Kenya Maize Stocks Dip, As Tanzania and Uganda Gain

Tanzania and Uganda are expected to increase maize exports to Kenya when the country opens an importation window in the coming weeks to cover an anticipated shortfall of 12.5 million bags.

Despite a bumper harvest last year, when Kenya produced 46 million bags, up from 35 million bags in 2017, the country is experiencing a maize shortage blamed on the chaotic management of the National Cereals and Produce Board, and the Strategic Food Reserve.

Agricultural think tank Tegemeo Institute and millers have warned that the country is on the verge of depleting the existing stocks by the end of this month, prompting the government to allow the importation of maize from July to December. By July, the government projects a shortfall of 4.3 million bags of the commodity.

Agriculture Cabinet Secretary Mwangi Kiunjuri said that, during the importation window, millers and traders will be allowed to import 12.5 million bags.

"We require to import 10 million bags between now and December: That is white maize for human consumption and another 2.5 million bags to produce animal feeds," said Mr Kiunjuri.

The minister added that unlike 2017, when the government came up with the controversial $50 million subsidy programme to cushion consumers from high maize flour prices, this time round, market forces will determine the prices.

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The looming crisis is blamed on farmers who are hoarding large stocks, unhappy with low prices set by the government. The NCPB is unable to buy the stock at the farmers' preferred price, leaving at least four million bags in its silos. Some millers are also being accused of hoarding stocks to create an artificial shortage and increase the price of maize flour.

The United Grains Millers Association (UGMA) has written to the Interior Cabinet Secretary Fred Matiang'i, who is mandated to oversee the implementation of government projects, seeking his intervention over allegations that the Strategic Food Reserve is favouring big millers.

This was after SFR released 1.7 million bags of maize early in the month, allocating one million bags to big millers and 700,000 to the small millers at a cost of $22.40 per 90kg bag.

"Decisions are not being made or implemented and the handling of allocation forms is irresponsible and chaotic," reads a letter signed by UGMA chairman Peter Kuguru, and seen by The EastAfrican.

Although the East Africa Community has imposed a 50 per cent tariff on maize coming from outside the region and allows the free movement of maize produced within the bloc, member countries can import duty-free from other parts of the world to cover shortfalls.

Data from the East Africa Grain Council shows that following the bumper harvest last year, maize trade among EAC member states in the first quarter of this year declined significantly.

The grain council's East Africa Cross-border Trade Bulletin shows that the estimated volume of maize traded in the region in the first quarter of this year stood at 85,000 tonnes, 24 per cent lower than the October-December 2018 quarter.

The volumes were also 55 per cent and 42 per cent lower than the first quarter of 2018 and five-year average levels respectively.

"The decreased regional trade in maize is attributed to a significant reduction in imports by Kenya, especially from Uganda, where carryover stocks for the July 2018 to June 2019 period were significantly high, while production during the same period is estimated at seven per cent above recent five-year average levels," said EAGC.

EXPORTS

It added that Tanzania accounted for 45 per cent of the total regional exports, surpassing Uganda, which was the dominant exporter last quarter. Uganda and Kenya accounted for 36 and 16 per cent of regional exports respectively.

While supplies in Uganda tightened amid expectations of a below average forthcoming harvest, Tanzania is still holding a stockpile of more than three million tonnes and is desperately looking for a market.

The country, which harvested 16 million tonnes of the maize against a national demand of 13 million tonnes, intends to export 700,000 tonnes to Zimbabwe.

According to the EAGC, the late start to the 2019/20 long rains season, along with erratic and below-average rainfall, could potentially delay the 2019 maize harvest in Uganda, Tanzania and Kenya.

It added there is likely to be significant country-level variations in maize supply across the region, exacerbated by expectations of below average net supply in Kenya, Rwanda, Burundi and South Sudan.

"Under such a scenario, structurally deficit countries will have to rely on international markets to fill any significant import gaps," it noted.

Kenya continues to depend on imports even after accusing Tanzania and Uganda of distorting its local maize market due to dumping. The opening of the window is expected to open the trade floodgates, and Tanzania and Uganda are still expected to compete for the market. But Kenyan traders have in the past imported from far off countries such as Brazil and Mexico.

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