By Julia Otieno and Jeremiah Darso
Introduction
Palm oil accounts for over 90 per cent of Kenya’s vegetable oil and supports 17 million livelihoods. It is a profitable crop in consumer products including margarine, soap and ice cream. Its output has grown over 500 per cent since 1960. While Kenya has great potential for local production, the import gap is still high at 763,059.52 tons. To bridge the gap, the Kenya Agricultural and Livestock Research Organization (KALRO) has identified counties, including Busia, Homa Bay, Kwale and Kisumu, as prime regions for palm oil production. Kenya’s move to expand local production could be transformative for the sector.
The Kenya Vision 2030 emphasizes investment in high-value crops such as palm oil to diversify agriculture. The Fourth Medium-Term Plan and Bottom-Up Economic Transformation Agenda (BETA) prioritizes it as one of the key value chains. County governments, such as Homa Bay, have committed significant resources, including US$ 27.5 million, to reduce the country’s annual palm oil deficit by 30 per cent. These policies position palm oil as an avenue for employment and economic transformation. This blog explores the status, challenges, opportunities and recommendations for unlocking employment opportunities in Kenya’s palm oil sector.
Status of Palm Oil Sector in Job Creation Progress in the palm oil market
Creating Jobs through palm oil production and imports
The palm oil value chain contributes approximately 7.7 per cent to GDP, employing 7,000 workers directly and 10,000 individuals indirectly. By expanding the sector, Kenya can boost employment opportunities in farming, processing, marketing, and distribution while reducing dependency on imports. Kenya imports 97 per cent of its palm oil from Malaysia. There has been an increasing trend in the palm oil imported in Kenya, with the highest amount recorded in 2022 (Figure 1). The rise indicates escalating demand, which implies the need for increased local production. Increase in local production increases more employment opportunities within the palm oil value chain.
Figure 1: Palm oil import and export quantity in Kenya
Source of Data: Agriculture and Food Authority of Kenya 2024 Boosting job creation through attractive prices
Figure 2 shows that the price of palm oil per kilogramme has grown by 23 per cent since 2018, with the highest price recorded in 2024. The increasing price makes palm oil less affordable to consumers, necessitating more production within the Kenyan economy, which creates more jobs.
Figure 2: Kenya palm oil price per unit in dollars (2018-2024)
Source of Data: Statista
Challenges and Emerging Issues Hindering Palm Oil Market
- Inadequate land: While at least 10,000 acres of land are required for efficient large- scale production, suitable areas in Kenya are highly fragmented. This limits the number of people employed in the sector and achievement of 600,000 metric tons demanded annually.
- Limited palm oil production: Kenya produces only 34 per cent of its edible oil requirement, making it heavily reliant on import from Indonesia and Malaysia. The annual palm oil requirement is approximately 600,000 metric tons valued at Ksh 54 billion, indicating untapped potential in domestic production employability.
- High production costs: Farmers face high production costs due to limited access to quality seedlings. The Kenya Agricultural and Livestock Research Organization (KALRO) has propagated over 25,000 seedlings, but upscaling of more farmers remains
a challenge despite the Kenyan government spending approximately Ksh16 billion annually to import the raw materials.
- Environmental challenges: Expansion of palm oil plantations into ecologically sensitive areas raises deforestation and sustainability concerns. The need to balance ecological preservation with the expansion of plantations is a pressing challenge for the industry.
Opportunities to Enhance Palm Oil Market and Jobs
- Palm oil production: Establishing palm oil plantation zones creates jobs for farmers engaged in cultivation. Palm oil production requires plantation managers, agronomists, harvesters and field supervisors. Cultivation of palm oil will raise employment opportunities for 7.5 million smallholder farmers, who account for 80 per cent of the country’s agricultural produce.
- Palm oil processing: Palm oil processing requires processing engineers, quality control specialists, production supervisors and machine operators. Establishment of palm oil processing factories in Kenya will lead to expansion of more factories from the current
13. The job opportunities in the sector will also increase from approximately 7,000 workers who are currently employed in the sector.
- High demand for palm oil at local market: The annual palm oil requirement is approximately 600,000 metric tons valued at Ksh 54 billion. Production of palm oil will be vital in meeting the 66 per cent deficit and provide more job opportunities for local producers.
Conclusion and Recommendations
The developing palm oil industry provides job opportunities to farmers, processors, and other value chain players. However, various challenges need to be addressed to realize the full benefits. The following recommendations propose solutions that can be explored.
- Conversion of more land for palm oil production: There is need to promote land consolidation through cooperative farming and leasing models in suitable regions to enhance large-scale palm oil production.
- Incentives to farmers: There is a need to subsidize high-yield seedlings, train farmers in modern farming techniques and facilitate credit access to palm oil producers. The incentives would be vital in reducing reliance on costly imports.
- Building capacity for farmers: There is a need to establish a board that can train farmers in good practices during seed production process. The good seedling practices will be instrumental in ensuring germination of high-quality palm oil seeds that produce high yield.
- Sustainable environment practices: Environmental NGOs and local communities need to collaborate to raise awareness and advocate for sustainable practices, promoting alternative farming methods that protect ecosystems vital in balancing economic growth with ecological preservation.
