred back upstream to farmers filtering approach to MoALF officials at a roundtable in Nai-
in the form of consistently low farm-gate prices. The robi in early February 2014. During the exchange, the team
result is growing divestment in coffee production among solicited feedback that it subsequently incorporated into the
Kenya’s farmers, who have scant capacity or resources final results. Appendix 8 presents the results of the filtering
to combat plant diseases, price shocks, and other risks. process for proposed mitigation, transfer, and coping strate-
A review of the coffee sector’s structure could aid iden- gies. Whatever the filtering process and criteria adopted to
tification of opportunities for streamlining how coffee evaluate decision options, it is important to ensure their clar-
is bought and sold and for opening up Kenya’s coffee ity and consistency.
markets to more competition and increased efficiencies.
A more open marketing system holds scope to rebal- Table 6.2 describes the filtering criteria the assessment
ance the way in which value and costs are shared across team used to rate each intervention.
the coffee supply chain. It could also create a more
enabling environment that incentivizes farmers—via
higher farm-gate prices and better access to information
and needed technologies—to invest in risk reduction TABLE 6.2. FILTERING CRITERIA FOR RISK
and productivity-enhancing measures. This includes MANAGEMENT SOLUTIONS IN
replanting old trees with new varieties resistant to CBD
KENYA
and CLR via improvements in extension and seed and
input distribution services (see above). Any initiatives Criteria Description
to address these challenges would undoubtedly require Applicability to Public sector: Is the proposed
strong political will on the part of the Kenyan govern- current agricultural solution in line with current/
policy/programming existing agricultural policy/
ment and would greatly benefit from broad engagement
or business objectives programs/priorities, and so on?
with the cooperative and private sectors. Private sector: Is the proposed
solution in line with current/existing
business objectives, and so on?
PRIORITIZATION OF RISK Feasibility of Is the proposed solution “easy” to
MANAGEMENT MEASURES implementation implement in the short to medium
Most of the measures outlined above are complemen- term?
tary in nature and have strong potential to contribute to Affordability of Is the proposed solution affordable
implementation to put into action/implement?
improved risk management in the short, medium, and
Scalability of Is the proposed solution easy to
long term. However, decision makers are compelled
implementation scale up/make available to an
to find the quickest, cheapest, and most effective mea- increased number of beneficiaries?
sures among myriad policy options. Ideally, a detailed, Long-term Is the proposed solution sustainable
objective, and exhaustive cost-benefit analysis would sustainability in the long term?
help in selecting the most appropriate intervention
Source: World Bank.
options, but such an analysis is often costly and time Note: The team answered the question posed in each criteria’s description
consuming. using a scale of 1–5 (1, No; 2, Marginally; 3, Somewhat; 4, Yes; 5, Absolutely).

Management of agricultural risks is nothing new to Kenya, » To curb soil erosion, increase soil fertility
and the GoK has a long track record of investment in risk mit- and water retention, and enhance the produc-
igation, transfer, and coping mechanisms. Moving forward, tivity31 and biodiversity of smallholder systems
Kenya’s Vision 2030 recognizes the need to strengthen exist- across Kenya, promoting broader awareness
ing risk management systems, and the GoK has launched a and adoption (via farmer field schools and other
range of new initiatives to confront the most severe threats participatory extension approaches) of conserva-
facing the country. In 2011, it established the Drought Risk tion agriculture practices such as zero tillage,
Management Authority to better coordinate preparedness mulching, composting and use of organic fertil-
and speed up response measures. It also launched the Disas- izers, crop diversification and rotation, intercrop-
ter Risk Reduction Program, the National Climate Change ping, and IPM
Action Plan, and the Hunger Safety Net Program.30 These » To strengthen certified seed production and
and other initiatives by the GoK and its development part- distribution systems, build their credibility, and
ners are already helping to safeguard livelihoods, promote stimulate demand for improved seeds and fertiliz-
adaptation, and strengthen resilience against impacts from ers by smallholders, investing in capacity building
natural disasters and a changing climate. And yet as high- and training to strengthen monitoring and
lighted by this report, agricultural supply chains in Kenya enforcement of quality standards and reduce
remain highly vulnerable to myriad risks that disrupt the incidences of counterfeiting, adulteration,
country’s economic growth, cripple poverty reduction and other abuses that dampen farmer demand and
efforts, and undermine food security. The current study productivity
highlights the need for a more targeted and systematic » To reverse degradation of water, soil, and
approach to agricultural risk management in Kenya. vegetation cover, safeguard the long-term
viability of Kenya’s arid and semiarid range-
Based on an analysis of key agricultural risks, an evalua- land ecosystems, and ensure access to suf-
tion of levels of vulnerability among various stakeholders, ficient grazing land, promoting (1) use of contour
and the filtering of potential risk management measures, erosion and fire barriers, cisterns for storing rain-
this assessment makes the following recommendations fall and runoff water, controlled/rotational graz-
for the GoK’s consideration. The proposed focus areas ing, grazing banks, homestead enclosures, residue/
of intervention encompass a broad range of interrelated, forage conservation, and other sustainable
mutually supportive investments, that together—aligned land management practices; and (2) innova-
with Livelihoods Enhancement goals within Kenya’s Vision tive rangeland comanagement (state and local
2030—hold strong scope to strengthen the resilience of community) approaches that leverage customary
vulnerable farming and pastoralist communities and the forms of collective action and economic instru-
agricultural systems on which their livelihoods and the ments to reward sound pasture management
country’s food security depend: » To strengthen drought resilience among vul-
» To better optimize rainfall and soil moisture nerable pastoral communities in target ASAL
in marginalized production areas, promoting com- counties and better safeguard the viability of ani-
munity-driven investments in improved mal herds during shortages, supporting the devel-
soil and water management measures such opment of feed/fodder production and
as terracing, water harvesting pans, roof and rock storage systems, animal health, market
catchment systems, subsurface dams, and micro- and weather information, and other critical
irrigation systems services
30
The Hunger Safety Net Program is one of five cash transfer programs under
the National Safety Nets Programme (NSNP). HSNP is implemented by 31
Conservation agriculture allows yields comparable with modern intensive
NDMA and targets the poorest and most vulnerable households in four ASAL agriculture but in a sustainable way and with lower production costs (time, labor,
counties (i.e., Turkana, Mandera, Wajir, and Marsabit). inputs). Yields tend to increase over the years with yield variations decreasing.

» To mitigate growing pressures on rangelands in the
ASALs and increasing vulnerability of smaller live-
CONCLUSION
stock (<50 animals) owners in particular, putting in This Phase I assessment analyzes agricultural risks and
place supportive policies and livelihood devel- impacts incurred in Kenya over the period 1980–2012. By
opment programs (targeted credit schemes, documenting and analyzing how Kenya’s agriculture sector
skills training, public sector investments in labor has been affected in the past by risk events, the study gen-
intensive infrastructure projects, cash for work) to erates insight into which sources of risk are most likely to
facilitate their engagement in alternative liveli- impact agricultural production systems and livelihoods in the
hood and income-generating activities future. It prioritizes the most important agricultural risks for
» To strengthen fiscal management and the country based on objective criteria. It offers a framework
reduce the GoK’s budget volatility (and diver- for development of a more comprehensive, integrated risk
sion of development resources caused by ex post management strategy to strengthen existing risk mitigation,
crisis response), better safeguard rural liveli- transfer, and coping measures in Kenya. Finally, it provides a
hoods, and increase resilience, deepening filtering mechanism to select an appropriate set of best pos-
investments in agricultural insurance mechanisms sible interventions for agricultural risk management.
and markets (in partnership with the private sec-
Many of the proposed intervention areas are covered to
tor), with an initial focus on asset protection
varying degrees under the GoK’s Vision 2030 and ASDS
(via early warning triggers and expedited payouts)
development frameworks. Some may currently be in the
among vulnerable pastoralist communities
process of implementation by either government agen-
and area yield index insurance for smallholder
cies or their development partners. Moving forward,
maize farmers
stronger emphasis should be placed on scaling up these
» To facilitate improved, evidence-based deci-
interventions to reach a larger number of beneficiaries.
sion making among farmers, pastoralists, and
A greater emphasis should also be placed on ensuring a
policy makers and to mitigate price volatility,
more coordinated, integrated approach to risk manage-
investing in integrated data and information
ment in Kenya to ensure more effective and meaningful
systems build-out for more robust, cost-
risk reduction and resilience building across the sector.
effective, and reliable collection, manage-
ment, and dissemination (via surveying, GIS, It is hoped that this assessment’s findings and conclusions will
ICT, SMS) of crop production, agro-weather, contribute to the existing knowledge base regarding Kenya’s
market price (input/output) information, and agricultural risk landscape. To be certain, Kenya’s agricul-
agricultural research and advice ture sector faces myriad risks. By prioritizing them, the study
» To further objectives of the devolution pro- can help the GoK focus attention and resources on a smaller
cess, promoting institutional and organizational set of key risks that have the most adverse impacts on pro-
capacity building and technical training at duction yields, incomes, and livelihoods. It is also hoped that
county and national levels to promote standard- the study will inform a dialogue between the GoK, the World
ized collection and management of agri- Bank, and the GoK’s other development partners that will
cultural data (in line with recently developed lead to concrete interventions toward improved agricultural
national guidelines) risk management and livelihood resilience in Kenya.

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APPENDIX A
CLIMATE CHANGE IMPACTS ON
AGRICULTURE IN KENYA
INTRODUCTION
Like those of many of the countries in Sub-Saharan Africa, Kenya’s agriculture sector
is highly vulnerable to the effects of climate change. The country’s climate is already
characterized by high temperatures and low but highly variable annual precipitation,
factors that negatively affect the productivity of heat-sensitive crops. Climate change
is a long-term trend that will exacerbate natural resource constraints on agricultural
production in Kenya by making weather patterns more variable and by increasing
the frequency and intensity of severe weather events. As a result, climate change will
directly affect the incidence of some agricultural risk events and indirectly affect the
incidence of others. Understanding how climate change trends affect farm productiv-
ity is essential to formulating an agricultural risk management plan that maximizes the
use of scarce resources. Regardless of the future extent of global warming, identifying
and implementing risk management strategies that address agricultural risks, includ-
ing those exacerbated by climate change, can reduce volatility and improve sustain-
ability in the sector.
Due to the importance of the agriculture sector in Kenya’s national economy, cli-
mate change impacts on crop yields and land suitability will have far-reaching effects.
Agriculture accounts for 24 percent of national GDP and 65 percent of all export
earnings (GoK 2012a). Agriculture also plays a key role in poverty reduction and
food security through its contribution to livelihood security. The sector employs more
than 75 percent of the workforce and generates most of the country’s food require-
ments. Within the sector, smallholder farms account for 85 percent of employment
and 75 percent of total agricultural output (GoK 2012a). In the Mapping the Impacts
of Climate Change index under “Agricultural Productivity Loss,” the Center for Global
Development ranks Kenya 13 out of 233 countries globally for “direct risks” due to
“extreme weather” and 71 out of 233 countries for “overall vulnerability” to climate
change when adjusted for coping ability.

Climate change impacts agriculture through temperature minant of land suitability for production, will decrease
increases, changes in precipitation, and increases in the in many places. Some regions (the mixed rainfed tem-
frequency and severity of extreme weather events. There perate and tropical highlands) are projected to experi-
are direct impacts, such as changes in land suitability for ence an increase in crop yield. Other regions, especially
crops due to temperature changes, and indirect impacts, the ASALs, are projected to experience a significant
such as changes in food prices that ultimately affect food decline in crop yields and livestock productivity as water
demand and well-being. Models predicting the effects of resources become increasingly scarce. These patterns
climate change on agriculture vary across regions and are largely driven by regional variability in future pre-
crop/livestock sectors, and depend heavily on the under- cipitation and geographic exposure to extreme events,
lying assumptions. The projected effects of changes in particularly drought frequency.
precipitation are particularly difficult to reconcile, given
the vast regional variation in annual rainfall and limited Key uncertainties surrounding the impact of climate
district-level data. Rising temperatures are also expected change on agriculture include
to increase evapotranspiration, offsetting productivity » Extent of crop yield increases due to CO2 fertiliza-
gains. Although a large degree of uncertainty exists about tion
the magnitude of the impacts, this brief synthesizes exist- » Effect of ozone damage on crop yields (Ainsworth
ing crop forecasts, highlights areas of consensus between and McGrath 2010; Iglesias et al. 2009)
different studies, and identifies areas of disagreement. » Extent of crop damage caused by the evolution of
pests and diseases
PRINCIPAL FINDINGS
Several structural vulnerabilities in the sector are likely to CLIMATE CHANGE AND
exacerbate the impact of rising temperatures and changes SEVERE WEATHER EVENTS
in precipitation on crop and livestock production, includ- The frequency of severe weather events has already
ing dependence on rainfed agriculture; overcultivation and increased, and the intensity of weather events like
land degradation; lack of technologies to improve produc- drought, extreme heat, and floods is likely to increase
tion; and high levels of poverty among smallholder farmers. as temperatures rise (IPCC 2011). In Kenya, recurrent
drought in particular has profound effects on the agri-
The studies cited in this report conclude that temperature
culture sector. Intense droughts occurred in 1991–92,
increases will have a significant impact on water avail-
1995–96, 1998–2000, 2004–05, and 2008–11, result-
ability and soil quality, and thus will likely exacerbate
ing in severe crop losses, livestock deaths, spikes in food
drought conditions. Precipitation is projected to increase
insecurity, and population displacement. For instance,
between 0.2 and 0.4 percent per year in Kenya, but the
the government of Kenya (GoK) imported 2.6 million
direction and magnitude of change vary considerably
bags of maize worth K Sh 6.7 billion between 2008 and
across regions, and warming-induced increases in evapo-
2009. In the future, any increase in the frequency and/
ration rates are likely to offset the benefits of precipitation
or severity of drought conditions will have profound far-
increases in some regions. In addition, an increase in the
reaching effects on national food security and the viabil-
intensity of high rainfall events is expected in Kenya and is
ity of livelihood activities, especially for people living in
already underway: the number of extremely wet seasons
the ASALs.
is increasing to roughly 1 in 5, compared to 1 in 20 in the
late twentieth century (Christensen et al. 2007; Herrero/
IFPRI 2010). In the arid and semiarid lands (ASALs) of
METHODOLOGIES
Kenya, fragile soils are particularly vulnerable to flash- Data analyses from the literature reviewed in this
flooding and erosion during high rainfall events. brief draw from downscaled general circulation mod-
els (GCMs). The studies use multiple GCMs, simulate
Temperature and precipitation changes suggest that between one and four greenhouse gas emissions scenar-
the length of the growing period (LGP), a key deter- ios, and incorporate crop prediction models. As a result,

