Maize production and trade issues in the EAC
16 September 2012
According to a USDA assessment of EAC maize production, Kenya is likely to require imports of 600,000 tonnes, while the exportable surplus elsewhere in the EAC is between 200,000 and 300,000 tonnes (two-thirds of this in Uganda and one-third in Tanzania). USDA suggests that the remainder of Kenya’s maize requirement will be met from imports from COMESA member states, since requirements related to GM maize (specific import permits and specific handling requirements), and the 50% ad valorem tariff applied, actively discourage maize imports from South Africa.
The policies being pursued in Zambia and Malawi to encourage production and export of maize are seen by USDA as having the potential to displace South African white maize on Southern and Eastern African markets, with South Africa being ‘on track to play the role of “supplier of last resort” for white corn (maize) in the region’.
USDA notes that ‘export bans, non-tariff barriers to intra-EAC trade and high transport and transaction costs associated with transhipment from points of production to points of consumption throughout the region’ all have an important bearing on the intra-EAC maize trade. Tanzanian producers are seen as being ‘financially disadvantaged’ by export bans, ‘while Kenyan corn producers may benefit financially’.
EAC maize production, imports, exports and consumption (tonnes)
| MY 2008/09 | MY 2009/10 | MY 2010/11 | MY 2011/12 | MY 2012/13 | 5-year average | |
| Consumption | 8,935,000 | 8,965,000 | 9,396,000 | 9,456,000 | 9,477,000 | 9,246,000 |
| Production | 7,783,000 | 8,194,000 | 10,174,000 | 9,577,000 | 8,927,000 | 8,931,000 |
| Imports | 1,068,000 | 704,000 | 74,000 | 305,000 | 605,000 | 551,000 |
| Exports | 33,000 | 105,000 | 180,000 | 283,000 | 305,000 | 181,000 |
Source: Extracted from USDA, ‘East African region corn report’, 21 June 2012
USDA notes that EAC member states appear to be increasing production ‘at a faster rate than the increase in EAC population’, with a potential to meet consumer demand by 2015. Although considerable production expansion potential is seen to exist, given the high ‘yield gap’ between EAC and South African production (1.6 tonnes/ha compared to 4 tonnes/ha), the policy environment in the EAC is not seen as conducive to expanding maize production beyond regional maize consumption needs. If regional consumption needs were exceeded, farm gate prices would plummet, in view of very limited export opportunities and/or competition from lower-cost producers (e.g. South Africa).
Currently a disease, possibly corn lethal necrosis, is affecting Kenya maize production, setting back efforts to boost production through input distribution programmes. A few large-scale farmers account for a quarter of Kenyan maize production.
According to USDA, Tanzanian maize producers are isolated from regional markets as a result of periodic export bans, discouraging investment in maize production and resulting in lower farm gate prices.
Open access to the Kenyan market, meanwhile, has encouraged investment in Uganda maize production.
In Rwanda, demand for white maize is growing, and the government is concerned about trends towards production of this less drought-resistant crop. Production in Burundi, meanwhile, matches consumption, according to USDA figures.
Editorial comment
The establishment of a proper functioning internal market for maize across the EAC would appear to be essential for the mobilisation of investment in exploiting the region’s full potential for maize production (through irrigation and the use of more modern farming technologies). This is both a regional and national challenge, for within Kenya there is a serious mismatch of supply and demand between the main maize growing areas in Western Kenya and the chronically food-insecure arid and semi-arid areas. However, even in arid and semi-arid areas there appears to be potential to increase production, if appropriate drought-tolerant varieties can be developed and distributed.
The weak current functioning of markets is leading to major inter-seasonal price volatility. The development of a more Structured Trade System including a regulated Warehouse Receipt System under the auspices of the East African Grain Council is in part intended to address the worst effects of this price volatility.
However, as highlighted by the recent outbreak of a corn disease, establishing effective SPS controls (and grain quality standards) would also appear to be essential to the development of well-functioning pan-EAC maize supply chains.
