Every good student of economics knows the ‘invisible hand’ theory by Adam Smith. Essentially, Smith puts forward the notion that if everyone acted in own self interest, then the market forces of supply and demand would lead to an optimal allocation of resources.
If he lived in Kenya today, Smith would have no problem if fertile farm lands were used for real estate because a “new crop of farmers will simply arise in a different part of the country to continue with food production”.
However, recent events in the maize farming sector seem to be challenging the established ideas. Maize production is not keeping up with the population size. Kenya produces about 56 million bags annually, against a national population of nearly 50 million people—slightly a bag (100kg) per Kenyan per year.
Is this enough for a youthful growing economy? Secondly, there is the risk of discontentment among farmers, not least because of delayed payments. And lastly, the economic argument that if the farmers switch to other sectors then the free market will introduce a new group of farmers, has proved to be false.
If anything, what really ends up happening is a steep rise in importation—Kenya imported 1.6 million bags of maize in 2016 and 14.7 million bags last year!
Fortunately, the solution to the problem is within reach. We need to recognise agriculture is unique from other sectors and cannot be purely subjected to market forces of supply and demand. It is directly tied to national security and preservation of the human species. What would happen if a key market Kenya relies on for maize supply adopts hostile disposition towards us?
Once agriculture is recognised as a matter of security and not a mere creature of free markets, the problem of supplying poor farm inputs will amount to sabotage and attract heavy penalties.
And rightly so—poor quality farm produce threatens health and stability of a country. Indeed, the ability of a country to standardise quality across the food value chain is a necessary condition for having a vibrant and productive agricultural sector.
Once the problem of quality is resolved, demand for Kenyan produce will dramatically rise domestically and internationally. And naturally financial capital will be attracted to the agriculture sector, solving the perennial problem of low access to credit which has greatly hampered sector development.
Expansion of farm operations will lead to job creation for youth, which will dramatically see unemployment levels reduce. Considering the average age of a farmer in Kenya is 60 years, having a youthful labour force joining the sector will ensure food production and security.
Champions of unbridled global free trade will naturally resist any form of government intervention in agriculture. Kenya should not shy away from emulating policies practiced in leading economies to its farmers who are essentially the principle producers in the economy.
The benefits of having a vibrant agriculture sector accrue to other sectors—most notably manufacturing, health, real estate and infrastructure. —The writer is Chief Economist at Mentoria Economics; Twitter: @kgichinga