Government budgetary allocation and its effect on agricultural growth

Abstract

Agriculture remains the pillar of the Kenya’s economy since independence. Literature points out existence of high correlation between agricultural growth and economic growth. The country has implemented several development plans with each identifying agricultural sector as among the important sectors that can lead to realization of set development goals. Agriculture in the country has experienced robust growth rates in the 1960s and 1970s to its dwindling growth in the 1980s and 1990s. However, the sector registered mixed performance from the year 2000 to date. A number of initiatives have been pursued with an aim of improving the productivity of agricultural sector and the economy as a whole. There is need to establish appropriate policies that should be implemented to enable sustainable increase in the agricultural output. This study examined government budgetary allocation and its impacts on agricultural productivity in Kenya. The study utilized annual data for the period from 1982-2014. A regression analysis was done using ordinary least squares (OLS) method to evaluate the significance of the factors. The study results revealed that agricultural output is responsive to both price and non-price factors. Specifically, agricultural price index, budgetary allocations, input price index and weather patterns were found to be statistically significant in determining agricultural productivity in Kenya. The study therefore recommends for an integrated policy regarding enhanced support for the sector to enable performance in agriculture sector.