conclusions vary depending on the underlying model commodities. Crop yield projections for maize vary
assumptions: widely, depending on the region and the specified climate
» Based on these models, the IFPRI study uses the scenario. Although the magnitude of the change in
Decision Support System for Agrotechnology yields varies under each scenario, most models predict
Transfer (DSSAT) crop modeling software projec- declining yields in large parts of the ASALs and in the
tions for crop yields, comparing yield projections lowlands, and yield increases in the temperate central
for 2050 against real 2000 yields. and western highlands.
» Thorton et al. (2006) combine projected climate
change scenarios with vulnerability data to iden- According to the IFPRI analysis, four out of six climate
tify high-risk regions and population groups. The scenarios predict an overall decrease in rainfed maize
analysis uses LGP as a proxy for agricultural yields. Kenyan maize yields drop by 51–55 percent under
impacts. Predictions on changes in LGP vary con- the NCAR 369, CSIRO 369, and CSIRO 532 A2 sce-
siderably across Kenya depending on the underly- narios, compared to 2050 yields with historic climate lev-
ing assumptions. Across a range of future climate els. In contrast, yields increase by 25 percent under the
scenarios, however, many parts of Kenya are pre- Hadley 369 A2a scenario.
dicted to experience a decrease in LGP, and some
a severe decrease. This suggests a need to focus
on the development and dissemination of short- Thorton et al. (2009) predict a maize production decline
season cultivars, as well as water management of 8.4 percent and 9.8 percent in the semiarid areas and
strategies. humid/subhumid areas, respectively. The same study
» Thorton et al. (2009) examines the spatial varia- predicts a 46.5 percent increase in maize production in
tion of climate change impacts on crop yields, the mixed rainfed systems in the temperate areas. Under
using GCMs, crop models CERES-Maize and this scenario, however, total production would still decline
BEANGRO, and soil and crop management given the relatively small contribution of the temperate
data. areas to total production.
» A study undertaken by the Adaptation to Climate
Change and Insurance (ACCI) Programme evalu- Beans: Beans are an important food security crop in
ates the current and future suitability of the Lake Kenya, accounting for 17.9 percent of the total harvested
Victoria region (Busia and Homa Bay counties) for area. Beans are grown in every region in the country,
major agricultural crops using a range of GCMs, with about 75 percent of total production concentrated
soil data, and crop models. in three regions: Rift Valley, Nyanza, and Easter Province
» The Information Center for Tropical Agricul- (Katungi et al. 2009). Like maize, crop yield projections
ture (CIAT) analyzes future climatic suitability for beans vary depending on the region and the specified
for tea-growing areas in Kenya. The study com- climate scenario. Although the magnitude of the change
bines current climate data with future climate in yields varies under each scenario, most models project
change predictions from 19 GCMs for 2030 and yield declines.
2050 (emissions scenario SRES-A2). These data
are then used in MAXENT, a crop prediction Thorton et al. (2011) use an ensemble mean of three
model. emissions scenarios and 14 GCMs to run crop simula-
tions for conditions in a 4°C warmer world by 2090. For
East Africa, a mean yield loss of 47 percent is projected
CROP PREDICTIONS for beans. However, the disaggregated analysis predicts
Maize: Maize is the principal food crop in Kenya. substantial yield increases for beans at higher eleva-
Grown in every region, maize accounts for 37.5 per- tions in Kenya’s western highlands, up to average tem-
cent of the total harvested area, and contributes 17.9 peratures of about 20–22°C, after which yields decline
percent to the total value of production of agricultural (DFID 2012).

FIGURE A.1. CURRENT SUITABILITY OF TEA PRODUCTION AREAS
Lobell et al. (2008) use 20 GCMs to run crop simulations tion. Recent declines in tea production have already been
in East Africa. At least 75 percent of the projections are directly linked to erratic rainfall patterns and drought
associated with Phaseolus bean yield losses. (Herrero et al. 2010).
Tea: Tea is the most important agricultural export crop According to a suitability analysis conducted by the CIAT,
in Kenya, accounting for 33 percent of total agricultural some areas will become unsuitable for tea (Nandi, Keri-
exports and 3.5 percent of GDP32. Although few rigorous cho, and Gucha), while some will remain suitable for tea
estimates of future changes in yield exist for the tea sec- (Bomet, Kisii, Nyamira) if farmers adapt agricultural
tor, several authors have analyzed the impact of climate management practices to new climate conditions. Suit-
change on future land suitability for tea production. Most ability for tea increases in some current growing areas
studies find declines in suitability for land currently under (Meru, Embu, Kirinyaga, Nyeri, Murangá, Kiambu), and
tea production and increases in suitability for new areas at new areas will become suitable for tea (especially higher
higher altitudes. As a result of higher temperatures, all of altitudes around Mount Kenya). However, many of the
the models predict major shifts in the geographic distribu- potential new areas for tea are located in protected areas
tion of tea production. and forested lands (figures A.1 to A.3).
According to maps provided by UNEP-GRID, a 2°C Preliminary results from an FAO study indicate that climate
increase in temperature would render much of the cur- change is expected to increase suitability of tea-growing
rent tea-growing area in Kenya unsuitable for produc- areas by 8 percent by 2025, and then negatively impact
suitability as mean air temperatures rise above the 23.5°C
32
Data available at http://faostat.org. threshold, dropping by 22.5 percent by 2075 (FAO 2013).

FIGURE A.2. FUTURE SUITABILITY OF TEA PRODUCTION AREAS
FIGURE A.3. SUITABILITY CHANGE FOR TEA PRODUCTION IN 2050
Source: CIAT 2011.

hide vast regional differences in crop performance under
CROPS RESISTANT TO climate change. Many of the existing studies on crop
CLIMATE CHANGE yield and land suitability under future climate scenarios
A regional study undertaken by the ACCI Programme (Lue- lack detailed, regional impact assessments. Regional and
deling 2011) analyzes the future suitability of the Lake Vic- district-level crop analyses could provide a better under-
toria region for major agricultural crops. It should be noted standing of the aggregate impact of climate change on
that the results of the study are limited to Busia and Homa agricultural systems and food security in Kenya.
Bay counties. Using a range of GCMs, soil data, and crop
prediction models, the study found that sorghum, ground- The studies all agree that rising temperatures are likely
nuts, and fava beans were moderately resistant to the effects to exacerbate drought conditions in some regions, espe-
of climate change. The ACCI study also identified cassava, cially the ASALs, due to highly variable rainfall patterns,
sweet potato, mango, banana, and pineapple as crops with changes in seasonal water availability, and poor soil qual-
the potential to thrive under warmer temperatures. ity. Even with increases in annual precipitation, extreme
heat and drought conditions will negatively affect yields in
parts of the current production area for crops like maize
CONCLUSIONS and tea. Thus, as climate variability and uncertainty
As discussed previously, the projected impacts of climate increase, there is an urgent need to identify and imple-
change on agriculture vary considerably depending on ment risk management solutions to mitigate agricultural
the climatic model specified, and national-level estimates losses and increase stakeholders’ coping capacity.

APPENDIX B
STAKEHOLDER RISK PROFILES
CASE STUDY 1: PHILIP MUTUA MBAI—

SMALLHOLDER MAIZE FARMER,
MACHAKOS COUNTY
INTRODUCTION
Philip Mbai is a 68-year-old small-scale farmer in Machakos County. He bought his
23-acre farm in 1978 while still working as an administrative clerk with Gailey and
Roberts, Ltd, an engineering firm, and settled down to full-time farming in 2000. He
practices mixed farming and grows maize and beans on 8 and 4 acres, respectively, and
commits another 2 acres each to green grams and cowpea and approximately another
2 acres to fruits (mangoes, bananas, and oranges) and vegetables (kales, onions, toma-
toes, and cabbages). The remainder of his farm is used for growing pasture to feed his
four exotic cattle (Guernsey) and another six indigenous cattle. A small portion is also
dedicated to bee farming, with an apiary of about 50 beehives featuring traditional log
hives, Kenya top bar hives, and modern Langstroth bee hives.
OVERVIEW OF KEY FARM ACTIVITIES

Except for the production of vegetables, Mr. Mbai’s crop production is purely rainfed,
with low attainable yields of below 0.5 ton/acre (about 10 90-kg bags per acre) largely
attributed to low and unreliable rainfall. Located about 1,600 meters above sea level,
his farm receives less than 800 mm of rainfall annually on average, although in the last
10 years, average annual rainfall has been below 600 mm and is falling. The farm serves
as a meteorological monitoring site for rainfall data and has a fitted rain gauge that Mr.
Mbai monitors on a daily basis. In a good year, Mr. Mbai makes about K Sh 500/bag,
which translates to K Sh 40,000 a year. On average, Mr. Mbai derives 30 percent of his
income from maize farming and the rest from the other farm activities.

IMPACT OF RISK EVENTS a drought once every two years. For instance in the last 10
Mr. Mbai encounters the following major agricultural years we had droughts in 2001, 2003, 2005, 2008, 2011
risks, in decreasing order of importance: drought, pests and now in 2014” (Philip Mbai). The severity of these
and diseases, postharvest losses, and volatile market droughts has also increased, with yield losses estimated to
prices that are exacerbated by lack of markets. “Overall, have increased from about 20–50 percent to 100 percent
dependence on rainfed agriculture is the most important in the recent past.
risk in this area” (Philip Mbai). The drought problem in
Machakos has been worsened by changes in the onset RISK PRIORITIZATION
and cessation of rains. Ten years ago the onset of rains In decreasing order of importance, the key risks encoun-
was predictable, today rains typically begin late and cease tered in Machakos include
early, which has shortened the length of the growing sea- » Drought
son. The frequency and severity of droughts in the recent » Pests and diseases
past has also increased. “While 30 years ago we experi- » Postharvest losses
enced a drought once every 5 years, today we experience » Price volatility
RISK FREQUENCY AND SEVERITY

Rank Risk Type Affected Crop Frequency Impact
1. Drought Maize Once every two years Yield losses of 30–50%
2. Pests and diseases Maize Occasionally Yield losses of up to 10%
3. Postharvest losses Maize Each season Yield losses of up to 30%
4. Price volatility Maize Occasionally Income losses of up to 20%
RISK MITIGATION STRATEGIES ing, planting Napier grass along terraces, enterprise diversi-
To mitigate against drought, Mr. Mbai undertakes a num- fication, and supplementary irrigation when possible). Even
ber of agronomic practices. These include growing drought- though relief food supplies are the most widely used drought-
resistant maize varieties, planting early, and using soil and coping strategy in the area, Mr. Mbai does not rely on relief
water conservation practices (terracing, road water harvest- food, but instead sells livestock in times of severe drought.
CURRENT RISK MANAGEMENT PRACTICES

