Kenyan grain traders lock horns with Ugandan rivals

Ugandan middlemen have accused Kenyan traders of locking them out of the maize market by buying directly from farmers and millers.

The Ugandans also accused Kenyans of entering into long-term contracts with millers in Nairobi, making it difficult for them to get a share of the Kenyan market.

The row opens a new battle front among regional traders in a common market that provides for free movement of goods.

The launch of the East Africa common market on June 30 allowed Kenyan traders to enter Uganda and buy grain at farm gates, cutting off Ugandan middlemen from the supply chain.

Before the common market came into effect, Kenyan traders had to buy the commodities from Ugandan middlemen at the border towns of Busia and Malaba.

“They say Kenyan traders are beginning to take advantage of unhindered travel deep into Uganda to source for goods, ignoring Ugandan middlemen.

“Given their (Kenyan) connection to millers and other markets, Ugandans feel they stand to lose,” said Jackson Kihara of the Regional Agricultural Trade Intelligence Network (RATIN).

Of the five countries that form the East Africa Community, only Rwanda and Uganda produce grains that surpass consumption, with the surplus feeding deficit markets such as Kenya.

For instance, Uganda’s total production by June 2010 stood at 1,285,000 tonnes, while her national consumption stands at 600,000 tonnes — leaving excess supply of 685,000 tonnes.

Regional trade data indicates that Kenya is the highest importer of grain from the region followed by Tanzania.

Locked out

The Ugandan middlemen say they have been locked out of the Kenyan market by the long term supply contracts that Kenyan traders have signed with millers, according to a brief by RATIN.

Among the grains whose demand in the region continues to drive cross border trade are maize, beans, wheat, millet, and sorghum.

Demand for grain in Kenya, especially maize, remains significantly high compared to Uganda given that prices in Kenya are higher.

One metric tonne of maize in Uganda is sold at $104, which is 40 per cent cheaper compared to Nairobi where the same is sold at $171.

Beans were going for $616 and $514 per tonne in Kampala and Nairobi respectively as of August 10, according to data from RATIN.

Officials at the East African Grain Council fear that the trend might stand in the way of the implementation of the common market.

A number of traders, especially from Uganda, where significant volumes of grain are sourced are wary of the trend.

They have complained that the common market is skewed in Kenya’s favour given the country’s varied and vibrant markets.

The complaints open fresh wounds in a row that has seen both Tanzania and Uganda claim that their countries are being turned into merely markets for Kenyan goods.

The row led to the appointment of a committee to interact with players in all sectors of the economy.

The team has less than a month to compile a report on its findings.

The members include former Trade minister Mukhisa Kituyi, political scientist Adams Oloo, and former East African Legislative Assembly member Rose Waruhiu.

The team was formed in line with the East African Community (EAC) secretariat’s directive that each of the five countries names a technical team to detail expectations and reservations of their citizens.

Asked whether the suspicion between the traders raises potential obstacles to the common market, Dr Kituyi allayed any fears saying the rule of the game is that all the countries open up for fair competition and use their competitive advantage to thrive.

Best prices

“The common market opens up uncompetitive sectors to market forces, ensuring that consumers get the best at best prices hence helping to cut down costs,” he said.

“We have up to August 21 to ensure that the protocol is properly domesticated and its provisions popularised among citizens.”

Even though Kenyan’s grain production, especially maize, has increased substantially, the country has not met its national consumption level which currently stands 3,234,000 tonnes per annum.

As at June the available stocks stood at 2,520,000 tonnes, creating a deficit of 714,000 tonnes.

The amount is imported both from the East African region and South Africa.

A recent government study, the Kenya Integrated Household Budget Survey, shows that in spite of the negative effects of economic liberalisation and privatisation in the 1990s, most Kenyan farmers still have faith in maize — so much so that 90 per cent of them regularly invest in the crop.