Kenya Methodist university

a. Discuss the vision, mission and objectives of the Kenya Rural Development Strategy
(KRDS)

Kenyas rural sector is very critical for economic growth. It is the main contributor to the Gross
Domestic Products (GDP), food security, employment and raw materials for industries. It
however faces a number of constraints and challenges. The Kenya Rural Development Strategy
(KRDS) was developed to address these constraints and challenges. Its vision is To bring about
sustainable livelihood for all. This will be achieved by facilitating participatory rural
development through equitable and improved access to productive assets and services.
The objectives of the KRDS are to:
a) Increase agricultural productivity
b) Expand farm and non-farm income earnings and food security
c) Reduce disease and ignorance and
d) Achieve sustainable natural resource management.

The strategy to achieve the above will be through:

i)

Equitable growth and development in the rural sector

ii)

Sustainable natural resource management

iii)

Improvement of rural sector physical infrastructure and social services

iv)

Improved governance, public security, safety and rule of law

The transport sector plays a crucial role in the countrys social economic fabric, rural development
and national integration. An efficient network of physical infrastructure in rural areas is critical in
achieving high rates of growth in the rural economy. The Government has given priority to
rehabilitation of rural infrastructure, starting with access roads repair and maintenance, expansion of
electricity and telecommunications to the rural areas and construction and maintenance of water
supplies dams, using locally raised funds and subventions from the local government.

Some of the interventions for the agricultural sector contained in KRDS include

Legal and Institutional Reforms

Research and Extension services

Access to Credit

Irrigation Development

b. Discuss the rationale of the Kenya Rural development Strategy

1. In early 1980s Kenya was at par with economies like Israel and Korea. What went wrong
that we are now considered as among least developed.
Among the reasons for this poor performance include poor implementation of economic policies
and mismanagement, and weak institutions of governance. After making initial gains soon after
independence, the economy started a downward trend during the late 1980s and this deteriorated
by late 1990s. Reforms of the 1980s and 1990s that sought to deal with structural problems
appear to only have had limited success in stimulating economic growth.
Unfavourable macro-economic environment: Although in past efforts the government made
considerable progress in stabilizing the macro-economic environment, persistent large public
sector borrowing requirements, high lending interest rates, and overvalued and volatile shilling
exchange rates have discouraged investment in the agricultural sector. Many farmers have been
impoverished by the high debt service and nonperforming loans.

Unfavourable external environment: Deterioration in terms of trade due to a decline in world

commodity prices has particularly impacted negatively on incomes from coffee, tea, sisal and
pyrethrum farming. Tariffs and non-tariff barriers imposed by developed countries have made it
difficult for developing countries to access their markets.
Inappropriate legal and regulatory framework: An outdated legal and regulatory framework
serves only to constrain agricultural development, trade and effective competition. In many
cases, liberalization was not accompanied by appropriate legal and regulatory framework.
Lack of capital and access to affordable credit: The main cause of low productivity in agriculture
is inadequate credit to finance inputs and capital investment. In the past, the government, through
the AFC, the Cooperative Bank of Kenya and the co-operative movement, provided affordable
credit to farmers. Due to mismanagement and political interference, most of these institutions
have collapsed or failed to provide the service, thus leaving farmers without a source of
affordable credit. Though micro-finance institutions have come-up, they reach only a small
proportion of smallholder farmers, provide very short-term credit and their effective lending rates
are very high.
Frequent droughts and floods: Most crop and livestock farming in Kenya is rain-fed, and,
therefore, is susceptible to weather fluctuations. Over the last three decades the frequency of
droughts and floods has increased, resulting in crop failures and loss of livestock. Furthermore,
with increasing land degradation, land resilience has been reduced and the effects of drought and
floods exacerbated.
Reduced effectiveness of extension services: The effectiveness of extension services declined
throughout the 1990s due both to inappropriateness of the training and visit extension model
pursued and to delayed adoption of alternative models and sharp reduction in the operational
budgets of the sector ministries.
Low absorption of modern technology: Use of modern science and technology in production is
still limited, although Kenya has a well-developed agricultural research infrastructure. While
lack of affordable credit has partly contributed to this situation, equally important is the
inadequate research-extension-farmer linkages and lack of demand-driven research.
Poor governance and corruption in key institutions supporting agriculture: Cooperatives and
farmers organizations are vital for good performance of the agricultural sector by giving farmers
advantages of economies of scale in dealing with credit and marketing of inputs and outputs.
Corruption has led most such institutions to collapse or has weakened them in terms of finances
and manpower. An absence of private sector capacity to take over services following the
governments withdrawal has lead to great losses by farmers.
Inadequate markets and marketing infrastructure: Agricultural marketing information and
infrastructure are poorly organized and institutionalised. The domestic market is small and
fragmented and lacks an effective marketing information system and infrastructure. The

