Kenya’s agriculture sector is at a crossroads, facing critical challenges such as land fragmentation, inefficient farming methods, climate change, and a significant financing gap. These issues, if unaddressed, could undermine food security, stifle rural development, and slow down economic growth.
However, with innovative approaches to land ownership, strategic partnerships, and financing, Kenya can trigger a long-awaited agricultural revolution, propelling the sector and the country into a new era of growth, sustainability and profitability.
One of the most impactful solutions lies in the establishment of agricultural corporations with a shared ownership structure. This innovative model would include county governments, local landowners and specialised technical partners as shareholders.
The primary goal would be to streamline farming operations and distribute benefits equitably among all stakeholders. This model of collaboration offers an inclusive approach, ensuring that rural farmers are not left behind but instead participate fully in the value chain.
The role of the three key players are as follows:
Local landowners: Kenyan citizens who are landowners, including small-scale farmers, can contribute their land as equity in exchange for shares in agricultural corporations.
By pooling resources, they can overcome the barriers of land fragmentation and access collective benefits such as improved infrastructure, modern farming techniques, and increased profitability.
Technical partners: These partners—ranging from agronomists, seed producers, and fertilizer companies to security service providers—will bring industry expertise and modern farming solutions.
For instance, seed companies can provide high-yield, climate-resilient crops, while security firms ensure the safety of workers and assets across the value chain.
County governments: They will play a pivotal role by facilitating planning, zoning and administrative coordination. Their involvement ensures proper infrastructure, such as roads and water systems, is available to support agricultural operations.
The concept of local fractional ownership allows landowners to contribute their land as equity in these ventures, while receiving shares in the corporation. This allows participants to benefit from the economic output of the land without losing ownership rights.
This model of ownership would be supported by 99-year lease agreements, ensuring long-term stability and compensation for development or relocation.
Case Study: Malaysia’s palm oil plantations and agro-industrial hubs
An exemplary model that Kenya can draw inspiration from is Malaysia’s highly successful palm oil industry. Malaysia has developed a unique model of corporate agriculture involving public and private stakeholders.
For instance, the Federal Land Development Authority was established to oversee large-scale agricultural developments by pooling land from smallholders and integrating them into the national palm oil value chain.
In this model, landowners contribute their land in exchange for equity shares in agricultural corporations. This allows them to benefit from the profits of large-scale palm oil production without losing ownership rights.
Malaysia’s success has hinged on its ability to avoid land fragmentation while elevating smallholders, who are fully integrated into the value chain through well-structured partnerships.
This model has not only created a thriving palm oil industry but also uplifted rural communities through the establishment of agro-processing facilities, providing employment and improving livelihoods.
Kenya can adapt this model by focusing on key crops such as tea, coffee, or palm oil, and replicating Malaysia’s agro-industrial approach.
By integrating small-scale farmers into larger agricultural corporations, Kenya can boost production, add value locally, and create jobs, while ensuring equitable distribution of benefits.
To optimise land use, Part Development Plans (PDP) and zoning regulations can be used to consolidate land for agricultural production.
The focus would be on identifying the minimum viable farm size required for profitable production and planning adjacent living areas to create self-sustaining agricultural communities. GPS-based registration systems can facilitate the collection of land titles, making the process efficient and transparent.
Local governments can leverage eminent domain for land acquisition, where necessary, ensuring that land is used effectively for agricultural and community development purposes. By integrating adjacent areas and reducing land fragmentation, large-scale farming can thrive, fostering the growth of crops such as palm oil, tea, and other high-value agricultural products.
Financing the agricultural transformation
Financing the agricultural transformation will require innovative approaches, including the use of convertible equities and dividend earnings to incentivise investment in agricultural corporations.
This financing structure allows for a mix of immediate cash flow and long-term value creation, ensuring that investors, landowners, and the corporations themselves all benefit over time.
Additionally, international financing through County Bonds and other debt instruments could be a viable option to support large-scale agricultural initiatives.
In line with global trends, Kenya can also explore green financing mechanisms. Climate-resilient agriculture, which focuses on sustainable practices and innovations, can be supported by green bonds, attracting investors interested in environmentally friendly projects.
By implementing green farming techniques such as solar-powered irrigation, agroforestry, and organic farming, Kenya can position itself as a leader in sustainable agriculture while contributing to global climate action.
The future of agriculture in Kenya hinges on innovative ownership models, strategic partnerships, and bold financing mechanisms. By embracing these changes, the country can overcome its agricultural challenges and unlock the vast potential of its farmlands.
The proposed solutions offer a pathway to not only feed the nation but also enhance rural development, create jobs, and boost economic growth, ensuring that agriculture remains a cornerstone of Kenya’s development trajectory.
The writer is the Group Managing Director & CEO, CPF Group
