Economic experts now argue that providing farmers with subsidized fertilizer is insufficient and urge them to have more access to financing.
They have described the subsidy as a fundamentally political response to an economic issue, claiming that the subsidies have failed to solve genuine economic problems.
“We’ve just gotten gasoline and maize flour subsidies. According to a senior lecturer at Strathmore University Lucy Muthoni, “We saw an instance where not all residents and business operators benefited from the program since other actors were excluded.
In other instances, wholesalers kept the discounted goods on hand for their own financial advantage.
Similar to the situation with maize flour, some farmers may not have access to the subsidized fertilizer, Muthoni said.
She noted that while fertilizer accounts for around 20% of the entire cost of agricultural output, the government must take other issues like loan facilitation into consideration.
Farmers are having trouble obtaining financing that would support them in developing plans to boost production, according to Rufas Kamau, a lead markets analyst.
A 50-kilogram bag of DAP fertilizer, CAN fertilizer, urea, NPK fertilizer, MOP fertilizer, sulphate of ammonia fertilizer, and urea would all sell for Sh3,500, Sh2,875, Sh3,500, Sh3,275, Sh1,775, and Sh2,220, respectively, under the subsidized fertilizer scheme.
Experts emphasized that subsidies are temporary policies with long-term repercussions during a Twitter debate on the economy.
They asked the government and exchequer to strengthen the nation’s fiscal and monetary policies in order to eliminate subsidies.
Subsidized loans may force commercial lenders to charge farmers exorbitant interest rates, which would discourage farmers from obtaining credit.
The agriculture industry had a mixed performance in 2021, a year in which the sector’s growth shrank by 0.1%, according to the Central Bank of Kenya’s Bank Supervision Annual Report (2021).
A lack of short rainfall and irregular, unevenly distributed long rains were blamed for the contraction.
CBK says that efforts to expand lending to this crucial sector of the economy need to be strengthened since the industry is expected to grow by 6.3% this year.