Scale up subsidy to benefit more smallholders

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What you need to know:

  • And even as they soldier on, many may not have the money to acquire the inputs to plant next season.
  • Traditionally, subsidies work well to incentivize food production by driving down prices to benefit farmers.

The Covid-19 pandemic has strained food production systems, destabilised the economy and jeopardised the welfare of millions of farmers. Adverse weather patterns and desert locusts have also caused production losses.

Smallholders typically do not insure their crops; hence, their finances have been devastated.

And even as they soldier on, many may not have the money to acquire the inputs to plant next season and require help to access seed and fertiliser.

President Kenyatta’s eight-point economic stimulus programme, which proposes to use Sh3 billion to subsidise farm inputs through e-vouchers, couldn’t have come at a better time. It’s a valuable policy intervention with the potential to create incentives for adopting high-quality inputs and increase food production. But it targets only 200,000 of the country’s four million smallholder farmers, so millions of deserving beneficiaries will miss out.

Smallholders are the all-important constituency that labours every day to meet our food needs and we must support them through a responsive, fit-for-purpose model. It makes the most financial and humanitarian sense to get as much access to credit and subsidies to as many of them as possible.

‘Big Four Agenda’ pillar

Traditionally, subsidies work well to incentivize food production by driving down prices to benefit farmers and, subsequently, consumers. The government could be more ambitious in its objective.

Food security and nutrition, a ‘Big Four Agenda’ pillar, aims at raising the average incomes of smallholders by 35 per cent — from Sh465 per day to Sh625 — and directly benefit more than 3.3 million farming households. The e-voucher can trigger adoption and investment towards this goal.

Fortunately, despite the scale of Covid-19 responses required, which demand intensive resource investment, we are not without options. The government can partner with stakeholders in the food value chain to actualise an effective national response in the interest of food security.

Funding needs

The government is hard-pressed to meet its usual funding needs and the socioeconomic ones that Covid-19 brings. Multilateral development institutions are working with governments, including Kenya, to craft solutions that touch on different spheres during and after the crisis through low-interest loans and donations. Some of these packages target smallholders, boosting subsidies.

The government could scale up its response through partnering with financial service providers, like banks and microfinance institutions, to provide seed and fertiliser on affordable credit.

The threat of Covid-19 to food and nutrition security is clear, and the government faces the balancing act of protecting the country’s health while keeping the economy going. Approaches that support all smallholder farmers, not just a few, must be an essential part of the Covid-19 mitigation.


Mr Maritim is a government relations senior analyst at One Acre Fund. [email protected]neacrefund.org.