Low grain prices renew hope of food security

The mixed outcome from the short planting season has caused huge price variations in the region’s grain market, opening a new window for the Kenyan government to restock its sagging granaries at competitive prices.

Kenya, Rwanda and Uganda have all recorded bumper harvests from the 2009 short-rains crop, pulling down market prices.

Statistics indicate that the cost of a 90 kilogramme sack of maize ranges from Sh1,050 in Kampala, Sh1,330 in Kigali, and Sh2,100 in Nairobi.

In Tanzania, crop destruction by heavy rains early this year, has strangled maize supply in the market, leading to a price rallies from Sh2,530 to Sh2,804 per sack from late last year.

“Barring logistical costs, it hoped that traders in the region will move to take advantage of this increased supply to trade within the region,” says grain market analysts at the Regional Agricultural Trade Intelligence Network.

Price drops

Grain market analysts however maintain that farmers are not gaining from current price variations because they still have to rely on middlemen to off-load their produce.

A relatively high market price in Kenya is attributed to the fact that farmers had in the last long season taken advantage of poor harvests to successfully negotiate for a higher producer price of Sh2,300 with the National Cereals and Produce Board.

“Prices of maize started to decline at the end of last year with the arrival of the 2009 short rains season of bumper production, but this still remain well above average levels,” The Food and Agricultural Organisation (FAO) says in its latest country brief.

Ordinarily, these existing price differentials would be expected to catalyse trade as tariff barriers on the movement of grain across the borders of EAC countries were eliminated five years ago when the region started implementing its custom union protocol.

In Kenya, where the short season harvests normally account for 15 per cent of the annual national cereal consumption, government statistics estimates that a bumper maize harvest of 540,000 tonnes (six million - 90 kilogramme sacks) has been realised from harvests concluded last month.

FAO attributes this increase by 20 per cent over the normal short season’s maize production levels of 450,000 tonnes (five million sacks) to enhanced rainfall that continued in February and early March in most areas of the country, often reversing the negative effects of the November dry spell.

In general, the super-normal short rains have pushed up the aggregate cereal production for 2009/10 to about 2.8 million tonnes, nine per cent more than the 2008 level but still 15 per cent less than the average for the last five years.

As a result, the country’s cereal import requirement for the period running up to June has dropped to 2.6 million tonnes, slightly less than in 2008/09 when domestic production was severely affected by drought.