CTA
Small fontsize
Medium fontsize
Big fontsize
English |
Switch to English
Français
Switch to French
Filter by Agriculture topics
Commodities
Regions
Publication Type
Filter by date

Kenyan maize production and the debate on cereals trade policy

07 January 2012

According to USDA, Kenyan maize imports are likely to ‘lag during marketing year 2012’, despite the abatement of the 50% import duty. Maize is mainly imported from Malawi, Tanzania (despite the July export ban) and Uganda. Bio-safety concerns linked to GMOs have served to restrict imports from South Africa.

In June 2011, farm gate maize prices reached record levels of US$550/tonne, but subsequently fell to US$350/ton. Kenyan domestic maize production is forecast at 3 million tonnes in marketing year (MY) 2012, 400,000 tonnes lower than the record production achieved in MY 2011. This decline was attributed to a shortage of certified seed and delays in delivering fertiliser.

According to the USDA analysis, high maize and maize flour prices are likely to constrain consumption in Kenya in the coming year.

Kenyan maize production (marketing year July–June)

  MY 2009/10 MY 2010/11 MY 2011/12
Consumption 3,580,000 3,660,000 3,600,000
Production 2,200,000 3,400,000 3,000,000
Imports 1,200,000 350,000 500,000

Source: USDA

The Kenyan government continues to provide subsidised or free fertiliser and seed to medium and small-scale maize farmers, as this policy contributed to the record harvest in the 2010/11 season.

At the beginning of September 2011, the governor of the Central Bank of Kenya cautioned against importing of food to feed drought-affected people, arguing that this could stifle local production. He said that ‘local farmers should be given priority in feeding famine areas since their excess supply is going to waste.’ There is considerable debate on cereals trade policy in Kenya. In September, the Kenyan farmers’ association objected to calls for an extension of the period for duty-free maize imports to July 2012, arguing that this would undermine returns to local maize producers. In contrast, the Cereal Millers’ Association has argued that such an extension ‘will not affect farmers but will mitigate any possibilities of growers withholding maize … in expectation of higher prices’.

Editorial comment

The debate on cereals sector trade policy is fraught not only regionally, but also domestically in Kenya. There is considerable suspicion along the supply chain, with government policy a terrain of struggle between producers, millers and traders.

Maize farmers will benefit in real terms from increased production only if maize marketing and overall maize trade policy is improved. Poor rural infrastructure and high transportation costs are both significant disincentives to individual farmers seeking to circumvent middlemen. In addition, the differing commercial interests of farmers (high maize prices) and millers (low maize prices) also need to be reconciled. At present the free functioning of markets characterised by unequal power relationships along the supply chain sees maize flour prices remaining high despite sharp decreases in maize prices. This is to the detriment of both consumers and producers.

Strengthening the functioning of the supply chain to promote greater transparency in contractual relations and the trade policy framework could help assist in establishing a stable framework for the promotion of production nationally and the effective and efficient intra-regional trade in cereals across the EAC. A more coherent policy, one less reliant on stop-gap measures such as export bans, could assist farmers in times of both surpluses and deficits, and could also facilitate the proper functioning of regional food supply chains.

The role played by the East Africa Grain Council in its dialogue with the respective public authorities will be absolutely critical.

Comment

Terms and conditions