The recent bumper harvest has pushed down maize prices in the local market by 16.4 per cent in the last one month, making Kenya one of the cheapest sources of the cereal in East Africa.
The average weekly wholesale price for the staple has fallen to Sh2,675 per bag, down from Sh3,200 at the beginning of December - significantly reducing the household burden as 2013 begins.
“The country has recorded significant drop in maize prices since the short seasons harvests started trickling in a few weeks ago,” Janet Ngombalu, the market information and communications manager at East African Grain Council (EAGC) said.
This price level is slightly above the Sh2,368 of Uganda but way below Rwanda’s Sh3,103 and Burundi’s Sh3,772, going by the latest data from Regional Agricultural Trade Intelligence Network (RATIN) indicates.
The Agriculture ministry estimates that the enhanced short rains may have lifted the country’s 2012 maize production to 38 million bags – just two million bags below the national consumption level.
The drop in maize prices is likely to reignite the old debate over the pricing policy of the National Cereals and Produce Board (NCPB).
At the onset of the short season harvests, NCPB raised its producer price to Sh3,000 a bag, attracting positive response from farmers. Critics however insist grain pricing should be left to market forces.
“The NCPB controls only two per cent of the national maize market, but its action disrupts the entire market as its producer prices is taken to mean the market’s minimum,” Mary Mathenge, managing director of Tegemeo Institute, said in an earlier presentation.
Data prepared by Kenya National Bureau of Statistics indicates that a two-kilogramme packet of maize flour cost Sh112.36 in December, a 3.6 per cent drop over Sh114.52 a year ago.
The falling prices of grain and flour are among the factors that have helped to lower inflation rate marginally from 3.25 per cent in November to 3.2 in December.
Uganda, however, remains the top source of grains that is exchanged across region, helping countries such as Kenya to plug their shortfalls and keep the commodity price down.
According to RATIN report, a total of 770 tonnes (8,556 bags) of maize from Uganda have crossed into Kenya since the beginning of the year putting pressure on prices.
Another 2.5 million tonnes of maize came into the country through Lwakhakha border while Malaba border post let in 1.35 tonnes. By comparison, Uganda has supplied only 380 tonnes of maize to Tanzania through Mutukula border since the beginning of this year.