Business Daily (Nairobi)
Michael Omondi
24 April 2008
The country is likely to plunge into a food crisis as cereal farmers switch to horticulture due to poor returns.
Their move follows soaring input costs, which have not kept pace with the rise in cereal prices-with margins from maize production expected to sink to their lowest level in decades.
Most small scale farmers have reduced the acreage under maize, the country's staple food, as they shift to the more lucrative horticulture farming.
It costs about Sh24,000 to produce an acre of maize against the projected income of Sh28, 000 from an average harvest of 14 bags. A bag of maize is expected to retail at Sh2, 000 at the harvest season in October. It currently sells at Sh1, 560 .
This means that a farmer will get an average profit of Sh4, 000 from planting an acre of maize this year, compared to Sh10, 000 in 2006.
Experts have warned that the country's maize production could fall 30 per cent below the country's requirement of 32 million bags of maize.
"Being a country that is heavily dependent on maize, a drop in production will definitely threaten the country's food security," said James Nyoro, the executive director of Tegemeo Institute, a local agricultural policy think tank.
Last year, the country produced 34 million bags and the Government was forecasting to hit 38 million bags, but experts are predicting a harvest of 22 million bags this year.
This is attributed to many factors with the surging input cost appearing on top of the pile.The price jump is also due to a sharp rise in the price of fertiliser, which has more than doubled over the past six months.
A clear picture of the extent at which farmers have been hurt by the high input costs has been constructed by this paper following interviews with marketers of farm inputs, agricultural policy experts and farmers.
To plant an acre of maize today one would need 75 kilogrammes of diamonium phosphate (DAP), which has gone up from Sh1, 600 last August to Sh4, 000 for the 50 kilogramme bag. This means that a farmer would pay Sh6, 000 for the fertiliser, up from Sh2, 400.
Calcium Ammonium Nitrate (CAN), which is used for top dressing, has also followed suit, having risen from Sh1, 300 last year to about Sh2, 200.
The farmer will also have to dig deeper into his pocket to meet ploughing expenses, which have increased to Sh3, 000 an acre, up from Sh1, 800 following a sharp rise in fuel prices.
This translates to Sh6, 000 for the initial ploughing and harrowing, a second run on the ploughed farm.
The high fuel prices have been attributed to the sky high prices of crude oil at the international energy market, which dealers predict will remain high for the better part of the year.
Crude oil prices hit $114 a barrel on Tuesday, having risen from $88 at the start of the year on increased demand for the commodity and fears over supply of the commodity.
Local oil marketers continue to show a strong bias for expensive fuel with many saying that the sky-high fuel pieces are here to stay. Farm labour, including planting and weeding has also hurt farmers as workers demand better payments, citing rising cost of living.
Rising input prices have been made worse by the disruption of the production chain following the politi cal violence that gripped the country in the first two months of the year. The political violence broke out over the controversial tallying of the presidential results on December 30.
With Kenya's food basket, the Rift Valley, hard hit by displacements of more than half a million people, mostly farmers, due to the violence, the volumes of grain produced is expected to drop . Already, food experts, led by UN food agency FAO, are warning of an acute food shortage in the coming months, but the government has since denied this, saying the country has enough food to last eight months.
Analysts say expected food shortages would spark a sharp rise in food prices, setting the stage for record inflation levels given that the food index accounts for more than half the overall inflation index.
Should the talk of food shortage come to pass, Kenya would have to turn to the international market to feed its granaries.
This would present an awkward situation for the government as the price of grains and other agricultural commodities are trading at record prices, which are not expected to cool down any time soon.
The booming agricultural commodity prices have been attributed to a drop in stocks and the biofuels boom that has added to demand.
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