Risk Type Risk Mitigation Risk Transfer Coping Strategy Effectiveness
Drought Early planting None Sale of livestock Not effective
Drought-tolerant
varieties
Soil and water
conservation
Enterprise diversification
Supplementary irrigation
Pests and diseases Use of chemicals None Use of indigenous Somewhat effective
knowledge in disease
and pest control
Postharvest losses Adoption of improved None Use of indigenous Somewhat effective
storage technologies knowledge
Price volatility Storage None Sourcing alternative Somewhat effective
markets

around seed and fertilizer, respectively. In addition, agro-
CASE STUDY 2: inputs are regulated by the Poisons and Pharmacy Board
MRS. MARABA—AGRO-INPUT along with the Kenya Veterinary Board. Operations in
DEALER, ELDORET UASIN the agro-input outlet typically peak around January to
GISHU COUNTY April when farmers in the region are planting maize and
again in June when they are top dressing. In the other
months, animal feed and day-old chicks are the main
INTRODUCTION inputs sold.
Mrs. Maraba operates an agro-input shop in Eldoret
Town of Uasin Gishu County that is located in Kenya’s
IMPACT OF RISK EVENTS
main maize-growing zone. The agro-input shop doubles
Agro-input dealers face the following main risks, in
both as a wholesale and a retail outlet selling to other
declining order of importance: government policy
agro-input dealers and farmers. She has been in this busi-
(NCPB subsidies), erratic seed quality, adulteration of
ness for the last 15 years and stocks farm inputs such as
fertilizers, foreign exchange, theft, and health risks.
seeds, fertilizers, chemicals, livestock feed, and veterinary
Government policy in the recent past has negatively
vaccines. Her major customers are small-scale farmers
affected input dealers since the subsidized inputs pres-
who are unable to access subsidized fertilizers from the
ent an unfair competition to other industry players.
state-run National Cereals and Produce Board (NCPB)
This makes it difficult for input dealers to plan their
that in the last three years has been stocking subsidized
stocking rates because they fear the price undercutting
fertilizers. Mrs. Maraba sources her inputs from seed
associated with subsidized fertilizers. When an input
companies such as Kenya Seed Co. Ltd, FreshCo Kenya
dealer stocks fertilizers before the government’s pro-
Ltd, East Africa Seed Co. Ltd, and Western Seed Com-
nouncement of subsidized fertilizer prices, he or she is
pany Ltd. Unlike those of other seed companies, prices
saddled with stocks that cannot be sold after the arrival
for seeds from Kenya Seed Company, which accounts
of government-subsidized fertilizers. Besides subsidized
for more than 80 percent of the market share, are regu-
fertilizers, another key risk is associated with stocking of
lated, with the company controlling prices at both the
poor-quality seeds, especially from Kenya Seed Co. In
wholesale and retail levels. Fertilizer supplies are sourced
the last two years, farmers have complained about the
from the seven major fertilizer importers in Kenya: Yala,
poor germination rate of maize seed from Kenya Seed
MEA East Africa Ltd, Export Trading Company, Africa
Co. Given that agro-input dealers source substantial
Ventures, Devji Megji Brothers, Sharkaji (SKL), and
amounts of seed from there, this issue presents a real
Eldoret Packers.
business constraint.
OVERVIEW OF KEY ACTIVITIES RISK PRIORITIZATION

Mrs. Maraba employs about five permanent staff and
In decreasing order of importance, the key risks faced by
another five casual workers on a daily basis. The major
agro-input dealers include
activity in the outlet revolves around stock management
» Unpredictable government policy
even though her staff also provide extension advice to
» Erratic seed quality
farmers seeking to purchase inputs. Agro-input dealers
» Adulterated fertilizers
in Kenya are regulated by both the Kenya Plant Health
» Insecurity
Inspectorate Service (KEPHIS) and the Kenya Bureau
» Foreign exchange fluctuations
of Standards (KEBS), whose regulatory services revolve
» Health risks

1. Unpredictable Maize Occasionally 20–30% reduction in profits
government policy
2. Erratic seed quality Maize Occasionally 10% loss in market share
3. Adulterated Maize Occasionally 5% loss in market share
fertilizers
4. Insecurity Maize Occasionally Scares away workers
5. Foreign exchange Maize Occasionally
6. Health risks Maize Occasionally Scares away workers
RISK MITIGATION STRATEGIES

This agro-input dealer’s key risk mitigation strategy is the procurement of insurance against theft, fire, and burglary.

Unpredictable Stocking operations None Not effective
government policy
Erratic seed quality Forward contracts with suppliers None
Adulterated Forward contracts with suppliers None
fertilizers
Insecurity Adherence to safety standards Insurance Safety at the workplace Somewhat effective
Foreign exchange Hedging Forward contracts
Health risks Medical insurance Insurance Observance of work safety
K Sh 2,500/bag, Mr. Olekoonyo earned K Sh 3.6 million

CASE STUDY 3: LESHAMON from his wheat enterprise last year.
OLEKOONYO—WHEAT
FARMER, NAROK
OVERVIEW OF KEY FARM ACTIVITIES
The key farm activities on Mr. Olekoonyo’s farm revolve
INTRODUCTION around wheat production. The period February to April
Mr. Olekoonyo is a wheat farmer in lower Narok, where is used in land preparation, where the main challenge is
he grows wheat on 400 acres. He also chairs the Narok the high cost of tractor hire, largely driven by the high
Wheat Farmers’ Association, a farmers’ organization cost of diesel. After planting, the farm engages in top
formed to lobby wheat millers to provide better prices dressing, chemical control of pests and diseases, and
to wheat farmers. Through the farmers’ association and later on harvesting, which occurs between June and July.
in collaboration with the Cereal Growers Association The area has two rainy seasons and therefore produces
(CGA), wheat farmers in Kenya were able to sign an two wheat crops each year. The major challenge in har-
agreement in 2008 that ensures that wheat millers pur- vesting is achieving a moisture content of 13 percent,
chase all wheat produced in Kenya before resorting to because most of the wheat is harvested at high moisture
imports. On average, Mr. Olekoonyo attains a yield of 15 content, and the cost of drying at the National Cereals
bags/acre, equivalent to 1.35 MT/acre. At the current and Produce Board (NCPB) is K Sh 26 per percentage
price of K Sh 3,100/bag and given a production cost of drop in moisture.

IMPACT OF RISK EVENTS The quality of both seed and fertilizer inputs has become
Risks are inherent in wheat production right from plant- extremely erratic. In the recent past, wheat seed quality has
ing through harvesting. Wheat farmers in Narok face the deteriorated to the extent that large-scale wheat farmers have
following major risks, in decreasing order of importance: begun to import seed from as far as South Africa. Moreo-
drought, pests and diseases, erratic input quality, volatile ver, wheat marketing has become a challenge because mill-
prices, hailstorms, and high wind speed, which leads to log- ers, which are local producers’ only buyers, have not signed
ging. Droughts in particular have become a major challenge a new agreement since 2008; that agreement is outdated and
in lower Narok, with their frequency estimated at once every does not reflect the current cost of production. Given this
two years. In upper Narok however, the major risk to wheat state of affairs, wheat millers dictate the prices paid to farm-
production is hailstorms, which hit once every three to four ers, and prices have been changing from one year to the next.
years, although their incidence has increased in the recent Farmers would prefer to negotiate prices each year.
past. On average, drought reduces wheat yield from 15 bags/
acre to 10 bags/acre, a loss of 30 percent; at times drought RISK PRIORITIZATION
leads to a total loss. Given the current prices of maize and In decreasing order of importance, the key risks faced by
wheat and the ongoing threat of drought and hailstorm, wheat farmers in Narok include the following.
some farmers are shifting to maize production. “The only
reason why I continue to produce wheat is because it is fully
mechanized unlike maize” (Mr. Olekoonyo).

1. Drought Wheat Once every two years Yield losses of up to 30%
2. Pests and diseases Wheat Occasionally Yield losses of up to 10%
3. Erratic input quality Wheat Each season Yield losses of up to 30%
4. Price volatility Wheat Occasionally Income losses of up to 20%
5. Hailstorms Wheat Occasionally
6. High wind speed Wheat Occasionally
RISK MITIGATION STRATEGIES vast majority of the indigenous Maasai wheat farmers in
A few large-scale farmers in Narok have begun to purchase Narok have not adopted any drought mitigation strategies.
crop insurance from Cooperative Insurance Company Mr. Olekoonyo says he would rather let God be his insur-
(CIC). Typically CIC insures the cost of wheat produc- ance. Mr. Olekoonyo’s failure to insure his crop is due to the
tion, estimated at K Sh 24,000/acre or an equivalent yield experiences of some wheat farmers who had to go to court
of 8 bags/acre. Insurance premiums are currently set at to claim compensation from the insurance companies.
about 6 percent, or an equivalent of K Sh 1,450/acre. A

Drought Drought-tolerant varieties Insurance Not effective
Soil and water conservation
Pests and diseases Use of chemicals Insurance Use of indigenous knowledge Somewhat effective
in disease and pest control
Erratic input quality Imports None Use of own seed Somewhat effective
Price volatility Storage None Sourcing alternative markets Somewhat effective
Hailstorms Insurance Planting edge trees
Wind Insurance Planting wind breaks

grain moisture content, protein, bushel weight, levels of
CASE STUDY 4: MARCEL aflatoxin, and all grain parameters in grain grading.
WAMBUA—HEAD OF
FINANCE, LESIOLO GRAIN The company’s average annual grain handling turnover
HANDLERS LIMITED is 110,000 MT. Its drying charges are K Sh 28 per per-
centage moisture drop per bag. In collaboration with the
Eastern Africa Grain Council (EAGC) and other part-
INTRODUCTION ners, LGHL participates in EAGC’s regulated Warehouse
Marcel Wambua is the Head of Finance at Lesiolo Receipting System. This allows clients to deposit at least
Grain Handlers Limited (LGHL), a medium-sized grain 10 tons of maize or wheat into certified silos during the
handler located in Lanet of Nakuru County. Established harvest season when prices are low. The client is given
in 2003 through funding from the International Finance a warehouse receipt that can be used in participating
Cooperation (IFC) and the East Africa Development banks for financing. The banks provide financing up to
Bank (EADB), LGHL’s existence stems from the belief 60–80 percent of the crop value, allowing clients to hold
that agriculture in Kenya demands both modern and their crop until the prices are better. For example, farmers
efficient grain handling services. LGHL’s management who deposited grain in January 2012 when the price was
believes that these demands are best served by private K Sh 2,200 per 90-kg bag sold their maize in May 2012 at
sector entities like itself. LGHL provides a compre- K Sh 3,400. They paid a total of 120 per bag for the five
hensive solution for grain storage and related services. months of storage, earning a K Sh 1,080/bag margin. In
The core services offered include grain drying, clean- addition, LGHL buys wheat, maize, sorghum, beans, and
ing, fumigation, storage, and seed dressing, among a soybeans from farmers and sells them to local processing
host of other services aimed at allowing customers the companies (e.g., flour millers, feed manufacturing plants,
opportunity to realize the highest prices for their grain. breakfast cereal manufacturing firms, and humanitar-
LGHL currently handles maize, wheat, and barley. Its ian relief organizations). The company also buys grain
main customers are large-scale wheat farmers, primar- on behalf of millers, which reduces their logistical costs
ily located in Nakuru, Narok, Moiben, Timau, and and frees their finances for production until they actu-
Naivasha. The company was contracted by East Africa ally require the crop. LGHL offers competitive rates to
Breweries Limited (EABL) to handle barley grown in farmers for their crops to enable them to have access
the region under contract. to markets.
OVERVIEW OF KEY ACTIVITIES IMPACT OF RISK EVENTS

The major risks faced by the company emanate from gov-
LGHL has an installed storage capacity of over 30,000
ernment policy, especially the operations of the National
MT in a configuration of 16 silos and 8 wet bins. The
Cereals and Produce Board (NCPB). The board’s buying
equipment includes two Cimbria 54-ton dryers, two
operations negatively impact LGHL’s buying operations
Cimbria Delta 120 cleaners, a belt conveyor system, and
since the board’s prices are always fixed at rates higher
a 12-ton mini-dryer to cater to smaller customers. The
than the market. The other risks faced emanate from farm
company has the capability to handle bulk or bagged
operations and include high moisture content in grains,
grain and has a bagging unit to accommodate customers
pests and diseases, and drought.
with specific needs. LGHL also has 2 mobile dryers with
a 12-ton holding capacity that are used to dry farmers’
grains at farm gate. These mobile dryers can be operated RISK PRIORITIZATION
by tractor or using 3-phase electricity. In addition, the In decreasing order of importance, LGHL faces the fol-
company runs a laboratory where it is able to determine lowing key risks:

1. Government interference Wheat, maize All the time Profit losses of about 10%
2. High moisture content Wheat Occasionally Reduces farmer incomes
3. Pests and diseases Wheat Each season Reduces farmer yields
4. Price volatility Wheat Occasionally Income losses of up to 10%
5. Operational hazards Wheat Occasionally Reduces staff productivity
(fire, injury, etc.)
RISK MITIGATION STRATEGIES

LGHL is fully insured against fire, theft, and burglary and
maintains work insurance for all of its staff. In addition, it
employs the following tools and mechanisms:

Government policy Forward contracts Stock management Not effective
High moisture content
Pest and diseases Fumigation Insurance Fumigation Somewhat effective
Price volatility Storage None Stock management Somewhat effective
Operational hazards Maintenance of work Insurance
safety standards
the company has offered a Multi-peril Crop Insurance

