Does Kenya need more than one bulk grain handler?
Maize is offloaded at the Mombasa port on June 12, 2017. PHOTO | KEVIN ODIT | NATION MEDIA GROUP
What you need to know:
Kenya imports the majority of its wheat in bulk by the same agency that can manage this: Grainbulk Handlers.
Presently, because of the tight supply and demand situation, maize offloading is prioritised.
This causes a few hiccups in the bulk handling of wheat imports and raises the question as to whether Kenya needs more than one bulk grain handler.
Kenya is facing a precarious food scenario for the foreseeable future. The major causes are inadequate rainfall, crop diseases and pests such as the fall armyworm.
This is against a backdrop of traditional production deficits in wheat and often maize. How it will pan out depends on a number of factors. The first will be the harvest of the maize crop under cultivation at present, particularly in the surplus growing areas.
A second will be whether the next local and regional rains later in the year will be adequate or not. This is important for all food crops as much of our production is rain fed. I refer to the region as well because of the formal and informal supplies that come from neighbouring countries when they have surpluses.
A third factor is how the country, the government in particular, manages this demanding food dilemma. Of interest is whether it puts in place more systems and mechanisms to handle the various challenges each time we need to import significant quantities of maize. So what is the current situation?
ARMYWORM: ROGUE FACTOR
Considerable quantities of maize need to be imported for at least the next four to six months. It also means that food prices will remain generally high for much, if not all, of the remaining year.
In short, the harvesting of the next crop from the traditional maize surplus areas will hopefully replenish much of our maize demand shortfall by the end of the year.
Greater acreage was sowed and so far the signs are for a reasonable crop. The rogue factor is the voracious and intrepid fall armyworm.
Maize and other food prices could start to stabilise and reduce by then especially if the next rains come on time and are sufficient. What we have seen though is much of the repeat of the reactive knee-jerk responses by government.
The first major lesson is that we need a policy that kicks in when projections raise food security alarm bells as they did late last year and early this year.
CERTAINTY AND PREDICTABILITY
We need an import mechanism that will not be subject to the agonisingly cumbersome pace of government decision making and implementation.
There is another reason for this. It is not because we need to improve timelines of imports, but also the need to create an environment of certainty and predictability.
Let us give a good example. The waiver on maize import duty lasts until the end of next month. It is difficult to plan reasonably seamless imports without concrete information. Importing large quantities of maize is a huge logistical and financial undertaking.
This begs the question as to whether the various arms and legs of government are coping or can cope with this demand effectively. The government must adopt a more informative policy and show us what is planned for this month, next and the months after.
It should show us how it will be coordinated with the private and public players. I put "private" first as this needs to be an exercise that is done in cooperation and tandem with all players: shipping companies, port handlers, transporters, millers and of course distributors.
ONE SMALL HITCH
One small hitch has arisen. Kenya imports the majority of its wheat in bulk by the same agency that can manage this: Grainbulk Handlers.
Presently, because of the tight supply-and-demand situation, maize offloading is prioritised. This causes a few hiccups in the bulk handling of wheat imports and raises the question as to whether Kenya needs more than one bulk grain handler.
The financing of this must be giving both the National Treasury and the Central Bank anxious moments not least because it was not initially budgeted for.
Such a scheme has a huge hidden cost that ultimately is borne by taxpayers. The government should be very open on this.
The food situation presents us with major short-term logistical, social and financial demands and longer-term policy challenges.
Robert Shaw is a public policy and economic analyst; [email protected].
