The Proposal

Agriculture including livestock is the mainstay of the Kenyan economy that accounts for 21% the gross domestic product - the highest single sector contribution to economic growth. The sector employs approximately 40% of the total population and 70% of the rural population. Agriculture is also the anchor sector for the country’s food and nutrition security and contributes directly to attainment of sustainable development goals (SDGs) 1 on eradication of hungers. 2 on zero hunger) and 10 on reduced inequalities.

Arid and Semi-Arid Lands (ASALs) constitute the largest landmass in Kenya, accounting at over 80%, host over 70% of livestock and account for approximately 36% of Kenya’s population that sorely depend on livestock for food and income. The region also posts high food insecurity and Global Acute Malnutrition Rates at 17% and 69% respectively; and is extremely vulnerable to the adverse effects of climate change such as droughts. Over the recent drought period that climate experts have coined the severest in 40-years, Kenya lost over 2.5 million livestock, mainly in ASAL areas.

The Hand-in-Hand Initiative in Kenya is therefore focusing on catalyzing market-base, sustainable and climate smart transformations at various nodes of the livestock value chain towards improving food and nutrition security for improved livelihoods in the Arid and Semi-Arid Lands (ASALs) of Kenya. HiH is providing technical assistance to the Kenyan Government in identifying, prioritizing, analysis and profiling investment opportunities in the seeds, feed, meat and routes-to-market nodes of the livestock industry.

Kenya Typologies

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Government of Kenya: investment cases in Kenya

Kenya Investment Cases and Interventions

Assorted Forage and Cotton Seeds

Kenya’s livestock sector is to a significant extent encumbered by a shortage of quality and affordable animal feeds and animal feed ingredients to support a thriving and commercially viable livestock industry. Lack of quality seeds for various feed related crop varieties is one the binding constrains to the production of animal feeds in the country. While perennial grass pastures form the main basal feed for livestock in ASALs, the low protein content in grasses underpin the policy need for production of forage legumes, cotton seed cake, among other ingredients for good livestock performance. The demand for pasture grass, legumes and cotton seeds has been increasing steadily in the past decade due to increased awareness, knowledge on the importance of balanced feed rations in terms of energy and protein for optimal livestock performance and this demand is projected to grow. The supply constraints in seed production have predisposed the seed security system in the country to reliance on imported varieties that has made quality seeds expensive and inaccessible.

In a policy endeavor to address this challenge, the Kenya Agriculture and Livestock Organization (KALRO) has recently registered four (4) climate smart range grass varieties, namely CECI MGD1 KBK, CECI TVT3 KBK, CHROX KBK, and ENMA KBK for commercial multiplication and distribution to farmers. Commercial of seed varieties has opened investment opportunities for seed investors and/or merchants to produce seed for direct distribution to the market, and for individuals and farmer groups to become out growers for both private seed merchant companies and KALRO. Basic seed of legume varieties including fodder cowpeas e.g. M66, Dolichos lab lab e.g. DL002, sweet potato vines e.g. Ex-Mukurweini and, cotton varieties e.g. HART 89M and KSA 81M are also available for commercialization. All the varieties are high yielding with productivity levels ranging from 100 to 400 kg/ha for grass, 800 to 10,000 kg/ha for legumes and 990 kg/ha for cotton seed. The varieties are widely adapted to the ASAL environment. Availability of quality seeds to livestock keepers or commercial forage producers at affordable prices will increase feed availability and subsequently enhance livestock productivity.

The Kenyan Government has therefore identified and prioritized establishment of assorted forage and cotton seeds production hubs each comprising of a 30 metric tons per annum scalable mechanized pasture seeds production; 10 metric tons per annum scalable mechanized legume seeds production; and a 660 metric tons scalable mechanized cotton seeds production by the private sector.

The total proposed investment is USD 444,440 that would yield a high internal rate of 22 percent. The net present value is estimated to be USD 39,780 and the total direct and indirect beneficiaries are estimated to be 93,000 and 558,000 respectively. The average expected income increase through these investments would be approximately USD 3,160 for each beneficiary.

Maize Grain Production and Silage Making

Livestock feed require approximately 1.6 million metric tons of feed ingredients currently and this demand is projected to increase to 3 million metric tons by the year 2025. There is therefore a public policy impetus for promotion of large scale, mechanized production and processing of maize grain for processing by animal feed millers. Moreover, the currently is currently producing approximately 6.6Million metric tons of silage against a demand of 12.2 million metric tons translating to about 50% deficit.

The Kenyan Government has therefore identified and prioritized large scale maize grain production and silage making to ameliorate this animal feed supply shortfall. The investments involve establishment of large-scale maize production hubs in units of 800HA under the land commercialization programme to produce maize grains for the feed millers and silage for livestock farmers.

The total proposed maize grain investment is USD 68.7 million that would yield a high internal rate of 19 percent. The net present value is estimated to be USD 2.7 million and the total direct and indirect beneficiaries are estimated to be 1,680 and 5,040 respectively. The average expected income increase through these investments would be approximately USD 6,720 for each beneficiary.

The total proposed silage production investment is USD 1.6 million that would yield a high internal rate of 28 percent. The net present value is estimated to be USD 3.6 million and the total direct and indirect beneficiaries are estimated to be 356 and 2,136 respectively. The average expected income increase through these investments would be approximately USD 989 for each beneficiary.

Black Soldier Fly Farming 23.2 Million USD 3,000 Beneficiaries

Black Soldier Fly Farming

Kenya's livestock sector is facing growing challenges due to increasing feed shortages, rising feed costs, and escalating demands for sustainable solutions - all intensified by the sector's rapid expansion. In particular, the country faces significant production shortages of animal feed

protein and other ingredients and relies on imports of approximately 500,000 metric tons of animal feed ingredients annually. The traditional sources of animal feed ingredients such as cotton seed cake, soya beans, maize jam and fish meal reliable on environmental resources such as large parcels of land and water to produce and therefore increasingly susceptible to climate change variability, require huge capital and other resources such as skilled labour to produce, compute directly with food for human consumption and a high carbon footprint.