CASE STUDY 5: MICHAEL (MPCI) that covers risks associated with drought, excess
WAIGWA—AGRICULTURAL rain, flooding, hail, and frost; over the period 2011–2012,
UNDERWRITER, it paid out claims amounting to K Sh 130 million to wheat
COOPERATIVE INSURANCE farmers in Narok alone. CIC’s loss ratio (claims divided by
premiums) in 2011 was 170 percent, indicating that the
COMPANY company incurred a loss from its MCPI business.
INTRODUCTION OVERVIEW OF KEY ACTIVITIES

Michael Waigwa is an agricultural underwriter at the The MCPI is reinsured by Swiss Reinsurance, which cov-
Cooperative Insurance Company (CIC), a general insur- ers 80 percent of the risks while CIC covers the rest. Pre-
ance company that provides crop insurance to wheat miums are shared in the same ratio as claims. Insurance
farmers in Kenya. Mr. Waigwa has been in the crop coverage is provided subject to crop inspections conducted
insurance business for the last four years. On average, the periodically by CIC. Three inspections are undertaken
farms covered are in the range of 10–7,000 acres. In col- during the crop life: at germination, mid-season, and
laboration with Swiss Reinsurance, an international rein- shortly preharvest. CIC provides farmers with a 65 per-
surance company, CIC offers crop insurance to wheat, cent yield guarantee based on their long-term average
barley, maize, and barley farmers. For the last four years, yield; for example, assuming a long-term average yield

of 12 bags/acre, the company would insure the equiva- insured; the majority want to be compensated for produc-
lent of roughly 8 bags/acre. The figure of 8 bags/acre tion revenues rather than for the cost of production, even
is estimated to be the cost of production for wheat. CIC though their insurance covers the latter. For example, CIC
compensation enables farmers to recoup production costs currently faces a court case in which a farmer is claim-
in case of a shock. For instance, if a farmer has bought ing K Sh 600,000 even though his yields were above the
insurance and his yield falls to 6 bags/acre, CIC compen- 65 percent trigger threshold. Other challenges faced by
sates the farmer for the difference of 2 bags/acre. The insurance companies include diversion of product, fraud,
premiums charged are 6 percent of the sum insured, or and diversion of inputs in cases of contract farming, such
an equivalent of K Sh 1,450/acre assuming a production as for barley.
cost of K Sh 24,000/acre for wheat.
RISK PRIORITIZATION
IMPACT OF RISK EVENTS CIC insures the following major risks:
Crop insurance in Kenya is a new phenomenon that many » Drought
farmers have not yet taken advantage of, but Mr. Waigwa » Excessive rain/flooding and logging
feels adequate capacity exists to undertake cereals insur- » Hailstorms
ance in Kenya from CIC and other insurance companies,
such as Union and Provisional (UAP). Crop insurance in These risks reduce the insurance company’s profits by an
Kenya is a risky business, as evidenced by CIC’s loss ratio estimated 30 percent. On the other hand, CIC faces the
in 2011. One key impediment to successful crop insurance following key risks:
in Kenya is the lack of legislation that makes crop insur- » Fraud
ance mandatory, as it is for motor vehicle insurance. In » Crop/input diversion
addition, farmers have difficulties understanding the sum » Excessive litigation by clients

1. Fraud Wheat Occasionally Profit losses of about 10%
2. Crop/input diversion Wheat/barley Occasionally Reduces profits
3. Excessive litigation Wheat Occasionally Reduces profits
RISK MITIGATION STRATEGIES Kenya Reinsurance in this scheme and to share the pre-
CIC’s key risk mitigation strategy is reinsurance with miums and claims across CIC, Kenya Reinsurance, Africa
Swiss Reinsurance. There is a new initiative to include Reinsurance, and Swiss Reinsurance.

Fraud Reinsurance
Crop diversion Reinsurance
Excessive litigation Hire lawyers

Mr. Murunya’s main source of income is sale of live ani-
CASE STUDY 6: WILSON mals. On average, a mature zebu steer raises K Sh 30,000
MURUNYA—LIVESTOCK during the normal season sales. Mr. Murunya acknowl-
HERDER, KAJIADO COUNTY edges that in a year he can sell up to 20 steers depend-
ing on financial need. The money acquired is used to buy
food for his family, drugs for the livestock, supplementary
INTRODUCTION
feed, and sometimes children’s school fees.
Wilson Murunya is a 30-year-old herder from Kajiado
County with a primary-level education. Like many other
young Maasai men, Mr. Murunya dropped out of school to RISK EVENTS
start herding. He started keeping livestock at the age of 20 According to Mr. Murunya, drought is the main risk
after inheriting 10 cows from his father. Mr. Murunya comes affecting herders in the region. During such times, herd-
from a polygamous family; his father owns approximately ers are forced to migrate and look for pasture in other
200 acres of land that are shared among the extended fam- areas, sometimes trekking hundreds of kilometers. “In
ily. He concentrates purely on herding, whereby he keeps 2007, there was an extensive drought and we had to move
indigenous zebu and a few crosses with the dual-purpose our livestock in search of pasture. I moved up to Magadi
sahiwal. He states that the dual-purpose sahiwal is good for where I lost over 70 cows while looking for pasture. Since
milk production and faster growth. However, the crosses then, I have not been able to restock again and my cur-
are less resistant to diseases and succumb more quickly to rent herd size is 50. During the same year, we went to herd
drought than the zebus. Nevertheless, Mr. Murunya asserts our animals in the Tsavo National parks where some of
that the sahiwal is more in demand despite these limita- our colleagues were killed by the lions. Drought not only
tions. He managed to raise his herd to 120 heads of cattle, brings us livestock deaths but also loss of human life, and
but currently has only 50 heads, all of which are indigenous our families back home also suffers” (Mr. Murunya).
zebu, having lost almost 70 animals to drought. He also
keeps a few goats, which are mainly raised by women and
children. His herd includes 12 mature females, which when RISK PRIORITIZATION
milked produce up to 1 liter per cow per day. According to » Drought
the Maasai tradition, milk belongs to women and is either » Animal diseases
consumed at home or sold in the market. » Unsustainable milk supply
RISK EVENT MATRIX

Rank Risk Type Affected Livestock Frequency Impact
1. Drought Cattle, sheep, goats Every 10 years for a major drought, and Loss of pasture
every 5 years for a minor drought Lack of water
Low prices of livestock (50% drop)
Livestock deaths. Mr. Murunya lost
70 out of 120 heads of cattle in 2007
2. Animal Cattle, sheep, goats Most of the diseases are endemic and Livestock deaths
diseases occur every time there is a trigger. Most High costs of drugs
common are FMD, mastitis, lumpy skin
disease, anthrax. Occurrence of FMD
and anthrax was very probable, while
the other were rare.
3. Unsustainable Milk market prices When there is drought, the supply of Lack of stable markets
milk supply milk is unstable; hence, most traders exit Low prices of milk
the market.

RISK MANAGEMENT STRATEGIES
Mr. Murunya relies on the following risk management strategies:

Drought Reserve grazing areas None Buying hay Not effective since hay has to
during the dry season Outmigration be gotten from very far and is
Increase the number expensive
and sizes of water pans Migration leads to more disease
Standing hay spread and animal deaths
Animal diseases Vaccination campaigns None Regular Effective during the rainy season,
Cattle dips vaccination but during the dry spells, animals
are too weak to be sprayed
Unsustainable Upgrading zebus with None Sourcing milk Not effective
milk supply sahiwal to increase from other villages
milk supply to the to sustain the
market market demand
3. Low financial stability

CASE STUDY 7: YUSUF 4. Insecurity and theft
KHALIF ABDI—LIVESTOCK 5. Clan conflicts over pasture
HERDER, GARISSA COUNTY 6. Social pressure
7. Price risks
8. Floods along the rivers
INTRODUCTION
Yusuf Khalif is a 65-year-old full-time herder from Modo- Mr. Khalif notes that “In 2010–2011, a major drought
gashe in Garissa County. Although Mr. Khalif did not occurred, I moved with my 700 goats from Modogashe
enumerate the number of animals he currently owns, he to Fafi, but I only returned back with 14 goats , all the
said he keeps cattle, goats, and sometimes camels. His sole others died on the road due to lack of pasture.” Before
source of income is sale of live animals. He occasionally outmigrating, Mr. Khalif wanted to sell his animals in a
selects livestock from his herd and brings them to Garissa move to destock, but the community did not allow this;
market for sale. community members believe that if an animal is meant
to die, it will, so herders are pressured not to sell. A major
RISK PRIORITIZATION drought occurred in 1987, and another in 2000. These
According to Mr. Khalif, the major types of risks are droughts resulted in extensive livestock deaths; the com-
1. Recurrent drought munity was afraid to speak about them in case “It heard
2. Animal diseases and came back.”

RISK EVENT MATRIX
1. Recurrent Cattle, goats, sheep, camel Every 10 years for a major Varied. In 2010–2011, Mr. Khalif
drought drought, and every 2–3 years for lost 700 goats, or over 90% of his
a minor drought stock
2. Animal Cattle, goats, sheep, camel Occasionally In 2007, farmers lost over 50% of
diseases their stock from Rift Valley fever
3. Low financial Herders lack financial Often Herders’ inability to destock their
stability capacity due to lack of animals when there is an early
Sharia-compliant credit warning
institutions
4. Insecurity Cattle, goats, sheep, camel Occasionally
5. Clan conflicts Grazing pastures Occasionally during drought Sometimes loss of lives as clans
over pasture fight for grazing pasture
Social Affects efforts to destock Often Farmers end up losing their
pressure animals as the community puts
pressure not to destock
Price risks Market prices for cattle, Often The price of animals drops up to
goats, sheep, camel 50% during a drought

Mr. Khalif employs the following tools and mechanisms to manage risks:

Risk
Risk Type Risk Mitigation Transfer Coping Strategy Effectiveness
Recurrent Establish irrigation None Livestock migration Not effective: Leads to
drought schemes for pasture. A case Supplementary feeds like hay livestock deaths and disease
in comparison is the Ewaso spread
Nyiro irrigation scheme
Animal Regular vaccination and None Vaccination Effective
diseases vaccination campaigns
Low financial Provision of Sharia- None Herders sell their animals and keep the Sometimes the herders lose the
stability compliant credit schemes money in the house money due to lack of secure
measures
Insecurity Community surveillance None Community surveillance Relatively effective but the
problems are always recurrent
Clan conflicts Community peacekeeping None Clan elders solve major conflicts with Relatively effective but the
over pasture programs the clan problems are always recurrent
Social Community peacekeeping None Herder currently succumbs to social
pressure programs pressure. For example, when Mr. Khalif
was denied selling his goats due to
drought, he decided to migrate and look
for pasture, and in the process, some
goats died
Price risks Proper structures for None Herders are price takers, and have low
livestock trade bargaining power

credit and artificial insemination services at a subsidized
CASE STUDY 8: FRESHA rate. The Fresha processing plant has a good risk man-
DAIRY—MILK PROCESSORS, agement strategy; while it supports its farmers to produce
GITHUNGURI COUNTY more milk, the factory ensures that all milk is purchased
from the farmers. The cooperative also ensures a steady
and rising price per liter paid to its members. Fresha man-
INTRODUCTION
agement stated their farmers are not adversely impacted
Fresha Dairy, opened in 2004 with a capacity of 50,000
by risk because
liters per day, now has a capacity of 200,000 liters per
» When there is less fodder, the cooperative buys hay
day. The dairy cooperative owns the whole value chain,
in bulk on behalf of its farmers, which they can
including production, processing, and distribution. The
pay for with the milk they supply.
dairy processing plant is owned by the Githunguri Dairy
» Fresha supplies other feed on credit, ensuring a
Society, which started in 1961 with a membership of 34
steady supply of milk from farmers.
and has grown to the current 23,120 members, of which
» In addition to processing milk, the cooperative has
19,000 are active dairy farmers. It has 75 milk collection
embarked on value addition and making long-life
centers, at which 200,000–218,000 liters of milk are col-
milk, which allow staggering of sales and hence
lected from members daily. Fresha has 65 stores where
more steady prices.
members can access animal feed and other inputs on
RISK EVENT MATRIX

1. Low-quality milk/spoilage Occasionally Low volume of milk processed
2. Drop in milk supply Occasional Low operational capacity
3. Oversupply of milk during the rainy season Milk spoilage

Fresha Dairy employs the following risk management strategies:

Risk
Risk Type Risk Mitigation Transfer Coping Strategy Effectiveness
Low-quality milk/ Milk quality checks at the farm level None Training farmers Effective
spoilage Training farmers on clean milk production on clean milk
Quality checks at the laboratory production
Drop in milk supply Support to farmers to maintain regular supply of milk; None
for example, buying hay and concentrates for farmers,
which the farmers pay for after delivering the milk
Oversupply of milk Milk value addition—process yoghurt and other dairy None
during the rainy products
season Establishment of a long-life milk processing plant to
handle excess milk

APPENDIX C
STAKEHOLDER VULNERABILITY ANALYSIS
Agricultural shocks are one important factor driving chronic poverty and food insecu-
rity in Kenya. Shocks impact household well=being in a variety of ways, by limiting
food availability, weakening food access, and negatively affecting monetary well-being
through the depletion of productive assets. Chronically vulnerable groups with high
exposure to hazards experience a disproportionately large impact from adverse events
and lack coping mechanisms available to other groups. In this context, vulnerability
is a useful lens through which to examine agricultural shocks because it allows policy
makers to determine which groups are most affected and to target risk management
solutions accordingly.
GENERAL TRENDS IN VULNERABILITY

