John Oyuke
15 April 2008
Nairobi — Kenyans face a further rise in the cost of living as food prices skyrocket due to an expected production shortfall in key growing areas.
Analysts contend that the food situation is not likely to be made any better given the soaring international cereal prices coupled with a move by some countries to limit or ban cereal exports.
An investment manager at the AIG Investment Company, Mr Nicholas Malaki, says a number of cereal exporters such as Pakistan, which exports rice to Kenya, have stopped exports.
"Food prices are likely to remain high due to production shortfalls at a time when global commodity prices are also likely to remain high and some countries have stopped exports of produce," he says.
Food prices are likely to remain high due to the increased shortfall in production in most parts of the country. Photo: Jonah Onyango
Malaki says agricultural production, especially in the Rift Valley, is expected to decline significantly due to the destruction of crops during post-election skirmishes and the displacement of more than 300,000 people, which has hindered planting during the most important rainy season.
According to Malaki, the crisis in farming areas have been compounded by the rapid increase in the cost of inputs such as fertiliser that has doubled in price over the last six months.
Government interventions include assisting affected farmers with seeds and ploughing services.
However, Kenya is not alone in this high priced food situation, as general rise in food prices blamed on increased bio-fuel production increasingly become a global problem.
For instance, food induced social unrest and riots, which have resulted in the loss of lives in some cases, have been reported in the past month in Egypt, Cameroon, CÙte d'Ivoire, Senegal, Burkina Faso, Ethiopia, Indonesia, Madagascar and the Philippines.
In Pakistan and Thailand, troops have been deployed to avoid seizing of food from the fields and warehouses.
According to a World Bank Group policy statement released last week, food crop prices are expected to remain high this year and next year.
The statement titled 'Rising Food Prices: Policy Options and World Bank Response' says increases in global wheat prices reached 181 per cent over 36 months leading up to February, and overall global food prices increased by 83 per cent.
World Bank Group Vice-President for Poverty Reduction and Economic Management, Mr Danny Leipziger, says the poor are facing a worrying combination of higher food prices and energy costs.
"Policy responses to protect the poor from food price rises are urgent, and need to be designed in a way that is conducive to stimulating greater agricultural production in the long run," he says.
World Bank Group President, Mr Robert Zoellick, also says the poor are suffering from the impact of high food prices, especially in urban areas. He adds that in some low income countries gains made in overcoming poverty may now be reversed.
"As an international community we must rally not only to offer immediate support, but to help countries identify actions and policies to reduce the impact on the world's most vulnerable," he says.
The World Bank Policy Statement notes that while households that are net producers may benefit from higher prices, the increases for staple foods will add to poverty in several countries.
"Indeed, for many countries and regions where progress in reducing poverty has been difficult, the impact of the current rising food prices risks undermining the poverty gains of the last five to 10 years, at least in the short term," it says.
For example, the Bank adds, in the case of Yemen, estimates show the doubling of wheat prices over the last year could reverse all gains in poverty reduction achieved between 1998 and 2005.
The report, however, notes that many governments are already taking action with some expanding targeted safety nets, such as cash transfer programs to vulnerable groups, food-for-work programs, or emergency food aid distribution.
Several countries have lowered tariffs and other taxes on key staples,to provide some relief to consumers.
In contrast, other countries have put in place export bans, which are detrimental to food importers and reduce incentives for production.
The report says measures that seek to stimulate food grain supply are essential over the medium-term, and include strengthening basic infrastructure (transport, power and irrigation) and investing in agricultural technology.
However, in a report released early this month, Food and Agriculture Organisation (FAO) say despite policy measures taken by governments to mitigate transmission of international price into domestic food markets, prices continue to be high.
It said prices of bread, rice, maize products, milk, oil, soybeans and other basic foods have increased sharply in the past months in a number of developing countries.
It said the most affected by the food price inflation are the low-income groups of population, as the share of food in their total expenditures is much higher than that of wealthier populations.
"The urban poor, together with food deficit farmers, are among the worst affected groups as they depend on the market to access food products," said FAO.
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