Opinion and Analysis
Flawed trade policies to blame for high food prices
Posted Wednesday, June 20 2012 at 20:16
Reports that food prices in Kenya are much higher compared to other regional markets, thanks to flawed trade policies, are worrying and must be addressed expeditiously.
A new survey by the World Bank reveals that the cost of basic food items in the country has increased beyond the reach of most poor households and the situation could worsen if urgent remedial measures are not taken. Food forms a large chunk of daily expenditure among households and its pricing has a direct influence on standards of living.
Unfortunately in Kenya, the cost of basic food items such as rice, bread, cereals and flour, sugar as well as fruits and vegetables has continued to soar, leaving most needy households in a tight spot amid growing inflationary pressure from other factors such as high oil prices.
The World Bank states that the high food prices in the country are largely as a result of barriers to trade such rigid quality standards which hamper efficient flow of commodities, leading to shortage even when we have surplus situations in neighbouring markets.
This kind of scenario must not be allowed to continue for the sake of poor households that are vulnerable to inflation due to their low purchasing power. Food is a basic right for households and no one should be denied access to affordable rations.
Kenya and partner states of the East African Community bloc should take advantage of the seamless market arrangement launched in July 2010 to improve their food security by allowing for unlimited flows of commodities across borders.
This calls for the harmonisation of regulatory measures so that no trader or buyer is hampered from supplying or sourcing for goods and products. The regulations must also be simplified to prevent undue strains to ensure compliance.
Fortunately for the region, an exercise is already under way to try and establish common regulatory measures on goods and products and partner states of the EAC should ensure more effort is directed towards concluding the job fast.
Besides stabilising food prices, uniform regulatory measures would also be beneficial to farmers because they are likely to attract fair prices for their produce in an open trade arrangement. This is also critical in ensuring that the regional economies are not strained by the effects of imbalanced imports and exports.
Authorities also need to work on harmonizing customs procedures and remove other barriers to trade such as police road blocks that increase the cost of transaction, leading to inflated commodity prices.