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Kenya: Agricultural Sector Public Disclosure Authorized AGRICULTURE GLOBAL PRACTICE TECHNICAL ASSISTANCE PAPER Public Disclosure Authorized KENYA AGRICULTURAL SECTOR RISK ASSESSMENT Public Disclosure Authorized Stephen P. D’Alessandro, Jorge Caballero, John Lichte, and Simon Simpkin WORLD BANK GROUP REPORT NUMBER 97887 NOVEMBER 2015 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 Kenya: Agricultural Sector Risk Assessment © 2015 World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org E-mail: [email protected] All rights reserved This volume is a product of the staff of the World Bank Group. The fi ndings, interpretations, and conclusions expressed in this paper do not necessarily refl ect the views of the Executive Directors of the World Bank Group or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank Group concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. World Bank Group encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clear- ance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA, telephone: 978-750-8400, fax: 978-750-4470, http://www.copyright .com/. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Offi ce of the Publisher, World Bank Group, 1818 H Street NW, Washington, DC 20433, USA, fax: 202-522-2422, e-mail: [email protected]. Cover photos left to right: 1. Gathering corn—Curt Carnemark/World Bank. 2. Man with livestock—Curt Carnemark/World Bank. 3. Irrigating fi elds 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 Profi les 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$, millions) xv Figure 1.1: Agricultural GDP versus National GDP Growth (% change), 1968–2012 2 Figure 1.2: Agricultural Value Added (annual % growth), 1980–2013 3 Figure 1.3: Agriculture Sector Risk Management Process Flow 5 Figure 2.1: Average Cumulative Rainfall (mm) by Rainfall Zone, 1981–2011 9 Figure 2.2: Composition of Crop Production (area harvested, in thousand ha), 1990–2012 10 Figure 2.3: Food Crop Production (thousand MT), 1990–2012 11 Figure 2.4: Industrial Crop Production (thousand tons), 1990–2012 13 Figure 2.5: Coff ee Production (tons), 1980–2012 14 Figure 2.6: Cereal Production Trends (thousand tons), 1990–2012 16 Figure 2.7: Maize Production versus Demand (thousand MT), 2003/04–2013/14 17 Figure 2.8: Trends in Cereal Prices (K Sh/ton), 1991–2011 19 Figure 2.9: Trends in Cash Crop Prices (K Sh/ton), 1991–2011 20 Figure 2.10: Coff ee Price Comparison ($/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 ($/kg), 1980–2012 36 Figure 3.4: International Coff ee Prices ($/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 Benefi ciary 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: Coff ee 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
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