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Kenyan imports of value-added food products on the rise

06 February 2014

USDA, in its Exporter Guide to Kenya published in December 2013, has reported a major increase in Kenyan imports of consumer-ready foods, with the value of imports projected to “reach a record high of $300 million in 2013 and to continue increasing over the next five years”. This continuous growth is attributed by USDA to the emergence of a growing middle class in Kenya. However, USDA also highlights how the Kenyan market remains price sensitive, noting that “importers prefer to source food products from low-cost suppliers.”

Currently, South Africa is the largest single supplier of consumer-oriented food products, accounting for 11.3% of total Kenyan imports in 2012 of this category of product. However, eight EU member states are among the top 15 suppliers, with the EU therefore accounting collectively for 40.1% of total imports of consumer-oriented food products in 2012. The two top EAC exporters to Kenya (Uganda and Tanzania), meanwhile, account for 13.1% of Kenyan imports of this category of food.

Kenya: Value and share of imports of consumer-oriented food products (selected countries and years)

  2008 2012 2015
  Value Share Value Share Value Share
  (U$ ’000) % (U$ ’000) % (U$ ’000) %
South Africa 17,012 10.8 30,413 11.3 41,000 11.7
Uganda 5,733 3.6 26,885 10.0 42,000 12.0
Tanzania 10,335 6.6 8,270 3.1 8,200 2.3
USA 17,883 11.3 15,061 5.6 11,000 3.1
Italy 7,370 4.7 27,632 10.3 33,500 9.6
France 5,636 3.6 24,876 9.2 36,000 10.3
Holland 13,594 8.6 11,969 4.4 13,000 3.7
UK 6,674 4.2 10,879 4.0 12,000 3.4
Ireland 12,988 8.3 10,069 3.7 13,000 3.7
Denmark 2,581 1.6 9,169 3.4 19,000 5.4
Belgium 666 0.4 8,104 3.0 10,700 3.1
Germany 4,643 3.0 5,209 1.9 9,900 2.8
Sub-total EU8 54,152  34.4 107,907 40.1 147,100 42.0
Total Imports 157,187   269,070   350,000  

Source: USDA, ‘Kenya: 2013 Exporter Guide’, 18 December 2013 (see below)

According to the USDA, by 2015 these same eight EU member states will account for 42% of imports in this category, while South Africa and the two EAC members will account for 11.7 and 14.3% respectively. This continues the trend of the growing market share of Kenyan consumer-oriented food product imports apparent since 2008.

In contrast, the value of US consumer-oriented food product exports to Kenya has declined across the selected years, with the US share falling from 11.3% in 2008 to 5.6% in 2012 and a projected 3.1% in 2015.

Some US trade officials are concerned that “the lack of reciprocity inherent in [the US African Growth and Opportunity Act] would result in US firms finding themselves at a competitive disadvantage vis à vis European firms, should Africa’s regional groupings conclude” and implement EPAs with the EU. 

Editorial comment

Patterns of Kenyan imports (and exports) make a good fit with EU agro-food sector policy aspirations. It is central to the trajectory for the reformed CAP that the EU increasingly target export markets for processed and value-added, quality-differentiated food products, while at the same time increasing imports of agricultural raw materials to ensure the global competitiveness of processed food product exports.

It should be borne in mind that the growing EU share of Kenyan consumer-oriented food product imports has taken place despite the implementation of the tariff reduction commitments entered into by EAC members under the EAC–EU EPA having been deferred – these tariff reductions will only occur once the agreement has been ratified by EAC member states. The question then arises: what will happen after the tariff reductions on imports from the EU are introduced?

The experience under the EU–South Africa Trade, Development and Cooperation Agreement (TDCA), which is the only fully implemented FTA with an ACP African region (the SACU), potentially provides some insights. Since 2002, when implementation of the TDCA began (it was completed at the end of 2012), the importance of the South African market to EU agro-food exports has grown significantly: growth in exports of EU agro-food products to South Africa has been four times the figure for growth in EU agro-food exports to the ACP, and two-and-a-half times the growth in overall EU agro-food product exports. The value of agro-food products in total EU exports to South Africa has increased from 3.2% in 2002 to 5.5% in 2011, and South Africa’s agro-food trade surplus with the EU has fallen from €1,378 million to €567 million over the same period (for more details, see AgritradeExecutive Brief Update 2013 – Southern and Eastern Africa: Agricultural...’, 11 December 2013).

SACU’s experience over this period suggests that implementation of the EAC–EU EPA could greatly boost imports of EU agro-food sector products into Kenya. The question then arises: what impact could this have on patterns of investment in and production of agro-food sector products in Kenya and the wider EAC? This would appear to be an issue requiring urgent policy attention, particularly in regard to the measures required to strengthen both the competitiveness and quality of domestic EAC agro-food sector production.

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