» Levels of human development, poverty, and food insecurity vary widely between
regions.
» Exposure to extreme weather events is highly correlated with being poor and
being food insecure.
» About 70 percent of Kenya’s poor live in the central and western regions, in
areas that have medium to high potential for agriculture (IFAD 2013).
» Poverty and food insecurity are acute in Kenya’s arid and semiarid lands
(ASALs), which have been severely affected by recurrent droughts.
VULNERABILITY, LIVELIHOODS,
AND AGROCLIMATIC CONDITIONS
Especially in rural areas, patterns of livelihood activities are strongly influenced by
prevailing agroclimatic conditions, which determine planting calendars, soil quality,
and crop suitability. Approximately 80 percent of Kenya’s land area lies in the ASALs,
home to more than 30 percent of the population and 75 percent of the country’s live-
stock (GoK 2011). ASAL districts have the highest incidence of poverty in the country,
contain 18 of Kenya’s 20 poorest constituencies, and are predominantly inhabited
by pastoralists and agro-pastoralists (GoK 2009). Pastoralist districts consistently rank
below the national average in terms of Human Development Index (HDI) scores

FIGURE C.1. HUMAN DEVELOPMENT INDEX (figure C.1), as well as on other indicators of well-being.
SCORES, BY PROVINCE These communities are among the most chronically food
0.7 insecure in the country and typically experience the high-
0.6
est rates of severe malnutrition. Several underlying factors
0.5
increase pastoral communities’ vulnerability, including
land fragmentation, population growth, low literacy and
0.4
education provision, poor infrastructure, and weak market
0.3
integration. These chronic weaknesses undermine pasto-
0.2
ralist groups’ capacity to respond to shocks, like drought
0.1
and livestock disease outbreaks, which occur frequently in
0 the ASALs. In turn, the increasing frequency and simul-
bi
st
rn
n
tra
taneous occurrence of multiple shocks erode the effective-

lle
er
nz
er
io
ro
oa
te
at
en
st
st
va
ya
ai
es
C
N
Ea
Ea
N
N
W
ift
ness of traditional coping mechanisms, creating a vicious

R
th
or
N
cycle of crisis and underdevelopment.

Source: Kenya National Human Development Report 2009.
FIGURE C.2. MAP OF KENYA’S LIVELIHOOD ZONES

KE01 - Northwestern Pastoral Zone
KE02 - Turkwell Riverine Zone
KE03 - Northwestern Agropastoral Zone
KE04 - Lake Turkana Fishing Zone
KE05 - Northern Pastoral Zone
KE06 - Marsabit Marginal Mixed Farming Zone
KE07 - Northeastern Agropastoral Zone
KE08 - Mandera Riverine Zone
KE09 - Northeastern Pastoral Zone
KE10 - Grasslands Pastoral Zone
KE11 - Southeastern Pastoral Zone
KE12 - Coastal Low Potential Farming Zone
KE13 - Coastal Marginal Agricultural Mixed Farming Zone
KE14 - Tana Delta - Irrigated Zone
KE15 - Southern Pastoral Zone
KE16 - Southeastern Marginal Mixed Farming Zone
KE17 - Southeastern Medium Potential, Mixed Farming Zone
KE18 - Southern Agropastoral Zonevvvv
KE19 - Central Highlands, High Potential Zone
KE20 - Western Medium Potential Zone
KE21 - Western High Potential Zone
KE22 - Western Lakeshore Marginal Mixed Farming Zone
KE23 - Lake Victoria Fishing Zone
KE24 - Western Agropastoral Zone
Source: FEWSNET 2011.
incidence at the district level ranges from 94 percent to

POVERTY STATUS AND 12 percent, and the poverty gap ranges from 218–230K.
VULNERABILITY According to an econometric analysis of district-level
In 2005–06, approximately 17 million Kenyans, or poverty data, stark spatial variations in the incidence and
47 percent of the population, were too poor to afford the depth of poverty arise from differences in agroclimatic
cost of buying enough food to meet the recommended conditions and income-earning opportunities, as well as
daily nutritional requirements and minimal nonfood unobserved factors (World Bank 2008). In other words,
items. Of these 17 million people, more than 85 percent household location is an excellent predictor of livelihood
live in rural areas. Spatial disparities in both the inci- activity, poverty status, and household consumption level
dence and depth of poverty are pronounced: poverty (figure C.2).

TABLE C.1. POVERTY TRANSITIONS BY LIVELIHOOD GROUP
Percentage
Percent Percent Point
Livelihood Remained Escaped Became Remained Poor at the Poor at the Change in
Group Poor Poverty Poor Non-Poor Beginning End Poverty
Mix farm, high 31 0 11 48 41 42 1
Farm/fish, low 24 7 14 55 31 38 7
Farm/ 43 11 13 33 54 56 2
livestock, low
Pastoral 38 3 22 36 42 61 19
Urban 42 14 15 29 56 57 1
Average 35 9 14 42 44 50 5
Source: Mango, et al (2007).
FIGURE C.3. HOUSEHOLD FOOD SECURITY BY

LIVELIHOOD ZONE
% of severely food insecure households
62
45 41
32 35
21 21 16
4
l
al
al
al
al
al
al
al
na
na
or
or
or
or
or
or
or
gi
gi
st
st
st
st
st
st
st
ar
ar
pa
pa
pa
pa
pa
pa
pa
m
ro
n
nd
rn
al
SE
er
er
ag
N
he
N
st
la
st
th
oa
ss
ut
rn
Ea
or
So
ra
te
C
es
G
Source: World Bank 2008.
Districts with high levels of poverty and food insecurity are Figure C.3 shows the percentage of severely food inse-
also characterized by a high frequency of extreme weather cure households, as of May 2013, in areas where the
events. Households in the bottom expenditure quintile are World Food Programme (WFP) operates. The graph
the most likely to experience a weather-related shock. By reflects the food security status of nonbeneficiary house-
virtue of their location, poorer households experience a holds, as opposed to WFP-beneficiary households.
variety of natural hazards more frequently compared to
better-off and richer households, and are less able to mobi-
lize productive resources to respond to shocks. Table C.1
VULNERABLE GROUPS
shows how the poverty status of different types of house- Certain population groups and certain types of house-
holds changed between 1997 and 2005–06.33 At the end holds are more vulnerable to agricultural shocks than
of the study period, the poverty rate was highest among others, depending on their level of exposure to risks,
pastoralists (61 percent), and a higher percentage of pasto- susceptibility, and capacity to respond and/or recover
ralists had slid into poverty than any other livelihood group from adverse events. In many cases, patterns of vul-
(22 percent), indicating a substantial drop in well-being. nerability reflect underlying inequalities and social
marginalization that preclude access to resources for
individuals, households, or livelihood groups. The
33
“Mix farm, high” is a mixed crop area with high potential. “Farm/fish, low”
is a mixed crop and fishing area with low or marginal potential, and “Farm/ groups identified below are especially vulnerable to
livestock, low” is an agro-pastoral area with low or marginal potential. agricultural shocks:

» On average, FHHs have smaller farm sizes and
PASTORALISTS lower education levels compared to their male
» Pastoralist households are more likely to be poor counterparts.
and more likely to be food insecure than nonpasto- » Roughly 49 percent of the total cultivated land
ralist households. owned by MHHs is good to medium fertile land
» Up to a fifth (15–20 percent) of households in the compared to 39 percent of land owned by FHHs
Northern Pastoral Zone engage in begging, a rate (Kassie et. al. 2012).
that is much higher than in any other livelihood
zone.
» The highest rates of global acute malnutrition are
UNSKILLED/CASUAL WAGE
in the Northeastern and Northwestern Pastoral LABORERS
Zones (WFP 2013). » Casual wage laborers are considered particularly
vulnerable to food price, production, and labor
FEMALE-HEADED shocks since they purchase almost all of their food
from the market.
HOUSEHOLDS (FHHS) » During the 2008 food crisis, labor demand and
» FHHs are 13 percent less likely to be food secure wage rates stagnated as food prices rose by up to
than male-headed households (MHHs). 50 percent (KFSSG 2008).

APPENDIX D
RAINFALL ANALYSIS
FIGURE D.1. AGRO-ECOLOGICAL ZONES FIGURE D.2. MEAN ANNUAL RAINFALL (mm)
ANNUAL RAINFAL F L
LEGEND
(in mm)
Zone I
2000+
Zone II
1600–2000
Zone III
1200–1600
Zone IV
Zone V 800–1200
Zone VI 600–800
400–600
Zone VII
200–400
200 or less
Source: Adapted from Kenya Soil Survey 2009.

FIGURE D.3. MONTHLY CUMULATIVE RAINFALL PATTERNS BY RAINFALL ZONE (mm), 1981–2011
Dagoretti region Eldoret region Garissa region
250 250
212 250
200 200 164 200
158 152 152
150 134 150
150 118
102 101 1
101 106
100 66 100 75 73 62 69 100 77
52 63 51
50 37 50 33 37 37 50 16 35 34
16 22 25 2
16 5 5 6 7
0 0 0
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Kisumu region Lodwar region Makindu region
250 250
250
202 200 200
200 163
165 1
156
150 135 150 150 121
10698 101 88
100 91 87 89 100 100
66
63 67 49
50 50 29 32 25 50 27 33
6 4 16 13 16 10 10 24 16 25
2 1 1 2
0 0 0
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Malindi region Mandera region Mombasa region
350 250 265

311
300 250
200
250 200
150 157
200 165 150 128
150 143 96 101
100 81 70 100
94 94 67 57 68
100 57 47 60 39 46 48 51
42 30 50 22 50 25
50 9 4 15 10
2 5 2 1 1 3
0 0 0
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Narok region Nyahururu region Voi region
250 250
250
200 200
200 163
150 150 133130
150 126 119
100 83 66 95 90
75 72
100
65
88 100 78 80
48 47
50 27 16 24 26 31 50 26 27 35 50 25 32
20
7 4 9 6 4 3 6 10
0 0 0
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
March
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec

FIGURE D.4. LOCATION OF
REGIONAL WEATHER
STATIONS IN KENYA
Source: GFDRR 2012.

APPENDIX E
WEATHER AND YIELD IMPACT ANALYSIS
BACKGROUND
The World Bank is conducting a study on the effect of several climatic events on dif-
ferent crops’ yield in Kenya. The purpose of the study is to determine whether and by
how much yield is affected by climatic events.
Figure E.1 shows the political division of Kenya prior to implementation of the 2010
Constitution; at that time, Kenya had eight provinces.
FIGURE E.1. PROVINCES IN KENYA

BEFORE 2010
Provinces: 1 = Central, 2 = Coast, 3 = Eastern, 4 = Nairobi, 5 =

North Eastern, 6 = Nyanza, 7 = Rift Valley, 8 = Western.

Similarly, in the Rift Valley Province, many rainy events
SUMMARY AND KEY during 1998 explain low production there.
FINDINGS
Rainfall distribution in Kenya is highly variable. In very Wheat production in the Eastern Province is affected by
dry years, like 1984, 2000, and 2009, little precipitation fell rainy events during the growing season. For example, in
throughout most of the country. But 1968, 1997, and 2006 2004, higher than expected rainy events catastrophically
were very humid years. This high variability in rainfall dis- affected wheat production.
tribution affects the yield of Kenya’s main food crops.
It is worth noting that the geographical resolution of the crop
Rainfall occurs mostly between March and May; April is production information is very low, because it is only avail-
the most humid month of the year. But a second rainy able at a provincial level; this might mask some relationships
period also exists: November receives a lot of precipita- that could be found with a finer geographical resolution.
tion in some regions of the country. Main crops like maize
and beans are sown in March to take advantage of the WEATHER INFORMATION
first rainy season. The dry season during July–September, Two data sources were used to analyze Kenya’s rainfall
when crops are in the middle of their growing stage, can patterns. The Kenya Meteorological Department pro-
affect their yield, however. vided a database with annual cumulative rainfall at 18
different weather stations from 1963 to 2012. This infor-
In Kenya’s Central and Coast Provinces, statistical evidence mation is only available at an annual level.
shows that drought during the growing stage greatly affects
maize production. For example, maize production was low A gridded database from the Global Precipitation Climate
in the Central Province during dry years like 2001, 2004, Project (GPCP, see http://precip.gsfc.nasa.gov/) was also
and 2008, and in the Coast Province in 2011 and 2012. used. The resolution of the grid is 1 degree, so there are
many pixel points with data from January 1, 1997, to
Bean production is affected by too many rainy days dur- December 31, 2013, for the whole country. Figure E.2
ing the harvesting season in the Coast Province; for exam- provides a scope of the grid superimposed on a map of
ple, in 1997, a very wet year, bean production was low. Kenya. Pixels in blue were considered for the analysis.
FIGURE E.2. RAINFALL PIXELS SUPERIMPOSED ON A

MAP OF KENYA
5
2 3
Latitude degrees
1 7 5
8
0
–1 1
–2 6
–3 4 2
–4
–5
33 34 35 36 37 38 39 40 41 42
Longitude degrees east

The bimodal pattern (long rains, short rains) is clear in
ANNUAL RAINFALL most provinces, although rain falls more uniformly in
DISTRIBUTION IN KENYA Western and Nyanza Provinces, the provinces farthest
Rain in Kenya follows two seasonal patterns through- from the coast. April is the wettest month in all provinces,
out the year: the “long rains” season, which occurs from with average cumulative rainfall fluctuating between 86
March/April to May/June; and the “short rains” season, and 148 mm, while August seems to be the driest month,
which occurs from October to the end of the year. Figure E.3 with only 10 mm on average, except in the westernmost
shows the average monthly distribution of rain for a pixel provinces, where cumulative rainfall ranges between 35
within all regions. and 102 mm.
FIGURE E.3. MONTHLY RAINFALL PATTERN BY REGION

Central province Coast province Eastern province
Monthly average cumulative rainfall (mm.)

