Agriculture cabinet Secretary Mutahi Kagwe advocated for stronger cooperatives and farmer aggregation to address fragmented agricultural land and improve access to markets during the 2026 annual Agricultural Show in Nairobi.
The push is significant for SACCOs because the commercial viability of agricultural borrowers depends not only on how much they produce, but also on the prices they receive, the costs they incur and how quickly they are paid.
By organising farmers into commercially effective groups, cooperatives can consolidate produce, negotiate with buyers, coordinate transport and invest in shared storage and processing facilities.
SACCOs can complement these arrangements by financing eligible members, cooperative enterprises and productive assets, including equipment, cold-chain facilities, warehouses and processing machinery, subject to their mandates, lending policies and risk appetite.
The government is promoting aggregation, processing, value addition and market development across coffee, tea, sugar, cotton, dairy and horticulture.
Kagwe reported that tea earned approximately KSh187 billion in 2025, cut flowers KSh103 billion, fruits and vegetables KSh100 billion, and unroasted coffee KSh52 billion.
These value chains offer potential for agricultural finance beyond conventional seasonal loans, including working capital for produce aggregation, equipment financing for processors and financing for businesses that supply logistics, packaging and other services.
For SACCOs, the opportunity is to finance a larger share of the agricultural value chain while maintaining prudent lending standards and ensuring that members can service their loans from actual business proceeds.
Warehouse receipts and post-harvest financing.
The CS also highlighted government efforts to reduce post-harvest losses through mobile dryers and other equipment, alongside promotion of the Warehouse Receipt System.
The system can allow eligible farmers and commodity owners to store produce in recognised warehouses and use warehouse receipts to seek financing, subject to applicable requirements and lender acceptance.
For agricultural SACCOs, warehouse receipt financing could provide an alternative to lending based solely on conventional collateral, where the commodity, storage arrangements, valuation and legal framework adequately protect the lender.
It could also help farmers avoid distress sales immediately after harvest, when market prices may be unfavourable.
However, effective uptake would depend on accessible storage facilities, credible commodity grading, transparent pricing, reliable warehouse operators and SACCOs’ capacity to manage commodity and price risks.
Kagwe’s emphasis on reducing post-harvest losses and strengthening market connections reinforces the need to treat agricultural credit as part of a wider commercial system rather than an isolated financial product.
Livestock investments expand financing opportunities.
In the livestock sector, Kagwe cited investments in animal health, breeding, dairy productivity and market infrastructure, including the assessment of the Isiolo Abattoir’s market readiness and the handover of the Bachuma National Livestock Quarantine Center to private investors.
“Both these investments connect farmers to markets, create local jobs, contribute to value addition, and position our livestock sector for global markets,” he said.
The government is also using the Animal Identification and Traceability System (ANITRAC) to strengthen livestock traceability and market access.
Kagwe reported that marketed livestock production increased from KSh232.3 billion in 2024 to KSh269.4 billion in 2025.
For SACCOs serving pastoralists, dairy farmers and other livestock producers, improved market infrastructure could create opportunities to finance livestock purchases, feed, breeding, animal health, milk collection, chilling equipment and other productive investments.
Yet livestock lending remains exposed to drought, disease, feed-price fluctuations and market disruptions. Kagwe called for reliable access to affordable feeds and expanded insurance programmes, noting that dry conditions had contributed to recent milk supply constraints.
Partnerships linking agricultural SACCOs with insurers, veterinary service providers, livestock cooperatives and reliable buyers could help address some of these risks, although insurance availability, affordability and coverage would need careful assessment.
Climate risk puts agricultural credit under pressure.
Kagwe said agriculture grew by 3.1 per cent in 2025 but remained under pressure from climate variability, rising production costs and changing market demands.
He cited estimates that droughts and floods create long-term economic liabilities equivalent to approximately 2–2.8 per cent of Kenya’s gross domestic product annually.
The government is accelerating irrigation investment through rehabilitation of existing schemes, new infrastructure and water-efficient technologies. It is also promoting drought-tolerant crops, conservation agriculture, agroforestry and sustainable land management.
These measures matter to SACCOs because climate-related production losses can weaken household cash flows, increase loan arrears and undermine the value of agricultural investments.
Financing irrigation, water-efficient technologies and climate-resilient production could improve resilience where projects are technically sound and commercially viable. Flexible repayment schedules aligned with production cycles and stronger links to agricultural insurance may also help manage seasonal risks.
The priority, however, is to ensure that agricultural credit supports investments capable of generating sufficient income rather than adding debt to already vulnerable farmers.
Turning agricultural savings into productive investment.
Kagwe said the government wanted young people and women to benefit from opportunities across farming, processing, technology, finance, logistics and entrepreneurship.
Agricultural SACCOs can contribute by mobilising savings from farming communities and channelling capital into productive enterprises, while providing members with financial education and access to appropriate credit.
Beyond individual farm loans, opportunities may include financing agro-dealers, produce transporters, cold-storage operators, processors and businesses that provide digital or technical services to farmers.
For SACCOs, this would require balancing the need to expand agricultural lending with liquidity management, portfolio diversification, sound governance and careful assessment of climate and commodity-market risks.
