Kenyan farmers have consistently earned less even as consumers pay more for food products, a new report shows.
The report by the UN’s Food and Agriculture Organization (FAO) dubbed the World Bank and Agriculture Statistical Year Book 2023 compares annual changes in prices farmers receive against inflation in consumer food prices.
The data shows a persistent disparity between the two through to the end of 2022.
For instance, inflation in consumer food prices stood at 12.9 percent against the 7.1 percent increase in prices for farmers.
In 2021, inflation in what consumers pay was recorded at 8.9 percent against a 3.8 percent increase in the rates farmers got over the period.
The disparity in the farmer earnings to consumer prices was at its widest in 2020 when the annual prices of growers got contracted by 44.1 percent against a 6.4 percent jump in consumer prices inflation.
Prices that Kenyan farmers get are usually influenced partly by an inefficient market structure that features many intermediaries between the producers and the end consumer, driving down value for the growers.
A Business Daily investigation published last November showed middlemen dictate what farmers earn with the actors, including corrupt police and county officials manning roadblocks, contributing to the divergent wholesale and retail prices.
The investigations revealed the manipulation of pricing right from the farm gate to the retail outlets with the middlemen allocating profit margins in the value chain largely to their advantage.
The FAO report traces the increase in consumer prices mainly to periodic shocks to global demand and supply chains.
“The FAO food price index declined during the early phase of the Covid-19 pandemic reflecting uncertainties faced by commodity markets,” the report noted.
“However, it surged between May 2020 and March 2022 to its highest value ever, due to a combination of factors including the effects of the Covid-19 pandemic on the supply chains, the rebound in activity and demand experienced in 2021, and the disruption to exports of cereals and vegetable oils from the Russian Federation and Ukraine.”
Meanwhile, the report attributes disparities in prices received by farmers or producer prices to a combination of factors with the largest fluctuations often taking place in Asia and Africa.
“Many factors can affect producer prices, including favorable or poor harvests compared to the previous year, production costs, market structure, subsidy schemes and external factors,” the report added.
Data from the Kenya National Bureau of Statistics (KNBS) does not segregate between producer and consumer prices for the agricultural sector.
The data, however, shows agricultural output at current prices increased by 10.4 percent to Sh3.113 trillion in 2022 from Sh2.838 trillion previously.
Earnings from marketed agricultural production increased by 7.1 percent in 2022 to reach Sh564.6 billion 2022 on account of increased prices with permanent crops including coffee, tea and sisal totalling the highest combined returns.
Proceeds from the sale of livestock and livestock products, however, decreased from the drought and accompanied poor prices offered for livestock.
KNBS data shows the average gross commodity prices paid to farmers by various buyers increased in the sale of tea, maize and wheat but declined in the case of coffee sales.
