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Drought conditions have Kenya suffering

Thursday, February 3, 2011

La Niña has been damaging to Kenya's ag industry, including the nation's renowned coffee beans.
La Niña has been damaging to Kenya's ag industry, including the nation's renowned coffee beans.

Farming and agriculture in parched Kenya will slow down for the first time in three years, negatively impacting both economic production and the millions of nationals who will face food shortages, Bloomberg reports.

The production of coffee was slashed in January by as much as 27 percent, causing problems for Nestle and Starbucks which buy a great deal of the East Africa nation's coffee, renowned as the continent's top grade.

Reduced crop yield "would have a chain effect on the economy," Peter Mutuku, senior corporate currency trader at Bank of Africa, told Bloomberg. "It would have a direct effect on a huge employment sector. Foreign- exchange reserves would also be affected, bringing pressure to bear on the shilling."

Twenty-five percent of the Kenyan gross domestic product and half of its exports are dependent on agriculture. Kenya's economy is considered the area's largest and it grew more than 5 percent last year. The country last had low growth three years ago when violence followed a disputed election

"The worst-case scenario is it could knock 2 percent off of GDP in 2011," Wolfgang Fengler, the World Bank’s chief economist in Kenya, told Bloomberg, noting what would happen if no rain fell in March.

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