Are commercialised farms driving agricultural transformation in rural Kenya?
Written by: Milu Muyanga, John Olwande, Joseph Opiyo and Thomas Jayne
Kenya’s agricultural landscape is rapidly evolving, with commercialised farming emerging as a key driver of change. By focusing on producing crops and livestock for sale rather than household consumption, this shift is reshaping rural economies and livelihoods. A recent study by the Tegemeo Institute delves into this transformation and explores the opportunities and challenges it brings.
Kenya’s agriculture has long been dominated by smallholder farmers, often focused on subsistence farming to feed their families. However, the rise of commercialised farming is transforming this landscape. Smallholders are increasingly embracing market-oriented production, while larger-scale farms operate with a business-like precision. Together, these actors are driving productivity gains, economic growth, and rural development in unprecedented ways.
Reaping the benefits of commercial farming
One of the most striking findings from the study is the boost in productivity and incomes among farmers who adopt commercial farming practices. By investing in improved inputs, such as high-yielding seed varieties and fertilisers, and employing modern farming techniques, commercialised farmers – both smallholders and medium-scale farmers – are not only producing more but also earning significantly higher incomes. The focus on high-value crops and efficient resource use has created a ripple effect, improving the livelihoods of farming households and contributing to a broader rural economy.
Employment is another critical area where these commercialised farms are making their mark. These small- and medium-scale farms create jobs. Directly, they employ labour for planting, harvesting, and other activities, and indirectly they fuel industries like transportation, processing, and marketing. In rural areas where job opportunities are often scarce, this employment generation is a lifeline, helping reduce poverty and providing stability for many families.
The integration of commercialised farmers into local and regional markets has also had transformative effects. Unlike subsistence farmers, who are often isolated from markets, commercial farmers are better connected through more established supply chains and contracts with buyers. Commercialised farmers are also more often part of networks or cooperatives that provide up-to-date information on market prices, weather forecasts, and farming best practices. This connectivity empowers them to make informed decisions about what to grow and when to sell, ensuring their efforts are rewarded with competitive returns.
A key enabler of commercialised farming by smallholders and medium-scale farms has been availability and affordability of technology. Mechanised equipment, advanced irrigation systems, and improved agricultural practices have revolutionised how farms operate. These innovations have not only increased efficiency but also helped mitigate the risks posed by climate variability, ensuring more consistent yields even in challenging conditions.
Barriers to growth: what’s holding farmers back?
Yet, this commercial transformation has not been without its hurdles. Access to affordable credit remains a major barrier for many farmers. Commercial agriculture requires significant investment in inputs, equipment, and expansion, but high-interest rates and stringent lending criteria often put these resources out of reach. Without sufficient financial support, the potential of commercialised farming remains underutilised for many smallholders.
Infrastructure is another pressing concern. Poor road networks and inadequate storage facilities hinder the efficient transport of produce to markets, while post-harvest losses remain high. These limitations reduce profitability and discourage investment in commercial farming. For many farmers, the dream of thriving in a market-oriented environment is tempered by these practical challenges.
Market fluctuations add another layer of complexity. The prices of agricultural products are often volatile, influenced by factors such as seasonal demand and global market trends. Without robust risk management strategies, farmers face unpredictable incomes, which can jeopardise their financial stability and capacity to reinvest in their farms.
The policy environment also plays a significant role. Inconsistent policies on tax and trade, land tenure systems, and bureaucratic hurdles create uncertainties that can deter farmers from fully committing to commercialised practices. A supportive and stable policy framework is crucial for fostering confidence and encouraging investment in the sector.
Unlocking the future of farming
To address these challenges and fully unlock the potential of commercialised farming, improving access to finance is paramount. Tailored financial products, such as microloans and crop insurance, can provide farmers with the resources they need to scale up operations. Similarly, investing in infrastructure better roads, storage facilities, and irrigation systems can create the backbone of a thriving agricultural sector.
Market development is equally vital. Strengthening cooperatives and farmer associations, as well as leveraging digital platforms for market access and price information, can empower farmers to connect with buyers more effectively. These connections not only stabilise incomes but also reduce the uncertainties associated with market volatility.
Extension services, which provide farmers with training on modern techniques and business management, are another essential tool. By equipping farmers with knowledge and skills, these services ensure that they can maximise their productivity and navigate the complexities of commercial farming.
Finally, policy consistency is crucial. Clear and stable regulations around land use, taxation, and trade can create an environment that encourages investment and supports long-term planning. Without such a foundation, the gains made by commercialised farming risk being undermined by uncertainty and instability.
Read the full paper Are Commercialized Farms Driving Agricultural Transformation in Rural Kenya? here: https://bit.ly/4h7ymw5
Photo: © Tim Njagi