148
150 150 150
130 122 130 130
115
110 110 98 110
87 83
90 90 80 90
70 74
70 66 65 70 70
59 57 60
51
50 50 44 50 39
36 36
30 22 30 22 20 30 22 21 20
18
11 13 13 14 18 8 9
4 7 7
10 10 10
–10 –10 –10
br ry
M ry
ch
M l
ay
ne
Se Aug ly
em t
N cto r
D em r
em r
r
br ry
M ry
ch
M l
ay
ne
Se Aug ly
em t
N cto r
D em r
em r
r
br ry
M ry
ch
M l
ay
ne
Se Aug ly
em t
N cto r
D em r
em r
r
ri
ri
ri
pt us
pt us
pt us
O be
ov be
ec be
be
O be
ov be
ec be
be
O be
ov be
ec be
be
Ju
Ju
Ju
Ap
Ap
Ap
Fe ua
ua
Fe ua
ua
Fe ua
ua
ar
ar
ar
Ju
Ju
Ju
n
n
Ja
Ja
Ja
North eastern province Nyanza province
146
150 137 150
130 130
111
110 110 102
92
90 84 90 83 79
70 64 70 59
57 52 57
50 45
50 39 43 50
26 30 29
30 24 30
16 16
9
10 10
–10 –10
br ry
M ry
ch
M l
ay
ne
Se ug ly
em t
N cto r
D em r
em r
r
br ry
M ry
ch
M l
ay
ne
Se ug ly
em t
N cto r
D em r
em r
r
ri
ri
pt us
pt us
O be
ov be
ec be
be
O be
ov be
ec be
be
Ju
Ju
Ap
Ap
Fe ua
ua
Fe ua
ua
ar
ar
Ju
Ju
n
n
A
A
Ja
Ja
Rift valley province Western province

150 150
130 130
110 99.4 110
90 90 86
70
62.5 63
70
52.1
70 56 61
48.1 35.4 46
50 40.3 50 40 40
32.6 35.1 31.5 28 30
30 22.7 23.1 30 24
1
15.2 18
10 10
–10 –10
br ry
M ry
ch
M l
ay
ne
Se ug ly
em t
N cto r
D em r
em r
r
br ry
M ry
ch
M l
ay
ne
Se ug ly
em t
N cto r
D em r
em r
r
ri
ri
pt us
pt us
O be
ov be
ec be
be
O be
ov be
ec be
be
Ju
Ju
Ap
Ap
Fe ua
ua
Fe ua
ua
ar
ar
Ju
Ju
n
n
A
A
Ja
Ja

drought events, although 2009 was also generally dry. The
DROUGHT AND EXCESS Narok station (about 150 km west of Nairobi) had con-
RAINFALL ANALYSIS secutive extreme drought events in 2002 and 2003, with
The Kenya Meteorological Department database was 0 mm and 50 mm of cumulative rain, respectively, but it
used to analyze the differences among years, since its time is odd that no other station experienced a similar event.
series is longer (50 years) than that of the gridded data-
base, and it only includes annual cumulative rainfall. To Excess rainfall years were 1963, 1967, 1968, 1977, 1978,
determine whether a year was dry or wet, the standard- 1988, 1998, 2006, and 2012. During these nine years,
ized cumulative rainfall was calculated for each region rainfall was more than one standard deviation above aver-
according to the following formula: age for at least five stations, meaning that rainfall was gen-
erally plenty during these years. The year 1968 was the
( eci − ) most humid, with 10 stations showing a positive anomaly
ii=
StdRain i
si in rainfall, and seven showing an extreme event. Nanyuki
where station seems to be an outlier or to have a measurement
StdRain, Standardized cumulative rainfall error, because its observation for 1968 is 9,895 mm, a fig-
Prec, yearly rainfall ure completely out of line. Still, more than 2,000 mm fell
m, mean yearly rainfall at several stations. The year 2012 was also wet, with seven
s, standard deviation of yearly rainfall stations showing excess rainfall, particularly the Kisii and
i, year Kericho stations (both close to Nyanza Province), which
saw more than 2,000 mm of cumulative rainfall.
Using the standardized cumulative rainfall makes it easier
to identify drought and excess rainfall years. Table E.1
shows the standardized cumulative rainfall by year and
RAINFALL—YIELD
weather station, color coded as follows: red means an REGRESSIONS
extreme drought event (StdRain < −2); orange means a The NASA database was used to determine the relation-
drought event (StdRain < −1); light blue mean a light excess ship between rain and yield for the various crops since it
rainfall event (StdRain > 1); and navy blue means an excess has daily data, allowing for a deeper analysis of dates and
rainfall event (StdRain > 2). events. The only caveat is that these data do not cover the
whole 50 years for which crop data exist.
Several conclusions can be drawn from table E.1. First,
there were 33 normal years, 7 drought years, and 8 excess It is worth noting that the geographical resolution of the
rainfall years. Extreme drought and extreme excess rain- two data sets is not the same. Rainfall data are available
fall years each occurred once. Second, extreme events on point estimates for pixels on a 1 × 1 degree grid, while
seem to have occurred less frequently in recent times, a yield data are available by province. It is therefore nec-
conclusion that might be at odds with the general concept essary to make equivalent the geographical resolution of
of climate change. both data sets. Because no information exists regarding
the sowing zones within each province, all available pixels
Drought years were 1965, 1975, 1976, 1980, 1984, 1987, within the province were considered to match the yield
1993, and 2000. During these eight years, rain was more information of each province. Thus, the average of the
than one standard deviation below average for at least five available pixels within a province was used as a proxy for
stations. The year 1984 was particularly extreme, with 11 each province’s rainfall.
stations showing drought, of which five had an extreme
drought shock. For several stations, cumulative rainfall Figure E.4 depicts the calendar used to determine the
was less than 500 mm for the whole year. The most recent sowing, growing, and harvesting seasons for the main
generally dry year was 2000, when six stations showed crops in Kenya.

