Overview
Production of major crops continues to show a mixed trend in the first seven months of 2006. The reforms introduced in the fiscal year 2006/07 budget are, however, expected to bolster agricultural activity. Key among these reforms are the re-opening of Kenya Meat Commission Factory in Athi River and the zero rating of VAT on selected agricultural implements, machinery and transportation of unprocessed agricultural and agro-forest produce.
Tea

Tea output in the first seven months of 2006 declined by 15.8 percent from 187,594 tonnes in the first seven months of 2006 to 157,887 tonnes in a similar period last year The deceleration of the growth in output to 15.8 percent compared with the January . June 2006 cumulative production growth of negative 19.6 percent though an indication of recovering tea production is, however, not sufficient to offset the shortfall caused by the drought in the first quarter of 2006. Moreover, the decline matched with Tea Board of Kenya expectation of a drop of between 10-16 percent in 2006 from the 2005 output.

coffee
Small-scale coffee producers have been for a long time plagued by many problems, among them, being unable to access affordable credit due to poor loan recovery in the past and to buy the necessary farm inputs, contributing to low productivity and quality in coffee sub-sector. In an effort to boost coffee farmer.s income, the government in July 2006 published new regulations that will allow farmers to seek better prices in overseas markets through vetted and authorized marketing agents. This process will in turn hopefully translate to higher prices for coffee product. In addition, coffee co-operative societies are introducing information technology in their operations to improve efficiency in marketing efforts. Therefore, the sector is poised to benefit by current restructuring and review of policies and rationalization of co-operative audit services.

Horticulture
Production in the horticulture sector decreased by 4.6 percent from 102,680 tonnes in the first seven months of 2005 to 98,000 tonnes in the January – July 2006 period. Flower production picked up by 4.2 percent, while fruit and vegetable production decreased by 15.9 percent and 11.0 percent, respectively for the first seven months of 2006. The shares of flowers, fruits and vegetables in total horticulture production for the period were 51.3 percent, 12.3 percent and 36.3 percent, respectively. The 2006/07 budget proposed tax measures to support horticultural sector and make horticultural products more competitive. These include exempting commissions payable to non-resident agents abroad from withholding tax and declaring mangoes and avocados permanent and semi-permanent crops so as to enjoy tax advantages available under such crops. In the first seven months of 2006

Dairy
In the dairy sector, processed milk increased by 7.1 percent in the first seven months of 2006 from 183,655,140 litres in a similar period last year to 196,764,220 litres. After falling to 21,142,656 litres in March 2006 as a result of drought, milk productionpicked up following the long rains to reach 34,032,057 litres in June 2006 and 33,304,057 litres in July 2006

Sector profile Agriculture (702 kb)   
Investment opportunities in Agriculture

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