dependence on a few external market outlets makes agricultural exports very vulnerable to
changes in the demand of agricultural products and unexpected imposition of non-trade barriers
by foreign markets.
Multiple taxes: As they transport or market their farm produce, farmers have been subjected to a
multiple number of taxes from local authorities and government departments. This has
contributed to a reduction of the net farm incomes and created distortions in marketing structures
without necessarily improving the revenue for local authorities.
High cost and increased adulteration of key inputs: The cost of key inputs such as seed and
especially fertilizers has tended to be too high and cases of adulteration have increased. For this
reason, farmers have substantially reduced use of quality inputs such as seed, fertilizer, and
pesticides. The high cost of these inputs, coupled with the adulteration problem and rising
poverty levels, largely explain the deterioration in farming practices. In addition to escalating
international prices, the high cost of agricultural inputs is also due to the high transportation cost
in Kenya and an inefficient marketing and distribution system.
Poor infrastructure: Underdeveloped rural roads and other key physical infrastructure have led
to high transport costs for agricultural products to the markets as well as farm inputs. This has
continued to reduce competitiveness of the Kenyan farmer. In addition, electricity in rural areas
is expensive and often not available; this has reduced investment especially in cold storage
facilities, irrigation, and processing of products.
Lack of coherent land policy: There is no comprehensive land policy covering use and
administration, tenure and security, and delivery systems of land. This has resulted in low
investment in land development, leading to environmental degradation.
Incomplete liberalization: The government has undertaken significant reforms since the early
1990s. The liberalisation process for some crops like coffee, pyrethrum and sugar is, however,
yet to be completed, leading to weak performance of those crops.
Pests and diseases: There have been high levels of waste due to pre-harvest and postharvest
losses occasioned by pests and diseases and lack of proper handling and storage facilities.
Smallholder farmers and pastoralists are unable to cope with pests and diseases mainly due to
lack of finances, but, also because they are not informed, reflecting weaknesses in the extension
services system. Crop damage by wildlife has been common also.
Lack of storage and processing: Inadequate storage facilities constrain marketability of
perishable goods such as fish, dairy products, and vegetables. Lack of fish processing facilities
close to the lake region and the Mombasa coastal area has limited the extent of exploiting this
industry.
Insecurity in various parts of the country: Insecurity, particularly in the North Eastern Province
and parts of the Rift Valley Province, has resulted in cattle rustling and displacement of people,
thus contributing to non-sustainable agricultural development.
Increasing incidence of HIV/AIDS, malaria and waterborne diseases: The rapid spread of these
diseases and the corresponding deaths have resulted in the loss of productive agricultural
personnel and base for sustained farming knowledge and diversion of investible resources to the
treatment of the diseases.
2. Discuss HIV/AIDS with special reference to rural development in Kenyas economy

Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome (HIV/AIDS)

prevalence has become a major international concern, particularly in Africa where it has taken a
heavy toll.
AIDS has the potential to create severe economic impacts in any country. It is different from most other
diseases because it strikes people in the most productive age groups and is essentially 100 percent fatal.
The two major economic effects are a reduction in the labor supply and increased costs:
Labor Supply
The loss of young adults in their most productive years will affect overall economic output
If AIDS is more prevalent among the economic elite, then the impact may be much larger than the
absolute number of AIDS deaths indicates
Costs
The direct costs of AIDS include expenditures for medical care, drugs, and funeral expenses
Indirect costs include lost time due to illness, recruitment and training costs to replace workers,
and care of orphans
If costs are financed out of savings, then the reduction in investment could lead to a significant
reduction in economic growth

3. Compare and contrast CAP 318 and the swynnerton plan of 1954
4.
a. Discuss the ROCH DALE principles of cooperative movement
The Rochdale Principles are a set of ideals for the operation of cooperatives. They were first set
out by the Rochdale Society of Equitable Pioneers in Rochdale, England, in 1844, and have
formed the basis for the principles on which co-operatives around the world operate to this day.
b. Discuss the different types of marketing boards while describing their functions
Marketing boards are state-controlled or state-sanctioned entities legally granted control over the
purchase or sale of agricultural commodities. They can be divided into two broad categories.
Monopolistic marketing boards that create a single-commodity seller are found mainly in
developed countries. Monopsonistic marketing boards concentrating buyer-side market power in
one institution were commonplace for many years in developing countries.
Functions of marketing boards
a) obtaining funds for sales promotion, research, and extension ser-vices;
b) raising the bargaining power of agricultural producers on domestic or export markets;

c) improving marketing organization and methods by regulating qual-ity and packing