TABLE E.1. RAINFALL ANOMALIES FOR THE 18 WEATHER STATIONS
Ext Ext
Year Eldoret Embu Garissa Kajiado Kakamega Kericho Kiambu Kisii Kisumu Kitale Machakos Meru Mombasa Nakuru Nanyuki Narok Nyahururu Nyeri Dro Drought Normal Excess Excess Comment
1963 1.72 1.14 0.60 −1.42 0.30 0.71 2.33 −0.40 −0.16 −0.98 2.45 −0.03 0.46 0.22 0.15 2.12 0.93 0 1 11 5 3 Excess
1964 0.79 −0.69 −0.12 1.19 −0.02 0.40 −0.35 −0.40 0.65 −0.20 −0.22 0.79 −0.55 −0.17 0.08 0.82 0.59 0 0 16 1 0 Normal
1965 −0.88 −0.99 −0.26 −0.41 −0.42 −0.86 −0.77 −0.26 −0.89 −1.64 −0.44 −1.91 0.20 −2.00 −0.25 −1.69 −1.04 0 5 12 0 0 Drought
1966 0.80 0.11 −0.58 0.55 −0.98 −0.60 0.92 1.78 1.66 0.39 0.38 0.85 0.37 0.28 0.01 −0.53 −0.54 0 0 15 2 0 Normal
1967 1.38 1.56 0.88 −0.12 −0.53 −0.27 1.42 −0.51 −0.66 −3.33 0.89 2.22 1.09 −0.51 0.04 0.00 0.15 1 1 11 5 1 Excess
1968 −0.04 2.22 3.49 −0.10 0.22 0.79 2.17 −0.48 2.03 −0.40 2.38 2.65 1.39 0.44 6.85 1.60 1.39 0 0 7 10 7 Ext Excess
1969 −0.61 −0.24 −0.47 0.00 −0.73 −2.39 −1.44 0.22 −0.91 −0.56 0.22 1.08 −0.28 −0.95 0.03 −0.76 −0.94 1 2 14 1 0 Normal
1970 1.60 −0.65 −0.71 1.66 0.84 0.57 −0.17 1.25 −0.61 0.23 −0.17 1.16 −0.64 0.76 −0.12 0.30 0.18 0 0 13 4 0 Normal
1971 0.01 0.49 0.01 0.33 −0.47 −1.56 0.52 4.12 0.28 −0.10 0.25 0.03 −0.99 −0.39 −0.01 0.51 −1.08 0 2 14 1 1 Normal
1972 0.16 1.60 −1.04 −0.59 0.48 −1.41 −0.43 0.66 0.60 1.69 −0.05 2.59 0.79 −0.47 −0.12 −0.47 −0.11 0 2 12 3 1 Normal
1973 −0.91 −1.14 −0.55 0.29 1.50 −0.83 −1.28 −0.53 −1.75 −0.84 −0.14 0.11 −0.04 −0.85 −0.16 −0.85 −0.43 0 3 13 1 0 Normal
1974 −1.11 −0.11 −0.69 0.20 −0.98 −1.19 −0.46 −0.47 −0.93 −0.81 0.38 1.12 −0.83 −0.03 −0.03 0.22 −0.62 0 2 14 1 0 Normal
1975 1.18 −1.18 −0.20 0.33 0.07 0.81 −1.12 −0.03 −0.60 −0.31 −0.35 −1.03 −0.50 1.02 −0.09 0.58 −1.06 0 4 11 2 0 Drought
1976 −0.43 −0.47 −0.98 −1.45 −0.51 −1.21 −0.60 0.24 −0.52 −1.13 −0.56 −1.00 −0.43 −0.51 0.04 −0.78 −0.58 0 4 13 0 0 Drought
1977 2.49 0.63 0.37 1.85 1.33 −0.51 1.38 1.56 1.32 2.01 0.63 0.76 0.19 0.86 0.04 1.90 −0.15 0 0 9 8 2 Excess
1978 −0.12 0.85 2.32 0.59 0.09 1.64 1.40 0.52 2.06 1.36 1.28 1.64 0.38 0.97 0.01 1.53 0.35 0 0 9 8 2 Excess
1979 0.24 0.37 1.13 −0.07 −0.47 −0.58 −0.47 −1.52 0.40 0.45 2.21 0.59 0.97 −0.12 −0.13 0.30 1.41 0 1 13 3 1 Normal
1980 −0.90 −0.94 −1.51 −0.59 0.07 −1.21 −0.21 −1.07 −1.48 −1.10 0.90 −1.01 −0.48 −0.61 −0.40 −0.78 −1.18 0 7 10 0 0 Drought
1981 0.53 0.74 −0.28 −0.41 1.04 −0.83 0.32 −0.97 −1.81 0.80 0.70 0.38 0.05 −0.21 −0.04 0.37 −1.06 0 2 14 1 0 Normal
1982 −0.15 0.37 0.52 0.03 1.52 −0.27 −0.12 −1.52 0.40 1.80 −0.56 0.70 1.31 0.30 −0.16 0.69 0.89 0 1 13 3 0 Normal
1983 0.00 −0.42 −1.40 −0.61 −0.29 1.04 −0.80 −0.39 −1.37 −0.11 −1.44 −0.87 0.07 −0.25 −0.29 −0.33 0.26 0 3 13 1 0 Normal
1984 −2.95 −1.10 0.92 −1.27 −2.08 −2.54 −2.65 −1.14 −0.77 −1.49 −0.87 −0.21 −0.82 −1.61 −0.29 −2.67 −1.24 5 11 6 0 0 Ext Dro
1985 −0.67 0.76 −0.78 −0.94 3.01 1.40 −0.42 0.00 −0.12 0.35 0.03 −0.13 −0.94 −0.06 −0.26 0.45 −0.17 0.00 0 0 16 2 1 Normal
1986 −1.08 −0.54 0.03 −0.65 −0.76 −0.80 −0.53 −0.75 −0.35 −1.64 −0.44 −0.59 −1.97 −0.22 −0.21 −0.83 −0.09 0.84 0 3 15 0 0 Normal
1987 0.22 −0.87 −1.78 −2.30 −0.19 0.51 −0.25 1.27 −0.39 −0.30 −1.97 −1.49 −2.04 −1.12 −0.30 0.37 −2.28 −1.21 3 8 9 1 0 Drought
1988 −0.39 2.08 0.26 1.67 1.48 1.18 0.53 0.20 0.06 0.00 −0.70 −1.48 0.97 −0.25 0.35 0.59 1.18 0 1 11 5 1 Excess
1989 −0.70 −0.44 −0.19 −0.10 0.60 1.62 −1.12 −0.31 0.04 −0.19 −0.55 −1.53 3.94 −0.06 2.13 −0.85 −0.62 0 2 12 3 2 Normal
1990 −0.31 1.20 1.03 2.80 0.11 0.76 0.43 −0.85 −0.28 0.69 0.06 0.36 −0.05 −0.16 0.06 0.19 0.62 0 0 14 3 1 Normal
1991 −0.39 −1.05 −0.07 1.40 0.26 0.42 −0.40 −1.42 −0.69 0.06 −0.72 −0.18 0.38 2.39 −0.50 −1.02 0.38 0 3 12 2 1 Normal
1992 0.02 −1.96 −0.21 −0.15 −0.80 −0.03 0.04 −1.17 −0.65 0.08 −0.77 −0.79 −0.32 −0.34 −0.40 −0.89 −0.80 −0.67 0 2 16 0 0 Normal
1993 −1.76 −1.19 −0.55 1.08 −1.54 −0.64 −0.69 −1.05 −1.12 0.28 −0.48 −0.65 −0.47 −1.11 −0.44 0.30 −0.33 −0.18 0 6 11 1 0 Drought
1994 0.51 −0.39 0.50 1.59 −0.22 0.38 −0.15 0.44 0.66 0.13 0.28 −0.39 2.53 −0.21 −0.32 1.26 0 0 13 3 1 Normal
1995 −0.50 0.51 0.37 −0.07 −0.55 1.15 0.23 0.42 0.61 −0.70 −0.59 −0.01 −0.29 −0.32 −0.12 −0.05 0.38 0 0 16 1 0 Normal
1996 0.00 −1.03 0.19 0.51 −1.53 0.56 0.86 −0.32 −0.91 −0.28 −0.23 −0.20 0.38 −0.49 −0.99 0 2 13 0 0 Normal
(continued)
TABLE E.1. RAINFALL ANOMALIES FOR THE 18 WEATHER STATIONS (continued)
Ext Ext
Year Eldoret Embu Garissa Kajiado Kakamega Kericho Kiambu Kisii Kisumu Kitale Machakos Meru Mombasa Nakuru Nanyuki Narok Nyahururu Nyeri Dro Drought Normal Excess Excess Comment
1997 0.55 −1.19 −0.26 0.34 −0.21 1.27 −0.01 0.06 2.84 0.18 0.11 0.97 0.48 3.06 0 1 10 3 2 Normal
1998 1.93 −0.33 1.01 0.91 −0.69 −1.03 0.83 0.36 2.34 −0.01 0.07 0.53 1.14 1.24 0 1 8 5 1 Excess
1999 −0.06 −0.79 −0.13 0.08 0.27 0.70 −0.27 −0.55 0.52 −1.10 −0.28 −0.22 −0.75 −1.58 0 2 12 0 0 Normal
2000 −1.02 −1.79 −0.31 −0.58 0.07 −0.87 −0.89 −1.16 0.88 −1.47 −0.39 −0.92 −1.12 −1.50 0 6 8 0 0 Drought
2001 0.32 0.06 2.11 0.50 0.42 0.60 0.85 −0.78 −0.26 0.53 −0.06 0.08 0.90 0.37 0 0 13 1 1 Normal
2002 −1.00 0.11 0.71 0.26 0.62 1.62 −0.19 −0.75 0.03 0.35 −0.15 −2.57 −0.09 0.42 1 1 12 1 0 Normal
2003 −0.49 0.66 0.19 −1.23 0.73 −0.62 0.50 −0.77 0.04 0.53 −0.04 −2.39 −0.17 0.68 1 2 12 0 0 Normal
2004 −0.15 −1.31 −0.32 0.55 0.07 0.15 −0.51 −0.67 −0.51 −0.31 −0.10 −0.27 −0.26 −0.44 0 1 13 0 0 Normal
2005 −0.65 0.14 −0.25 −0.38 −1.16 0.72 −0.94 −0.97 −0.30 −0.41 −0.13 0.24 −1.16 0 2 11 0 0 Normal
2006 1.45 1.73 1.66 0.93 1.42 1.33 0.42 1.15 0.94 1.46 1.19 0.89 −0.06 −0.16 1.26 0.36 1.78 0 0 7 10 0 Excess
2007 0.25 −0.08 −0.24 −0.02 0.60 0.24 −0.85 −1.07 1.30 −0.94 0.03 0.32 0.86 −0.10 −0.05 1.46 0.15 0 1 14 2 0 Normal
2008 −0.42 −0.62 −0.41 −0.18 −0.06 −0.93 −0.22 −0.79 −0.14 −1.35 −0.91 −0.39 −0.74 −0.26 −0.38 −0.17 −0.79 0 1 16 0 0 Normal
2009 −1.05 −0.48 −0.40 −0.74 −0.66 −0.92 0.01 0.25 0.02 −1.31 0.11 −0.75 −1.05 −0.33 −0.49 −1.14 −0.98 0 4 13 0 0 Normalw
2010 1.13 −0.32 0.36 0.15 0.96 0.49 0.83 0.60 1.05 −0.21 0.15 −0.17 1.46 −0.07 0.20 1.27 0.07 0 0 13 4 0 Normal
2011 0.11 −0.04 −0.41 −0.05 0.63 −0.70 0.26 1.03 1.10 −0.86 0.47 −0.61 0.41 0.04 0.80 0.30 −0.15 0 0 15 2 0 Normal
2012 1.33 0.56 −0.60 0.16 1.27 −0.33 0.87 1.71 1.54 −0.39 0.46 −0.80 0.79 0.03 1.02 1.34 1.69 0 0 10 7 0 Excess
Extreme 1 0 0 1 1 2 1 0 0 1 0 0 1 0 0 2 2 0
Drought
Drought 6 7 4 4 5 7 6 9 7 6 4 6 4 7 0 2 6 10 Ext Dro 1
Normal 35 27 31 19 38 35 35 36 34 36 31 36 40 38 49 21 35 32 Drought 7
Excess 9 7 5 6 7 8 9 5 9 8 5 8 6 4 1 3 8 8 Normal 33
Extreme 1 2 2 0 2 1 2 1 2 1 3 3 3 2 1 1 1 1 Excess 8
Excess
Prob Ex 2% 0% 0% 3% 2% 4% 2% 0% 0% 2% 0% 0% 2% 0% 0% 8% 4% 0% Ext 1
Drought Excess
Prob 12% 17% 10% 14% 10% 14% 12% 18% 14% 12% 10% 12% 8% 14% 0% 8% 12% 20%
Drought
Prob 70% 66% 78% 66% 76% 70% 70% 72% 68% 72% 78% 72% 80% 78% 98% 81% 71% 64%
Normal
Prob 18% 17% 13% 21% 14% 16% 18% 10% 18% 16% 13% 16% 12% 8% 2% 12% 16% 16%
Excess
Prob Ext 2% 5% 5% 0% 4% 2% 4% 2% 4% 2% 8% 6% 6% 4% 2% 4% 2% 2%
Excess

FIGURE E.4. CALENDAR FOR MAIN The following rainfall parameters were estimated for each
CROPS IN KENYA crop season (sowing, growing, and harvesting):
Kenya » Cumulative rainfall (cumrain)—The sum of
Crop calendar (*major foodcrop) daily precipitation in millimeters for each season
described above.
Barley (Long rains) » Number of rainy events (events)—The number of
days in the season in which rain is greater than 5 mm.
Barley, Maize, Millet &
Sorghum (short rains)
Figure E.5 illustrates the average cumulative rainfall dur-
Beans (Long rains) ing 1997–2012, which covers the NASA rainfall database
Beans (Short rains)
for the March–November timeframe.
Maize (Long rains)* Figure E.5 shows that Western and Nyanza Provinces are
Millet (Long rains)
the most humid, getting more than 1,000 mm of rain-
fall on average. North and Coast Provinces follow with
Sorghum (Long rains)
more than 800 mm of rainfall on average. But most of the
Wheat (Long rains)* center of the country is very arid, with less than 400 mm
J J A S O N D
of rainfall on average for this period of the year.
Lean period (N, S & E
pastoral areas)-
FEWSNET To determine the relationship between yield and rain, lin-
Lean period (N, S & E ear regression models were run using both rain parame-
pastoral areas and ters during each stage of the crop cycle as the explanatory
SE marginal
cropping areas)- variable for yield.
FEWSNET
Yield = β0 + β1 cumrainsow
Lean period (central Yield = β0 + β2 cumraingrow
cropping areas)-
FEWSNET Yield = β0 + β3 cumrainharvest
Sowing Yield = β0 + β4 eventsow
Growing Yield = β0 + β5 eventgrow
Harvesting Yield = β0 + β6 eventharvest
FIGURE E.5. MAP OF AVERAGE CUMULATIVE

RAINFALL, BY PIXEL
1 600
1,600
Cumulative rainfall (mm.)
1,400
1,200
1,000
800
600
400
200
5
3
Latitude
–1
1
–3
41 42
2
–5 39 40
36 37 38
34 35
Longitude
0-200 200 400

200-400 400-600
400 600 600 800
600-800 800 1,000
800-1,000 1,000 1,200
1,000-1,200 1,200-1,400
, , 1,4
1,400-1,600

TABLE E.2. SIMPLE LINEAR REGRESSION RESULTS FOR MAIZE
ProvNo Province CumRain1 Cumrain2 CumRain3 Events1 Events2 Events3
1 Central 2.0% 60.0% 0.0% 4.3% 59.6% 0.0%
2 Coast 8.0% 44.3% 0.4% 5.3% 20.7% 0.0%
3 Eastern 0.3% 6.6% 0.2% 1.8% 4.1% 0.6%
6 Nyanza 2.8% 0.1% 0.0% 2.3% 0.0% 1.3%
7 Rift Valley 1.1% 0.8% 3.3% 5.0% 0.0% 3.5%
8 Western 9.4% 13.1% 12.8% 5.4% 5.0% 4.2%
TABLE E.3. MULTIPLE LINEAR REGRESSION RESULTS FOR WHEAT

ProvNo Province CumRain1-CumRain3 Events1-Events3
1 Central 10.1% 31.1%
3 Eastern 18.7% 36.3%
7 Rift Valley 28.5% 28.4%
TABLE E.4. SIMPLE LINEAR REGRESSION RESULTS FOR WHEAT

ProvNo Province CumRain1 CumRain2 CumRain3 Events1 Events2 Events3
1 Central 7.3% 0.0% 0.7% 4.4% 3.4% 0.8%
3 Eastern 3.7% 17.0% 1.2% 1.0% 32.6% 1.1%
7 Rift Valley 4.4% 22.1% 1.7% 12.1% 20.3% 2.3%
The main objective of the regression analysis is to calcu- Wheat: Wheat production data were only available for
late the determination coefficient (R2) for each variable. three provinces. Table E.3 summarizes the regression
The determination coefficient is a measure of the propor- determination coefficient for a multiple linear regression
tion of the variability in yield explained by each rainfall analysis using the three seasons of the cumulative rain-
variable. Therefore, the higher the R2, the more likely the fall and the three seasons of the rainy event variables by
particular rain parameter and yield are related. Regres- province.
sion analyses for each crop and province follow.
As table E.3 shows, generally speaking, the number of
Maize: Table E.2 summarizes the regression determina- rainy events in the three seasons (sowing, growing, and
tion coefficient for each rain parameter by province. harvesting) explains more variability in wheat yield than
cumulative rainfall does. Table E.4 summarizes the simple
Table E.2 shows that cumulative rainfall seems to bet- linear regression analysis performed using each variable
ter explain maize yield than the number of rainy events. as a regressor.
Cumulative rainfall during the growing season explains a
significant amount of the variability in maize yield for the Once each season is analyzed separately, it can be seen
Central and Coast Provinces. The number of rainy events that as with maize, the growing season explains more
during the growing season also explains a significant pro- variability in wheat yield than the other seasons. But
portion of variability in maize yield in these provinces, the number of rainy events during the growing season is
but slightly less than cumulative rainfall. Rain during the the most significant variable, explaining between 19 and
harvest season is not significant in explaining maize yield. 33 percent of the variability in yield.

APPENDIX F
CROP PRODUCTION TRENDS
FIGURE F.1. MAIZE PRODUCTION, 1990–2012

4,000 25,000
Production (tons) Area harvested (Ha) Yield (Hg/Ha)
3,500
Production/area (in 000s)
20,000
3,000
2,500 15,000
Yield
2,000
1,500 10,000
1,000
5,000
500
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.
FIGURE F.2. WHEAT PRODUCTION, 1990–2012

Production (tonnes) Area harvested (Ha) Yield (Hg/Ha)
600 35,000
500 30,000
25,000
400
20,000
Yield
300
15,000
200
10,000
100 5,000
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.

