Drought exerts pressure on food, power prices in 2011
Pastoralists search for water for their livestock. FILE PHOTO | WILLIAM OERI | NATION MEDIA GROUP
The first half of the new year will be dry, casting a heavy cloud over the economy that grew by 6.1 per cent for the nine months to September.
The outlook by meteorologists dims prospects for agricultural production during the March to May long rains season, which was the main growth driver.
A dry weather run may also herald higher electricity tariffs and water rationing as industries struggle to shake off high production costs.
The country faces lower harvests as low rains hit farms at a critical crop stage, bringing to an end bumper harvests that have significantly eased food prices from late last year.
Farmers who took advantage of the continued rains to plant crops immediately after the mid season harvests say the poorly distributed rains portend enormous losses.
If the current crop fails, it will be the first time that farm production will be taking a hit since the prolonged drought experienced between 2008 and 2009.
The country has consistently reported good harvests since last year, helped by El Nino rains and enhanced August/September rains.
“We can only expect poor harvests from the mid season because maize is experiencing an acute rains shortage at the tasseling stage when they should be having enough water,” said Mr Anthony Kioko, a programmes officer at the Cereals Growers Association.
Farmers in the country usually plant in the March-May-August long season, which accounts for close to 85 per cent of the annual cereals production with the remaining 15 coming from the September – December short rains season.
This year has however been different as enhanced rains that have been experienced in the country since late last year buoyed many farmers into mid season planting immediately since harvesting began last month.
The planting was done against the weatherman’s advice that most parts of the country would face depressed rainfall from October to the March – May long season.
The deputy director of meteorological services, Mr Peter Abenje, said the rains that have continued to pound most parts of the country up to this month could not be relied on due to poor distribution.
He said apart from Nyanza and Western, the rest of the country would face depressed rainfall that could significantly lower food production up to mid next year.
Eastern and Central provinces, where a significant number of the country’s least-cost hydro generation plants are located, are expected to experience dry weather until mid next year, according to meteorologists.
“There will be depressed rainfall in the main water catchments areas of Turkwel and Masinga which are expected to reduce the inflows into the dams,” says the meteorological department in its outlook for December. “Our latest prediction— that most parts of the country face depressed rainfall that could extend beyond the first quarter of next year — remains accurate and farmers must study our forecast map carefully,” he said
The government says the previous good rains have helped the country to raise production the production of maize, milk and potatoes.
However, the country generally remains a food deficit state producing only 700, 200 bags of rice out of the 1.8 million bags consumed annually.
The rains have also failed to plug the deficit of six million bags for wheat and 1.2 million for beans.
“It is easy to tell that farmers are preparing for the difficult period ahead because of the growing demand for early maturing and drought resistant seeds,” said an official of Simlaw Seeds – a subsidiary of the Kenya Seeds Company.
Agriculture PS Romano Kiome says the government has already spent Sh1 billion in subsidising seeds to farmers since last year, hoping to encourage land owners to put more acreage under farming.
The government has also invested in developing drought resistant crops and has set itself a target under the economic stimulus programme to irrigate arable land in the next 10 years.
Low rainfall means that Kenya’s ability to generate electricity from the less expensive hydro sources will be diminished, forcing the country to rely more on the expensive thermal power to meet consumer demand.
Industrialists have been complaining about expensive electricity, saying it hurts their competitiveness in the regional market where pricing is the key driver of market share growth.
To consumers that means higher power bills arising from the variable high fuel cost charges.
KPLC managing director Joseph Njoroge said the power distributor will step up supply from additional diesel generators to conserve water in the dams.
“We are balancing the supply from hydro with thermal to ensure that we also meet peak demand,” he said. Peak demand has grown from 1,172 Megawatts in December from 1,070 Megawatts in September.
The balancing will offer private power producers such as Aggreko, Iberafrica, Tsavo Power and Rabai Power an opportunity to grow their earnings with thermal power producers targeted to stabilise the transmission system.
To achieve that, the World Bank has announced that it will in the new year, consider offering partial risk guarantees for three such plants — Gulf Power, Triumph Energy and Menelec— which have a combined capacity of 252 Megawatts.
The guarantees are required for investors to get financiers for the projects.
The developments would open a new chapter in thermal power investments as the country moves to minimise weather shocks on power supply.
Following a prolonged drought in 2009 for instance, KenGen failed to meet its generation targets, costing it Sh1.25 billion in revenues, as water levels at Masinga dam fell to 1,022 meters from the optimal 1056 meters.
KenGen relies on hydroelectric dams for 70 per cent of its generation, an exposure aggravated during drought by the dams along the Tana River.
New entrants in the market sliced KenGen’s market share to 47.5 per cent from 61.4 per cent in 2009, according to data from Kenya Power and Lighting Company (KPLC).
The steep drop in hydro power’s contribution to the national grid due to poor weather saw electricity bills increase by about 60 per cent in the year to June 2010 compared to a year earlier.
In line with the national Least Cost Power Development Plan and the Vision 2030, which envisages the generation of up to 15,000 megawatts in total capacity, this year is likely to witness more ventures into new sources of power such as solar, thermal, wind, nuclear and coal.
