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Dependence on rain, poor planning cause of high food prices

Sunday May 14 2017

The cost of living measure is at a 57-month high.

A staff in Tumaini Supermarket in Nyalenda, Kisumu, on May 9, 2017 arranges packets of milk for sale. The cost of living measure is at a 57-month high. PHOTO | ONDARI OGEGA | NATION MEDIA GROUP 

By GERALD ANDAE
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Poor policies, dithering in decision making and dependence on rain-fed agriculture are behind the current high cost of living, which has seen Kenyans dig deeper into their pockets to put food on the table.

An agriculture think-tank, Tegemeo Institute of Policy and Research, says the country would not be facing the current challenges if the government acted fast to put in place measures that would have tamed the maize shortage, which had been anticipated.

“We warned the government in November (last year) that there would be a serious shortage of maize and advised them to make the necessary arrangements for import by February,” Mr James Githuku, a senior research associate at Tegemeo, says.

MAIZE DISEASE
Mr Githuku said the government failed to act on the information and waited until matters ran out of hand.

The Egerton-based research wing informed the government of an early consideration of potential sources of such imports, given the drought in the region that had affected Kenya’s source markets for white non-GMO maize.

An outbreak of maize disease in the country’s grain basket made matters even worse.

“There is a need to prepare early for a possible maize shortage, taking into account the lag-time in procurement and duration that the imports will take to land,” Tegemeo said in its recommendation last year.

IMPORTS FROM MEXICO
Kenya normally relies on imports from Tanzania and Uganda to bridge a deficit of about 20 million bags of maize every year.

Millers have already said the price of maize flour, which is currently retailing at Sh144 for a two-kilogramme packet, will only come down in the next two months after they receive consignments from Mexico.

“In the initial weeks of the import programme, some millers will have access to imported maize and others will not, so we do not expect maize flour prices to stabilise until adequate imported grain stocks are distributed across all the mills,” the millers said last week.

“This is expected to be in late June or early July. When this happens, prices are expected to settle at the Sh125-Sh135 per 2kg packet,” they added.

FLOUR PRICES
However, Agriculture Cabinet Secretary Willy Bett said on Friday that the price of flour is expected to come down this week, contradicting the millers.

Last week, Mr Joshua Chepkwony, the proprietor of Jamii Unga, broke ranks with other millers saying that the current prices of flour are exorbitant and that his counterparts are making unjustified profit.

Mr Chepkwony said that the price of a 2-kilo packet ought to have dropped to Sh118 factoring in the Sh3,000 that the government was selling maize to millers from the Strategic Food Reserves (SFR), and this is after factoring in production costs.

“If we factor in the cost of transporting that same packet of unga from Eldoret (where the Jamii factory is located) to Nairobi at about Sh2, for instance, plus a 10 per cent margin, it all comes to about Sh118 a packet,” Mr Chepkwony said, adding that anybody selling the same for more than Sh120 is dishonest and robbing Kenyans.

DROUGHT AND RAINFALL
But the Cereal Millers Association (CMA) argues that the price at which a miller decides to sell their maize depends on the cost at which it was acquired.

“Our business is based in Nairobi and we have to transport maize from Eldoret to the city, there is an additional cost in bringing this maize here,” CMA says, adding that transporting a bag to Nairobi costs Sh200 more.

Mr Githuku said the government should utilise the current rains to harvest runoff water, which will come in handy when the dry spell kicks in.

After going through the drought, the rains are causing destruction, with scores of people killed by the floods.

The cyclic events can be avoided if proper mechanisms are put in place to harvest the runoff.

Harvested runoff has the potential to meet Kenya’s water requirements by four times if stored for future use. But this has taken long to be implemented.

COST OF LIVING
Kenya has just come from one of the worst droughts in recent years, which saw people and livestock die of starvation and thousands in need of food relief.

The perennial maize shortage has been attributed to lack of proper policies, with Kenya dependent on rain-fed agriculture for food production as opposed to the use of large scale irrigation systems.

Prices of sugar, maize flour, beans and sukuma wiki have increased by 21.6 per cent, 31.2 per cent, 21.3 per cent and 63.2 per cent, respectively, over the past year.

A severe sugar shortage has also hit the country with two kilogrammes of the commodity now retailing at Sh400.

This is the highest price to have been recorded in the last five years.

Households’ breakfast table has not been spared either with the price of milk having hit a record high in recent days with a half litre packet of fresh milk retailing at Sh65 on average while long life is retailing at Sh75 for the same quantity. 

POOR HARVEST
The high cost of food saw inflation jump 11.48 per cent in April from 10.28 per cent the previous month, taking it beyond the Treasury’s preferred upper limit of 7.5 per cent.

The cost of living measure is at a 57-month high.

President Kenyatta — who is seeking a final five-year term — acknowledged the problem of high food prices last weekend.

The price jumps are partly caused by drought that has left around 2.7 million people in need of food aid.

The short rains harvest in the South Rift, which is expected in the next two months, is however, expected to come as a relief to millions of Kenyans who are grappling with the current high cost of maize flour.

The high prices are due to poor harvest last year during the short-term crop that was affected by erratic rain.

STABILISE MARKET
The drought caused near total crop failure in the short rains dependent areas.

This led to an overall reduced production of 34.5 million bags, creating a shortfall of about 7.5 million bags of maize nationally.

Maize forms 80 per cent of the raw material used in manufacturing flour.

The Cereal Growers Association (CGA) says the crop has performed well and they expect two million bags to be injected into the market in July.

“We are expecting a good crop unlike last year. This harvest is going to create a huge impact on the market as we expect the prices to come down from the current highs,” CGA chief executive officer Anthony Kioko said.

Normally, this early crop plays a major role in stabilising the market in the second quarter of the year as it supplements stocks from the October main harvest.

MORE IMPORTS
Mr Kioko notes that the short-term crop from eastern Kenya will also be harvested at the same time.

But the eastern crop is mainly for subsistence use as just a fraction of it finds its way into the market.

Millers are also banking on the short rain crop, which is poised to increase supply of the produce in the market.

They argue that the current maize shortage and high prices of flour will ease in the next two months.

This harvest will supplement 2.8 million bags of maize that is being imported from Mexico, with the first batch of 30,000 tonnes having arrived in the country this past week.

The government says a similar shipment is expected in a fortnight.

Millers are purchasing the Mexican maize at between Sh3,500 and Sh5,000 a bag, which is cheaper in comparison to local prices.