Technology; Future of Rural Areas?

Simply put, rural Kenya is different from the rest of the country,” A Professor told his fellow university and Extension agricultural economists attending a conference. While the economic recovery is generally slow and steady in much of the nation, recovery of the rural economy is a mixed bag, he added.

Rural Kenya is drought affected a lot sooner than urban areas, and because of that, job growth has turned positive in rural areas before it has in urban areas. On the other hand, rural economies have taken a beating.

“In this jobless recovery, rural communities are actually enjoying some job gains,” he says. “After falling more sharply, rural jobs rebound a bit faster that urban job gains, posting positive job growth. The leading pace of rural job gains is supported by the agricultural sector.

Additionally, rural job gains have been paced by stronger activity in service-producing firms, rural manufacturers face the brunt of the challenges, with available jobs in the goods-producing sector falling.

This highlights the challenges rural Kenya faces in a global economy. Building competitive advantages on low-cost land and labour will not work in a regional economy where neighbouring countries have cheaper land and labour.”

“Rural Kenya is becoming a service-based economy, and that industry is making gains while the goods producing industry is falling. This declining agriculture and factory base means rural Kenya needs a new economic engine that will be built on new technological innovations. If rural Kenya is going to compete, it is going to have to develop a new, competitive advantage.”

Recently, almost 10 percent of agricultural land has been converted into real estates resulting to mass layoffs were due to large scale farms closures, something not witnessed in the urban areas. “These jobs are not coming back. And small scale agriculture, the cornerstone of our economy, is suffering.

The two have one thing in common; they compete with the world for low-cost land and low-cost labour. With globalization, can we compete on these two things anymore?”

The answer to this question may be no. Production costs are increasingly cheaper in neighbouring countries. In addition, less than 10 percent of rural farmers in Kenya can afford quality inputs, and only a handful of those can feed themselves leave alone commercial agriculture. Value-addition, or product-based agriculture, is the key to future growth in the Kenya’s agricultural industry.

Kenya’s grain production has not recovered from drought crisis of yester years, but the impact has fallen primarily on bulk commodity production. Value-added imports continue to rise. If Kenya’s agriculture is going to compete in a global economy, competitiveness may rest on using technology to produce value-added agricultural products. Technology is the answer, as it always has been.”

For example, some sorghum growers are turning their commodity into animal feeds, while other producers are growing oil grains. Farmers are growing oil grains in rotation to traditional grains like wheat, and they’re making cooking oils from sub-urbanised areas.

And for every 1 shilling it takes to produce quality animal feeds traditionally, it takes only 50 cents to produce sorghum animal feed. On a broader scale the nation’s economic recovery, while slow and steady, will not necessarily equate to job recovery unless Kenyans invest in value addition agriculture.

Overall, economic activity is rising, spending is firming among individuals, businesses and governments, but the labour markets remain weak, which is why we don’t feel like we are in a recovery.

Despite economic growth, unemployment is still rising, and much of the nation is in a jobless recovery. Unemployment levels are low by historical standards, but they are still rising and are still quite high. This is the time to think of value-addition factories in the rural Kenya.

The reason for this phenomenon is a surge in grain productivity. Kenyans are producing less with more due to our turning to export crops like flowers in the expense of grain agriculture. This has been driven primarily by strong growth in the E.U market, which has been growing to support stronger economic activity. While grain productivity gains have edged back a bit, the population has been slowly growing.

One major difference between high value export leaning agriculture and grain agriculture is the economic recovery is weaker in the export because there is no investment in agro-processing. We’re growing; we’re just not growing as fast as we were prior to the recession.”

Consumer spending holds the country together during tough times. Now, corporate profits need to raise enough to spur business investments in physical assets and structures in the rural areas. Investing in rural value addition agriculture and agro-processing is the first step in beginning to see businesses that are finally confident enough in a recovery to spend some of their money.