* Small farmers can't afford inputs to boost yields
* Africa could earn more if it adds value to exports
* Productivity struggles to keep pace of population growth
KIRINYAGA, Kenya, Aug 29 (Reuters) - Nancy Njeri lugs a sack of fresh coffee berries to a hilltop factory from her small farm, which produces one of Kenya's main cash crops yet earns barely enough for her family of seven children.
"We are toiling hard and the coffee does not give us good returns," she said, after reaching the processing plant where the berries from her 200 coffee trees are de-husked and the extracted beans are graded and dried ready for roasting.
On big estates, one tree can produce 10-15 kg of coffee berries a year using fertilisers and other chemicals. But these are too costly for Njeri and other small-scale farmers. Their trees on the small plots in Kirinyaga County produce just 3-5 kg.
This means that with a little help, Njeri's earnings of equivalent to $300 to $500 a year could be doubled.
It is a story repeated across Africa, where export crops like coffee, tea, cotton and cocoa are often produced by smallholders whose incomes cannot both support families and pay for products to improve harvests. Many smallholders are reduced to growing food staples, adding to Africa's farming inefficiency.
"Africa has to move away from agriculture for food in the stomach to agriculture for wealth into the economy and into the pockets of farmers," said Martin Bwalya, the head of The Comprehensive Africa Agriculture Development Programme (CAADP), an African Union (AU) initiative.
Experts say that this needs action from governments and others to invest in research to produce higher-yielding crop varieties, improve marketing and add more value to produce instead of exporting raw commodities from which others profit.
Bwalya's CAADP has led a drive for change, but progress has been slow. Under a CAADP initiative, African presidents committed in 2003 to lift annual agriculture funding to 10 percent of their budgets.
More than a decade later and only eight of the AU's 54 nations have reached and maintained that goal, although some others are improving. Bwalya said 40 nations now devoted 5-6 percent of their budgets to farming, up from just 3 percent.
VALUE AT HOME
Investing more could yield significant returns. In Kenya, farming accounts for nearly a quarter of national output, a common figure across the continent. As agriculture is also a huge employer of Africa's roughly 1 billion people, supporting farms, which are mostly small, helps many people.
Edward George, the head of research for soft commodities at Ecobank in London, said farming was being held back by a failure to invest in crop processing and building local African demand.
Pointing to African cotton farmers, he said only 30 percent of their harvest was turned into yarn and textiles locally, with the rest exported in the form of lint bundles.
"It is possible there is a cotton farmer in Burkina Faso who is wearing a shirt made with the cotton that he grew, but the shirt was made in China," George said.
Developing local consumption of farm products in Africa could encourage more local industry, avoiding the fate of cocoa farms in Ghana and the Ivory Coast, who earn just 7-8 percent of the value of a chocolate bar made from their cocoa beans, he said.
It is a similar picture elsewhere. Kenya, Uganda and Rwanda, which are some of the continent's main coffee exporters, mostly send beans abroad but farmers and producers could earn more if value was added at home.
A standard 50-kg bag of top AA beans, a grading that relates to size, can earn up to $400 to $500 at the peak auction period. But farmers can earn that amount by roasting and packaging lower grade beans, which would be worth half the value of AA beans if sold unprocessed at auction.
Some farmers are doing that in Kenya, but it is a small portion and held back due to limited local consumption, although coffee shops serving a growing middle class are starting to spread in Nairobi, Kampala and Kigali.
"Only 4 percent of coffee is roasted locally while the rest is exported," said Matthew Mugo, managing director of Kenya's Gibsons Coffee at his outlet in downtown Nairobi.
FOCUS ON FARMING
Work is going on to boost agricultural productivity. The Alliance for a Green Revolution in Africa (AGRA), supported by the Bill and Melinda Gates Foundation, is researching improved seed varieties for African staples such as sorghum, cassava and millet, which have received less attention than crops like wheat and rice.
Such research is vital when AGRA says the continent's population is expanding 50 percent faster than food productivity. Africa's food deficit could reach 60 million tonnes or $14 billion by 2020, if action is not taken, it says.
But gains are uneven. Productivity has been among the fastest in Africa's most populous nation Nigeria, but has shrunk in politically troubled Zimbabwe.
Some governments are too wedded to grand infrastructure plans that fail to address particular farming needs, say experts. Morrison Rwakakamba, head of the Kampala-based think tank Agency for Transformation, says this is the case in Uganda.
"When they invest in, say roads or in health or the environment, they think somehow agriculture benefits," he said. "There has not been specific efforts to address issues unique to agriculture and that has been a problem."
For many authorities, it is a question of cost. In Kenya's Kirinyaga County, Governor Joseph Ndathi illustrated the funding challenge, saying only a third of the county's spending resources of 3.25 billion shillings ($36.79 million) for the year were available for development. Most would go on roads, schools and clinics.
Agriculture would receive a fraction, he said, even though 90 percent of the county's 560,000 people relied on farming for their livelihood.
The best-paid farmer in his county earned 70 shillings per kg of coffee this year, while better marketing and farming practices could lift that to 200 shillings, he said: "That is the surest and fastest form of development."
Kenyan Agriculture Minister Felix Koskei said the government was working to improve the use of technology and introduce better warehousing to lift productivity and cut losses. But he acknowledged farms could deliver more for the economy.
"(Agriculture) does not reach its full potential," he told Reuters, adding that developing efficient markets for local produce so farmers can get the right price for their goods is key. "The most important thing is markets."
(1 US dollar = 88.3500 Kenyan shilling) (Additional reporting by Elias Biryabarema in Kampala; Editing by Edmund Blair and Susan Fenton)