Ray of hope as coffee is poised for comeback

Recent overtures by the Government and development partners towards the beleaguered coffee sector should be applauded.
Coffee was once the primary cash crop, and earned the country the prestigious title of world best producer of coffee. But its popularity fell in the 1990s, with production plummeting from 130,000 metric tonnes in the 1980s to 40,000 tonnes last year. Coffee is now only the fourth-largest earner after tourism, tea and horticulture.
The chief reason for this drop was decreasing coffee acreage, which is being lost to other high value crops, like horticulture, and real estate development in areas adjacent to Nairobi.
The decline was mostly brought about by mismanagement in the sector, which forced farmers to make do with paltry earnings. The low earnings, coupled with the high cost of inputs drove farmers to abandoning it for more lucrative crops, like horticulture and food crops.
But there is a ray of hope for the dying sector as the European Union said yesterday that it had increased funding to the sector. Under the plan, farmers will receive about Sh500 million in the next four years to improve production and quality.
Certification project
This follows another plan to boost quality control in coffee production, strengthen competitiveness of the crop and increase farmers’ earnings launched in July.
This plan would see the EU work and Kenya-based DCDM jointly fund a Sh370 million certification project aimed at increasing output and boost earnings by 25 per cent.
Moreover, Government recently introduced a hybrid plant resistant to coffee berry disease and to coffee leaf rust.
It is also high-yielding and suitable for planting at twice the normal density.
All these will help revive the floundering sector, and boost falling production.

Are Wars Good for the Economy?

One of the more enduring myths in Western society is that wars are somehow good for the economy. Many people see a great deal of evidence to support this myth, after all World War II came directly after the Great Depression. This faulty belief stems from a misunderstanding of the economic way of thinking.

The standard "a war gives the economy a boost" argument goes as follows: Let's suppose that the economy is in the low end of the business cycle, so we're in a recession or just a period of low economic growth. The unemployment rate is high, people may be making less purchases than they were a year or two ago, and overall output is flat. But then the country decides to prepare for war! The government needs to equip its soldiers with the extra gear and munitions needed in order to win the war. Corporations win contracts to supply boots, and bombs and vehicles to the army. Many of these companies will have to hire extra workers in order to meet this increased production. If the preparations for war are large enough, large numbers of workers will be hired reducing the unemployment rate. Other workers may need to be hired to cover reservists in private sector jobs who get sent overseas. With the unemployment rate down we have more people spending again and people who had jobs before will be less worried about losing their job in the future so they'll spend more than they did. This extra spending will help the retail sector, who will need to hire extra employees causing unemployment to drop even further. A spiral of positive economic activity is created by the government preparing for war, if you believe the story. The flawed logic of the story is an example of something economists call The Broken Window Fallacy.