The Future of Smallholder Farming in Eastern Africa - Uganda ...

Figure 2: Recent trends in domestic export of Kenya’s principal commodities
during liberalisation and immediate post-liberalisation period
Coffee, tea and maize (Tons)
300,000
250,000
200,000
150,000
100,000
50,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
0
1990 1991 1992 1993 1994 1995 1996 1997 1998
Year
Coffee Tea Maize Hides and skins
This study set out to explore how trade liberalization contributed to the performance of
the agricultural sector in 1980s and 1990s, when compared to the expectations from the
policy reforms. This is important because the inability of the agricultural sector to
maintain reasonable growth rates and the frightening scenario that Kenya faces if the
failure persists puts in focus the fortunes expected from trade liberalizing policies.
Hence, it is important to seek a better understanding of both the direct and indirect
effects of trade policies on agriculture through an explicit consideration of the
relationships between agriculture and the policies.
This study was based on the acknowledgement that economy-wide policies are as
important as sector specific policies in affecting agricultural performance. Some of the
studies, which have shown this relationship, include analysis of the economic impacts
of tariffs in Australia (Siriwardana, 1996) and analysis of the impacts of external shocks
in the Kenyan economy (Karingi, 1998).
The study strives to quantify the effects of trade liberalisation policies on the Kenyan
agricultural economy and uses a computable general equilibrium (CGE) model for
Kenya (discussed below). 1986 was picked as the base year 3 , being the most recent
year when social accounting matrices (SAM) database required to implement the CGE
3 Ideally, it would have been good to have a more recent base year. Structural economic changes that
occurred from a baseline of 1986 might not be uninformative in terms of policy analysis, but would give
direction and magnitudes of impacts. But still, using 1986 as a starting point is not unrealistic even
though we are looking at the issues of the 1990s since we recognise that policy changes for different
agricultural commodities in Kenya were staggered out from the late 1980s.