Discussion Paper No. 85 of 2008 on Determinants of Kenya's Beef Export Supply

Abstract

Beef cattle production is important for livelihood sustenance, especially in the Arid and Semi Arid Lands (ASALs) of Kenya, besides contributing a significant share of the agricultural Gross Domestic Product. Export trade in beef is one of the pathways through which increased foreign exchange earnings could be achieved to facilitate acquisition of equipment, knowledge, capital and development of domestic agricultural processing capacity in Kenya. However, Kenya's beef export supply has generally declined over the last three decades. The situation is exacerbated by periodic shocks such as drought and disease outbreaks that often significantly affect a considerable herd size, leading to famine, misery and extreme poverty especially in northern parts of the country. This paper analyzes the main determinants of the volume of beef supplied for export. The study uses annual time series data from 1965 to 2004 and a single equation model. Results show that the key determinants of beef export supply are domestic beef production, livestock development expenditure as a ratio of GDP, operation of the Kenya Meat Commission and occurrence of Foot and Mouth Disease, and Rift Valley Fever. The study recommends prioritization of disease control in order to eradicate especially Foot and Mouth Disease, and Rift Valley Fever, as the most critical intervention; increased budgetary allocation for enhancing domestic beef production; focus the mandate of the Kenya Meat Commission on regulatory functions; promote public-private investments in market infrastructure development; establish a vibrant livestock research and beef export coordinating department; review and harmonize the legal.framework to improve disease surveillance and streamline imports of beef cattle; and apply safeguard measures in beef trade. Further research is suggested on estimation of trade potentials in specific export markets.