The rising cost of farm inputs, fuel, labour and equipment is pushing more farmers to borrow money to keep their farms running, with the proportion accessing credit increasing in recent months.
According to the Central Bank of Kenya’s July agriculture survey, 34 per cent of farmers accessed credit in July, up from 30 per cent in May.
While commercial banks remain a key source of agricultural finance, farmers are also turning to family and friends, produce buyers and digital lenders to raise money for their activities.
The report, however, shows that borrowing is not necessarily a sign that farmers are expanding their businesses. In many cases, the money is needed to meet basic production costs such as buying fertiliser and certified seed, paying farm workers, purchasing fuel for machinery or pumping water for irrigation.
Kamau Wanjeru, a farmer from Kieni in Nyeri county, grows potatoes and other food crops. He says poor harvests sometimes leave him with no choice but to borrow money from his cooperative society or, when things get worse, seek help from his brothers to buy enough fertiliser.
“The subsidised fertiliser I receive is not enough because I have leased more land to grow potatoes. I therefore have to dig into my pocket to buy an additional one or two bags at Sh7,000 each. Even paying farm workers is becoming a challenge because the cost of production has become too heavy,” Wanjeru said.
The CBK survey found that farmers relied on different sources of credit, with family and friends remaining the most commonly reported source in July at 38 per cent.
Commercial banks accounted for 21 per cent of reported borrowing, while 19 per cent said they obtained credit from buyers of their produce.
Digital lenders were also an important source, accounting for 16 per cent of farmers who reported accessing credit.
The report shows a decline from May in the proportion relying on several of these sources. Borrowing from family and friends fell from 45 per cent in May to 38 per cent in July, while borrowing from commercial banks declined from 32 to 21 per cent.
Credit from produce buyers fell from 45 to 19 per cent, while farmers reporting access to digital loans declined from 30 to 16 per cent.
The CBK says farmers’ choice of where to obtain credit can change depending on factors including the cost of borrowing, ease of accessing credit and farmers’ awareness and knowledge of available credit facilities.
But for farmers already struggling with the cost of production, borrowing can mean the difference between maintaining production and leaving part of the farm idle.
“If I do not get the money for fertiliser on time, I cannot continue with production,” Wanjeru said.
The July survey which was conducted between July 13 and 17 involved 389 respondents, including farmers, wholesalers and retailers in selected areas across the country.
The survey covered agricultural markets and farming areas in counties including Kiambu, Kajiado, Machakos, Nakuru, Narok, Bomet, Kericho, Kisumu, Mombasa, Taita Taveta, Kisii, Uasin Gishu, Trans Nzoia, Nyandarua, Laikipia, Makueni, Meru, Nyeri, Murang’a, Isiolo, Kakamega and Bungoma.
The farmers called for government support to provide irrigation equipment such as generators, pumps and piping networks, saying access to reliable water could help maintain production.
They also called for increased agricultural subsidies and grants, better feeder roads to facilitate the movement of farm produce and stronger extension services.
Farmers want agricultural officers to provide more education on the use of appropriate seeds and fertiliser, soil testing, crop spacing, climate-smart agriculture, proper use of pesticides and herbicides and ways of reducing post-harvest losses.
“Measures to reduce the input cost burden, including subsidised fertiliser and certified seeds, should continue,” the CBK report stated.
It also recommended reducing the cost of agricultural equipment and machinery to promote mechanisation and productivity in addition to strengthening extension services and sustaining measures aimed at reducing fuel costs.
