Determinants of agriculture sector performance in Kenya

Abstract

Agriculture sector remains the backbone of the Kenya's economy since independence. There is correlation between agricultural growth and economic growth. The country has implemented several development plans with each identifying agriculture sector as among the important sectors that will lead to realization of set development goals. Agriculture in the country has experienced mixed performances from its robust growth rates in 1960s and 1970s to its dwindling growth in the late 1980s and 1990s.

A number of initiatives have been pursued with an aim of improving performance of the agriculture sector and the economy as a whole. There is a need to establish appropriate policies that should be implemented to enable sustainable increase in the agricultural output. This study examined the factors that determine performance of agriculture sector in the country.

The study utilized annual data for the period from 1968 to 2008. Agricultural gross domestic product was used as a measure of performance of the agriculture sector. A regression analysis was done using the ordinary least square (OLS) method to evaluate significance of the factors. The study established that agriculture output is responsive to both price and non price factors. The price factors such as agriculture price index and input price index alone were found to be inadequate in explaining agricultural growth.

It was established that non price factors including weather, adjusted exchanger rate, election violence and agricultural budgetary allocation were significant in explaining the agriculture output. The study recommends that an integrated policy regarding enhanced support for, the sector is required to enable agriculture sector to perform well.