FIGURE F.3. DRY BEAN PRODUCTION, 1990–2012
1,200 25,000
Production (tonnes) Area harvested (Ha) Yield (Hg/Ha)
Production/area (in '000)

1,000
20,000
800
15,000
Yield
600
10,000
400
200 5,000
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.
FIGURE F.4. TEA PRODUCTION, 1990–2012

450 Production (tonnes) Area harvested (Ha) Yield (Hg/Ha) 30,000
400
25,000
350
300 20,000
250
Yield
15,000
200
150 10,000
100
5,000
50
0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 0
Source: FAOSTAT.
FIGURE F.5. COFFEE PRODUCTION, 1990–2012

200 Production (tones) Area harvested (Ha) Yield (Hg/Ha) 8,000
180 7,000
160
6,000
140
120 5,000
Yield
100 4,000
80 3,000
60
2,000
40
20 1,000
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.
FIGURE F.6. SUGARCANE PRODUCTION, 1990–2012

7,000 Production (tones) Area harvested (Ha) Yield (Hg/Ha) 90,000
6,000 80,000
70,000
5,000
60,000
4,000
Yield
50,000
3,000 40,000
30,000
2,000
20,000
1,000 10,000
0 0
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Source: FAOSTAT.

APPENDIX G
LIVESTOCK TERMS OF TRADE ANALYSIS

110
–2
0
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Av Jan 06 Av Jan 06 Av Jan 06
Av May 06 Av May 06 Av May 06
Av Sep 06 Av Sep 06 Av Sep 06
Source: MoALF 2014.

Av Sept 07 Av Sept 07 Av Sept 07
Av May 08 Av May 08
Av May 08
Av Sept 08 Av Sept 08
Av Sept 08
Wajir
Mombasa
Moyale
av Jan 09
av Jan 09 av Jan 09
Av May 09
Av May 09 Av May 09
Av Sept 09
for 1 beef cow)
Av Jan 10
Av Jan 10 Av Jan 10 Av May 10
Av May 10 Av May 10 Av Sept 10
Av Sept 10 Av Sept 10 Av Jan 11
Av Jan 11 Av Jan 11
0
5
10
15
20
25
0
2
4
6
8
10
12
14
16
18
0
2
4
6
8
10
12
14

Av Sep 06 Av Sep 06 Av Sep 06
Av Sept 07
Av Jan 08 Av Jan 08
Av Jan 08
Av May 08 Av May 08
Av May 08
Av Sept 08
Av Sept 08
Isiolo
Av Sept 08
Garissa
av Jan 09
Dagoretti
av Jan 09 av Jan 09
Av May 09
Av May 09 Av May 09
Av Sept 09
Av Jan 10
Av Jan 10 Av Jan 10
2006–11 (number of 90-kg bags of maize exchanged
Av May 10
Av May 10 Av May 10 Av Sept 10
FIGURE G.1. TOT OF INDIVIDUAL MARKETS IN NORTHERN KENYA,
Av Sept 10 Av Sept 10 Av Jan 11

Av Jan 11 Av Jan 11
Agriculture Global Practice Technical Assistance Paper

APPENDIX H
OPTIONS FOR SCALING UP LIVESTOCK
INSURANCE IN KENYA
In the recent past, livestock insurance has gained a lot of interest in Kenya as a viable
solution to addressing covariate risks like those associated with drought. International
Livestock Research Institute (ILRI) has piloted index based livestock insurance (IBLI)
in arid and semiarid land (ASAL) regions of Kenya. The pilot started in Marsabit
County in 2010 is now in three counties (Marsabit, Wajir, and Isiolo), and ILRI has
plans to expand to all 14 counties34 in ASAL regions. Through IBLI, farmers are
able to cushion themselves against the impact of droughts, which have increased in
frequency and severity, a phenomenon associated with climate change. In Kenya, 28
severe droughts have been recorded in the last 100 years, including four droughts in
the last 10 years. In the major drought of 2000, major animal losses occurred. Analysis
undertaken by ILRI on IBLI has shown that providing access to insurance creates an
effective safety net for vulnerable-but-non-poor pastoralists.
The importance of agricultural insurance in addressing food security seems to have

been embraced by Kenya’s current crop of politicians. In the 2013 presidential elec-
tion, provision of agricultural insurance was one of the key pledges of candidates. The
coalition that won the election included livestock insurance as part of its party mani-
festo. Kenya’s agricultural/livestock insurance policy is clearly spelled out in Executive
Order No. 2, which outlines what the current government intends to achieve. Medium
Term Plan II (MTP-II), which covers 2013–2017, recognizes the importance of live-
stock insurance and talks of establishing a National Livestock Insurance Scheme.
To keep its political promise and to implement the projects spelled out in MTP-II,
the government of Kenya (GoK) through the Ministry of Agriculture, Livestock and
Fisheries (MoALF) sought support from the World Bank Agriculture Insurance Devel-
opment Program (AIDP) to assist in formulating a large-scale national agricultural
insurance program as a public-private partnership (PPP). Starting in January 2014,
Lamu, Isiolo, Laikipia, Mandera, Marsabit, West Pokot, Turkana, Tana River, Garissa, Baringo, Samburu, Narok,
34
Samburu, and Wajir Counties.

the AIDP team worked closely with State Department of Turkana, and Wajir Counties and use of HSNP’s livestock
Livestock (SDL) to think through an appropriate livestock census and classification system for targeting. Beneficiar-
insurance PPP for the government. In partnership with ies of the SDL-paid macro coverage will be “vulnerable
the World Bank’s Financial Sector Development unit and pastoralists” immediately above HSNP target beneficiar-
ILRI, AIDP will assist the MoALF in implementing a ies (the 100,000 poorest households) in these counties.
macro-level livestock Normalized Difference Vegetation AIDP has agreed to target households above those already
Index (NDVI) insurance program to address the SDL’s receiving a nonconditional cash transfer from HSNP and
objective of enhancing resilience and reducing vulner- to provide insurance coverage for five Tropical Livestock
ability of small-scale pastoral farmers. Units (TLUs) for selected households.
Under the SDL-driven livestock insurance initiative, a HSNP counties were selected to introduce the macro-
graduated approach is envisaged, with government pur- level insurance product because household censuses have
chasing an insurance product at a macro level for targeted already been done in them, their poverty levels have been
vulnerable households, while wealthier households will be determined, and the infrastructure to pay herders (in the
able to purchase the product on an individual, voluntary event of a payout) has been established. HSNP’s infra-
basis. It is envisaged that the macro livestock insurance structure will be used to register and make payouts35 to
product will offer asset protection, having early payouts the SDL beneficiaries. ILRI-supported IBLI will also be
with the onset of drought to empower pastoralists to pro- available and accessible to those who want to top-up (e.g.,
tect their herds. The voluntary component is expected to those covered by the government-paid insurance) or those
initially be an asset replacement-type product, paying out who want to voluntarily purchase it (e.g., those who are
at the end of the drought season; however, in the medium not under macro-level coverage). The voluntarily pur-
term, the SDL with the support of AIDP will develop an chased coverage will be available in more counties than
asset protection-type product to be offered to this group as those covered under HSNP (because it will not require
well. The asset protection cover would use the ILRI NDVI HSNP infrastructure to operate and there would be no
database and methodology to make timely payouts to tar- need to target).
geted vulnerable pastoralists (beneficiaries) at the onset
of severe drought, thus reducing livestock mortality and Strong synergies would be gained from working closely
asset depletion. This product assumes that investments with the World Bank–supported Regional Pastoral Live-
will strengthen availability of animal feed, destocking, and lihood Resilient Project (RPLRP) to promote livestock
other critical market services. insurance in the targeted counties. RPLRP’s objective is
to enhance the resilience of pastoral and agro-pastoral
The macro-level NDVI index insurance cover would be communities in drought-prone areas through regional
purchased by SDL-GoK as part of their national drought approaches. The project will be implemented in 14 coun-
risk reduction and risk financing strategy for pastoral- ties, and one of its key components is pastoral risk man-
ists in ASAL regions; SDL would be the insured party, agement, which corresponds well with the objective of
responsible for payment of the premium for the macro- promoting livestock insurance.
level coverage. SDL has also requested that AIDP design:
(1) voluntary top-up coverage for targeted beneficiaries;
and (2) a micro-level individual livestock producer policy.
35
HSDL is working with Equity Bank to ensure that every beneficiary house-
AIDP has proposed to SDL linkage of the macro-level
hold of the cash transfer program has a bank account. It is hoped that a simi-
livestock index insurance product with the Hunger Safety lar agreement can be reached with Equity Bank for the separate AIDP-SDL
Net Program (HSNP) program in Mandera, Marsabit, macro-level livestock index insurance program.

APPENDIX I
RESULTS OF SOLUTIONS FILTERING PROCESS
FOOD CROPS
FIGURE I.1. PRIORITIZATION OF RISK MITIGATION SOLUTIONS FOR FOOD
CROPS
Average score (max. score 25)
Increase predictability of government interventions 18.1
Training on post-harvest management 21.1
Fumigation 16.0
Apply moisture and quality standards 18.5
Hermetically sealed silos 16.7
Safety net interventions 17.5
Drought tolerant seeds 21.8
Irrigation 16.8
Water harvesting 20.5
Conservation farming 20.1
FIGURE I.2. PRIORITIZATION OF RISK TRANSFER

SOLUTIONS FOR FOOD CROPS
Average score (Max. score 25)
Warehouse receipt system 19.8

Weather insurance 17.1
FIGURE I.3. PRIORITIZATION OF RISK COPING SOLUTIONS FOR FOOD CROPS

Average Score (Max. Score 25)
Promote farmer association operated storage centers 18.8

Cash for work 17.6
Food for work 16.6
Programs to strengthen livelihoods & social capital 17.9

CASH CROPS
FIGURE I.4. PRIORITIZATION OF RISK MITIGATION SOLUTIONS FOR CASH CROPS
Average Score (max. score 25)
Tea: Work on a branding policy to assure more extensive

20.9
participation in niche markets and diversified export destinations
Sugar: Maintain and enforce a long term market policy including

19.8
indicators about meeting COMESA agreements.
Coffee: Open the market to ensure greater price transmission to

21.2
farmers and more incentives to invest in production.
LIVESTOCK
FIGURE I.5. PRIORITIZATION OF RISK MITIGATION SOLUTIONS FOR LIVESTOCK
Average score
Capacity building (farmers and local officers) 20.8

Irrigated fodder production 13.3
Strengthening community customary governance 19.8
Community peace keeping programs 19.2
Intensification and strengthening of disease surveillance 20.2
Increase water conservation pans 18.7
Conditional parks grazing /Wildlife /livestock coexistence 15.5
Destocking 19.3
Increased vaccination campaign 22.2
Controlled livestock movement 19.7
Reserve grazing pastures /standing pasture 16.9
Institutional reform 21.5
Livestock micro-finance 18.5
Animal feed: haymaking and storage, irrigated fodder 19.8
Invest in livestock sector infrastructure 19.1
Address conflict: reinforce customary mechanisms & create joint… 22.3
FIGURE I.6. PRIORITIZATION OF RISK COPING

SOLUTIONS FOR LIVESTOCK
Exceptional livestock movement 15.8
Livestock vaccination 20.7
Building water pans 18.8
Crop residues 18.5
Supplementary feed, emergency stores 15.8
Buying hay 14.5

A G R I C U LT U R E G L O B A L P R A C T I C E T E C H N I C A L A S S I S TA N C E P A P E R
W O R L D B A N K G R O U P R E P O R T N U M B E R 97887
1818 H Street, NW
Washington, D.C. 20433 USA
Telephone: 202-473-1000
Internet: www.worldbank.org/agriculture
Twitter: @WBG_Agriculture

Kenya Agricultural Sector Risk Assessment

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AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER

AGRICULTURAL SECTOR RISK ASSESSMENT

Stephen P. D’Alessandro, Jorge Caballero,

WORLD BANK GROUP REPORT NUMBER 97887 NOVEMBER 2015

Kenya: Agricultural Sector Risk Assessment

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Cover photos left to right:

Acronyms and Abbreviations ix

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A principal source of employment and major contributor to GDP, agriculture remains

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The GoK’s Agricultural Sector Development Strategy

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Risk Solution Development of risk Implementation and

Source: World Bank.

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AGROCLIMATIC CONDITIONS RAINFALL PATTERNS

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Source: Kenya Meteorological Department.

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1,500 Beans, dry

TABLE 2.2. LIVESTOCK POPULATION IN KENYA, 2009 AND 2012

TABLE 2.3. TRENDS IN CROP PRODUCTION,

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FOOD CROPS 70 percent of total maize output in Kenya on an aver-

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FIGURE 2.4. INDUSTRIAL CROP PRODUCTION (thousand tons),

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Sugarcane: Kenya’s sugar industry supports an esti- 16

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for between 6.2 and 32 percent of consumption depend-

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Consumption of maize and wheat is expected to increase

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FIGURE 2.8. TRENDS IN CEREAL PRICES (K Sh/ton), 1991–2011

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An important factor explaining the decline in coﬀee 19