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Kenya: Inflation Looms As Clients Face Maize Shortage
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Business Daily (Nairobi)
26 March 2008
Posted to the web 26 March 2008
Steve Mbogo
Maize prices are set to increase in the next four months, signalling more inflation pressures at a time when most consumer goods are costly.
The new cost will be triggered by high fertilizer prices, rising global costs, exports to Tanzania and post-election violence.
Consumers want the government to increase the levels of national strategic reserves to cushion them from the price increase.
Kenya holds three million 90-kilogramme bags of maize as strategic reserves at the National Cereals and Produce Board depots - which can only feed the population for a month.
Farmers are thought to hold volumes equal to national reserves, and which can be used for up to two months.
But during this time, a bulk of those reserves by farmers was destroyed in post-election violence and has been used to feed the internally displaced.
The reserves are not enough and there is need to double them, said Ms Anne Mbaabu, the executive director of Eastern Africa Grain Council.
Sector players say the months of August, September and October will be particularly difficult for Kenyans. During this time, the country will be required to import maize from Tanzania and Uganda, countries that are expected to have better harvests.
In case the imports are not enough, Kenya will import from Southern Africa region.
The concern is that prices for imports will be higher because of the prevailing high prices of grains in the world market.
Kenya imports 2.2 million bags from Uganda and Tanzania. In December last year, the country carried over 10 million bags which were expected to caution consumers of likely shortage shocks but destruction of the January harvest and disruption of the current planting season have tilted this balance.
The post election violence disrupted farmers' income flow and most do not have money to finance inputs and procure services to boost production.
The cost of production has also gone up. Fertilizer prices have for instance gone up to Sh4,000 per 50-kg bag from Sh1,500 early last year. The cost of hiring a tractor has doubled from Sh3,500 per hectare last year to Sh7,000 per hectare.
According to the United Nations agency Food and Agriculture Organization crop preparation for the planting season is far behind schedule in major food-producing areas. The group says that there is an opportunity for farmers to catch up with the planting if they receive subsidies on inputs.
The Rift Valley region, which was predominantly affected by political violence, produces about 70 per cent of Kenya's maize crop.
Nyanza region which produces about five million bags of maize annually was also adversely affected.
Currently, the country is deemed to have enough stocks to last till June and that is why the market is finding surplus to export at least 50,000 bags of maize every month to Tanzania. This export is also attributed to higher maize prices there. These exports are also depleting the stocks which could have helped the country cover its shortfall.
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Kenya's Meteorological Department has already issued an early warning signal saying that rainfall will be poorly distributed in the arid and semi-arid areas. The weatherman warns of a potential human-human and human-animal conflict over limited water and pasture.
Enrico Eminae, Action Aid's coordinator in the North East region, said from grassroots analysis of the situation, if it doesn't rain in the next few weeks, the region will be hit by a severe famine which will spark off food crisis.
Food aid prospects also look bleak as the main coordinator, the World Food Programme issued an extraordinary emergency appeal on Tuesday to cover a deficit of Sh35 billion across the world. The UN agency said the deficit was partly because of rising food and fuel prices.
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