6 June 2014

Kenya: Higher Global Prices Set to Raise Food Import Bill

Rising international food prices may inflate Kenya's import bill as they add to the already worrying situation of erratic weather and insecurity likely to reduce production.

A World Bank report released last Friday shows international food prices increased by four per cent between January and April, halting a declining trend sustained since August 2012.

The World Bank report, titled 'Food Price Watch: Rising prices and their role in food riots', found that wheat and maize prices increased sharply in the four months "due to growing weather concerns and mounting import demand."

"Despite favourable prospects for cereals supplies, several uncertainties hang over the near future, some exerting upward pressures on prices, such as weather in the United States and, more globally, El Niño, and a hypothetical escalation of geopolitical tensions in Ukraine," it states.

International wheat prices jumped by 18 per cent between January and April, a steep increase that has not been witnessed over a 22-month period, with April prices being five per cent higher than a year ago.

The price of internationally traded maize as well rose by 12 per cent in the four months, though April prices were some 21 per cent lower than a similar month last year.

The report says maize prices in Eastern Africa have followed seasonal trends to rise, "with prices recently increasing as food availability from previous harvests dwindles". Already, insecurity has intensified seasonal effects in Somalia, South Sudan, and Sudan.

Kenya imports huge quantities of wheat, rice and maize, though it slashed the quantities last year on improved food production.

The Economic Survey 2014 shows it imported 764,000 tonnes of wheat last year, down from 1.12 million tonnes in 2012. Maize imports similarly decreased sharply to 94,000 tonnes from 325,000 tonnes in the previous year.

This has helped Kenya to reduce its import dependency ratio of total food products for the second year consecutively. The self-sufficiency ratio has improved over the last two years, indicating that a bigger proportion of food commodities is being sourced from local production.

The Economic Survey shows Kenya's self-sufficiency ratio increased for the second year in a row at 80.1 per cent last year from 77.6 per cent in 2012 and 74.6 per cent in 2011.

"Overall, reliance on domestic food production improved during the review year," the report states.

The country's overall food import dependency ratio declined to 23.3 per cent from 25.7 per cent a year before and 29.1 per cent in 2011.

Egerton University's Tegemeo Institute in April expressed concern that maize seed shortage could hamper the country's quest for food security. It cites challenges as high input prices, prolonged and severe droughts and spiralling food prices as causing recurrent food insecurity.

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