Maize imports could cost the country up to Sh1 billion over the next six months, following a Ministry of Agriculture advice that additional supplies are needed to boost current stocks.
In its latest food security situation update, the government has projected that the country will need an additional 300,000 bags to bridge the gap between the projected harvest from farmers as at the end of September and cross-border imports from neighbouring countries.
Going by last month’s average price of a 90-kilogramme bag of maize, which was selling at Sh2,979, and factoring a 50 per cent import duty, millers and other importers could spend up to Sh1 billion on the projected imports.
Private maize millers and relief agencies are the main importers of cereals. However, the government is not expecting a sharp increase in maize prices with the projected supplies expected to keep the prices of staples steady.
“Market prices of coarse grains, especially maize, wheat, and rice are likely to reduce marginally but with the stabilising prices still remaining higher compared to long-term averages,” said the Ministry. Maize is one of the main sources of starch for the country and its availability usually has an effect not only on the prices of other staples in the country that can be used as substitutes, but also on the prices of other products such as animal feeds, which use the grain as an input. Over the next six months, the country is projected to have a surplus of about 190,242 bags of maize assuming longs rains remain normal in South Rift, Nyanza, Lower parts of Western Province and the Coastal strip.
The country, which had 18.61 million bags of maize as at the end of March this year, is projected to have a total of 21.97 million bags in stock by the end of September, 4.75 million bags of which are expected to come from the long rains and 750,000 as imports from other East African countries. It is projected that 2.44 million bags will be lost through the harvest process and the balance will be imported by the private sector and relief agencies to meet the national consumption, which has been placed at 21.78 million bags.
The ministry, in its food security situation report as at the end of June last year, which advised for the importation of maize, projected that the country needed four million bags to bridge a shortfall that was to be experienced through December last year.
The government allowed a duty waiver that lapsed on December 30.
Import duty for maize from outside the East African Community attracts duty at 50 per cent. In a similar food security situation report last month, the government projected that the shortfall had dropped to 600,000 bags.
“Unless there is a disaster we do not expect to see that high level of importation because it will be too expensive for them (importers),” said Johnson Irungu, director of agriculture in the crop management directorate. Dr Irungu, however, said that maize prices had started rising and were almost approaching Sh3,000 per bag in some parts of the country. Inflation for the month of March stood at 15.61 per cent, mainly driven by price increases of food and fuel.
In a statement, the Tegemeo Institute of Agricultural Policy and Development, said that the current shortfall creates uncertainty amongst players in the maize chain and leads to escalation of prices in the market.
David Nyameino, the chief executive of Cereal Farmers Association of Kenya, said that the import duty should be sustained going forward since that there was no shortage of maize in the country and if the rains are good then substitutes to maize will also result in a drop in prices.