Moreover, the world losses 1/3 one third of all food produced - approximately 1.3 billion metric tons of organic food waste per annum excluding losses farm level food waste and losses during transportation, processing and storage. Organic food waste produces significant amounts of both carbon dioxide and methane gas under either aerobic or anaerobic decomposition. If the food waste ends up in landfills, it generates methane – a GHG that is estimated to be 25 times more potent than carbon. Edible food waste is also a social-economic and humanitarian issue. It is estimated that today’s level of food waste would deliver enough calories to feed the undernourished persons on earth. The problem of food waste is more severe in developing countries where waste recycling capacity is limited.

Black soldier fly (BSF) farming therefore presents a groundbreaking opportunity to address livestock feed challenges while supporting the global climate ambition on reduction of greenhouse gas emissions. BSF larvae convert organic waste into high-quality protein, offering an eco-friendly alternative to traditional feed ingredients. BSF farming reduces waste and enhances sustainability, aligning with Kenya’s environmental and sustainability goals.

The Kenya Government has therefore identified BSF farming as a credible and sustainable source of protein ingredients for livestock. BSF larvae has high crude protein (30 – 66%), fat (14 – 40%), essential amino acids, vitamins, and minerals; does not bioaccumulate aflatoxins, E. coli and Salmonella spp and Aligns with Kenya’s goals for sustainable agriculture and food security. BSF innovation has low barriers to entry and therefore provides opportunities for decent jobs for young women and men.

The Government is therefore promoting establishment of 2,400 modular BSF production facilities to produce larvae and organic manure/frass.

The total proposed investment is USD 23.3 that would yield a high internal rate of 23 percent. The net present value is estimated to be USD 2,000 and the total direct and indirect beneficiaries are estimated to be 1,000 and 558,000 respectively. The average expected income increase through these investments would be approximately USD 1,076 for each beneficiary.

Pasture (Hay) Warehousing and Storage 19.8 Million USD 100,000 Beneficiaries

Pasture (Hay) Warehousing and Storage

Kenya faces a 60% animal feed deficit and approximately 46% of this animal feeds production is lost every year due to post harvest losses. This double challenge of animal feed shortages and post-harvest losses have significantly undermined the sustainably and competitiveness of the livestock industry in the country. Due to shortage of sufficient and nutritious animal feeds

mean that livestock take inordinately long to attain minimum weights for the market which exposes the livestock herds to adverse climate change impacts such as droughts that occasion livestock mortalities. These circumstances generate other unintended consequences such intensive livestock migration in search of pasture and water that trigger resource-based conflicts; strain on environmental goods along the livestock migration corridors; and increased methane emission. At the macro level, shortage of animal feeds predisposes the value chain to reliance of costly animal feeds and animal feed ingredients that have contributed to costly animal feeds in the country due to imported inflation and in further undermining the competitiveness of animal base products in the regional and international markets.

The Kenyan Government has therefore prioritized development of 3,121 modular pasture and fodder storage and warehousing assets each with an installed holding capacity of 85,000 bales as a public policy imperative. This intervention will address the problem on post-harvest losses and catalyze the development of development of market linkages in wholesaling, distribution and retailing of pasture and fodder commodities to livestock keepers.

The total proposed investment is USD 19.8 million that would yield a high internal rate of 25 percent. The net present value is estimated to be USD 35,380 and the total direct and indirect beneficiaries are estimated to be 16,000 and 84,000 respectively. The average expected income increase through these investments would be approximately USD 996 for each beneficiary.

Cotton Ginning, Cake Milling and Oil Production 19.8 Million USD 20,944 Beneficiaries

Cotton Ginning, Cake Milling and Oil Production

Despite the sector’s production and activities decline, cotton is still considered one of the few cash crops with real potential for increasing employment opportunities and food security through income generation in the ASALs of Kenya. The country is endowed with a well-developed textile industry that requires a constant supply of cotton lint. The textile industry includes integrated textile mills and large-scale garment manufacturers. However, the industry has significant potential to expand if cotton production and market conditions improve.

The industry continues to import various material inputs mainly from the neighboring countries of Uganda and Tanzania for lint and from the Far East for (Asia) for inputs in garments manufacture. In addition to the textile industry, seed processing stands out as a downstream industry for the sector, offering several potential business opportunities with respect to oil, animal feed and energy production.

There are 9 ginneries in the country, with an installed capacity of approximately 80,000 bales annually. They include three in Coast region, one in Nyanza, Kirinyaga, Meru, Thika, Eldoret and Kitui. The current cotton seed cake production in Kenya is 1.5 million metric tons with a targeted production of 1.8 million metric tons by 2030. The current demand for cotton seedcake stands at 0.22 million metric tons and is projected to increase to 0.46 million metric tons annually.

The Kenya Government has identified development of 50 modular cotton ginning hubs with a processing capacity of 4,000 metric tons of cotton seed to produce 1,600 metric tons of seed cotton per annum. In addition, the Government is promoting establishment of 50 units of cotton cake milling and oil production hubs each with an installed processing capacity of 1,600 metric tons of seed cotton to produce 1,400 metric tons of cotton seed cake and 192 metric tons of cotton oil per year.

The total proposed investment is USD 79.8 million that would yield a high internal rate of 21 percent. The net present value is estimated to be USD 965,199 and the total direct and indirect beneficiaries are estimated to be 1,904 and 19,040 respectively. The average expected income increase through these investments would be approximately USD 960 for each beneficiary.

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