standards, market procedures, and sales practices, by raising the scale of operation and
setting up needed marketing and processing facilities, and by achieving a more
advantageous adjust-ment of the quantities and types of produce sold on particular
markets;
d) equalizing returns from sales in different markets or through differ-ent outlets; and
e) cushioning the impact upon producers and consumers of sharply fluctuating internal and
external prices.
Advisory and promotional boards. The main duties of this type of board
are to carry out market research and sales promotion on behalf of
specific commodities, including pilot programs to develop n w uses and
outlets. Such a board advises on product varieties, packing methods,
and grade standards, conducts quality analyses, and arbitrates
disputes. It does not own marketing
installations or equipment, nor engage in trade, nor maintaind irectc
ontrolso verv olumeo f sales or prices.T he existing patterno f
marketingen terprisesan d channelsr emainsu nchanged. Com-pulsioni
s usuallyc onfinedto a levy on salest o financet he board'so pera-tions
pera-tions. 2. Regulatoryb oards. Thesea re establishedto developa nd
applyu ni-forms tandards of qualitya ndu niformp ackingp roceduresto
exportp ro-duce facingi ncreasingc ompetition. Enforcementis by
licensinga nd in-spectione itherb y the boardo r by governmentse
rvicesw orkingin collabo-rationw itht heb oard. Somer egulatoryb
oardsa lso providel aboratoriesfo r qualitya nalysis; weighing,g
rading,s torage,p acking,a nd processingi nstallations; and sales
facilitiess uch as centrala uctionm arkets. The existingm arketing
structurec ontinues, subjectt o modificationun dert he board'sr
egulatory policy and possibleo bligationt o use the facilitiesw hich it
provides. 3. Boardss tabilizingp ricesw ithoute ngagingi n trade.T
ypicali s the caissed e stabilisationo f the formerF renchA fricanc
ountries, whicha c-cumulates reservef undsd uringp rosperoustr adey
earsa nd uses themt o supporti nternalp ricesw hen marketsa re less

favorable. It may also fix prices and determineq uantitiess old in

particularm arkets. In the de-velopingc ountries,it is normallyu sed for
exportc ropsp roducedm ainly by peasantf armers. Closelyr elateda ret
he boardss et up to negotiatep ricesw ith largep ro-cessors, wholesaleb
uyers,a ndd istributorson behalfo f a largen umbero f producers
and/orc onsumers,as for tea and dairyp roducei n Kenyaa nd
pyrethrumin Tanzania. Such a boardm ay also guaranteep ricesf or a
givenv olumeo f output,l eavinga dditional outputt o findi ts own
market. Thesel atterp rograms arel ikelyt o involvet he registrationan
di nspection of individualp roducersa nd traders,a nd the
supplementation,on the basiso f individual returns, of priceso btainedb
y themf or specificq uanti-ties sold.T hesep rograms arem oste asilya
dministered wheret he produc-ers concerneda re specializeda nd
relativelyf ew in number. The existing marketings tructurec ontinues,
with some tendencyt o crystallizationif total sales quotasa re allocatedt
o individual tradersa nd processors on the basiso f the volumeh
andledb y eachi n previousy ears. 4. Boards stabilizing prices by trading
alongside other enterprises. Spe-cial boards, supply institutes, or departments
of development banks were established in many Latin-American and Near-Eastern
countries in the 1950's to maintain buffer stocks of basic foods such as grains and
beans, and to stabilize internal prices to producers and consumers [8, pp.

241-259]. These boards own marketing installations and equipment, and

trade extensively on their own account. They may or may not have power
to compel producers and traders to follow certain procedures, including
observing fixed prices. Usually they operate in competition with preexisting marketing enterprises, buying from farmers through licensed
agents or the board's own purchasing stations, and selling to existing
wholesale distributors, to existing retailers, or, in some cases, through a
board's own retail outlets or through retailers under special contract-fair
price shops, for example. Such a board may need a monopoly of imports
and/or exports to help implement its domestic stabilization program.

Export monopoly marketing boards. This kind of board is sole buyer and
seller of specified products primarily produced for export, including raw
produce sold to domestic enterprises for processing into commodities for
export. Firms formerly engaged in the export trade are, in principle,
replaced by the board but may continue as the board's domestic buying,
processing, and overseas selling agents. Domestic purchases may also be
made through cooperatives and stations operated directly by the board.
Export sales are made locally by the board or through selling agents on
majori nternationalm arkets.T he board may own or hire marketingi nstallations and processing facilities. Its price stabilization policy is normally
based on fixed producer prices backed by reserve funds. This type of
board has been used widely in newly independent African countries,
largely to assure greater national control over main sources of foreign
exchange and government revenue. 6. Domestic monopoly marketing
boards. These boards were originally developed as a means of maintaining
the price of a commodity primarily producedf or domestic consumption;b
ut where surpluseso ver local needs at the desired price level have had to
be exported at lower prices (for ex-ample, maize in Kenya and the
Rhodesias), these boards have also been empowered to fix prices for
producers and retailers. Independent whole-sale buyers and processors
may be replaced by direct board services or employed as agents of the
board. Monopolies of exports and of pur-chasing in specified areas have
also been given to organizations such as the Kenya Meat Commission and
the Rhodesia Cold Storage Commission as a condition of providing
marketing and processing facilities which were not being provided by
existing enterprises.