Data Hub

Uncertainty for Kenya on dim East Africa maize forecast



Maize stocks are expected to tighten in East Africa’s next harvesting cycle due to limited supplies in Uganda and an expected export ban from Tanzania.

This could impact negatively on Kenya, which traditionally relies on the two neighbours for cross-border trade to bridge shortage of grain as the country is faced with an annual deficit of up to 10 million bags every year.

A market assessment report by the Eastern African Grain Council (EAGC) which was presented to the Ministry of Agriculture, indicates that Tanzania could have sufficient stocks but most of it could head to its southern neighbours while Uganda, just like Kenya, may have grain deficit due to delayed rains.

This implies that Kenya will not be out of the woods yet next year as the already tight maize supply is expected to persist. This will keep the current price of flour up, with the expected production decliner of 10 million bags in the current crop in the field piling more pressure on the staple.

“Delayed rains and dry conditions in March that continued into April have affected planting and establishment of first season crops. Substantial cereal crop production shortfalls are expected in Uganda,” says EAGC in the report.

The report notes that above average import gaps in typically surplus producing Uganda will likely limit their ability to supply structurally deficit countries within the region, which could severely constrain both formal and informal regional trade flows. “Under such a scenario, structurally deficit countries will have to rely on international markets to fill any significant import gaps,” added the report.

It says data collected indicates that Tanzania will have an exportable surplus of maize in 2018/19 and 2019/20 but there is likely to be increased demand for it in southern Africa, particularly Malawi and Mozambique.

Food security in the latter two countries was greatly affected by tropical storms that recently destroyed cropland.

“As Tanzanian maize moves to its southern neighbours, exportable surpluses available to Kenya and the wider EAC are likely to be reduced; in essence, Kenya will likely face stiffer “competition” for Tanzanian maize from Mozambique, Malawi and potentially also Zimbabwe particularly as Zambia has banned maize exports since September 2018,” the report notes.

“There is also a risk of a potential export ban by Tanzania in the coming months in the event exports to its neighbours are deemed to undermine local maize availability, especially if the harvest is delayed. An export ban will thus hurt Kenya as it cuts off potential maize supplies for Kenya,” says EAGC.

The study, however, adds that crop production may be below average in central areas (Tabora and Singida regions) as well as northeastern bimodal areas of Tanzania due to delayed rains and dry conditions, but these are not major grain belts.

Agriculture Principal Secretary Hamadi Boga says whereas the cross-border imports would help stabilise the price of flour, it may not be sufficient to lower the cost of the staple.

“For us to have a significant reduction in the cost of maize flour, we have to ship in sufficient stocks from other countries other than Uganda and Tanzania, the current inflow will only help in maintaining the cost,” said Prof Boga.

A food security survey conducted by the Ministry of Agriculture last month shows a sharp decline in maize crop cover in most parts of the country, especially in the country’s breadbasket of Uasin Gishu and Trans-Nzoia.

Agriculture Chief Administrative Secretary Andrew Tuimur says the report indicates that production will drop from 44 million bags that were realised last year to 34 million bags.

According to the report, the acreage under maize will decline from 2.4 hectares that was planted last year to 1.5 million hectares, hence cutting down on the number of bags.

“We expect a reduction this year because a number of farmers opted to grow wheat, pulses and fodder when the rains delayed,” Mr Tuimur said. EAGC says Ethiopia is estimated to possess significant exportable surpluses of maize which Kenya can take advantage of to ease the domestic shortage with grain trade between the two countries having proven feasible in 2017 when approximately 120,000 tonnes of maize was imported from Ethiopia and played an important role in alleviating domestic maize shortage.

The agency says for Ethiopia-Kenya trade to be more viable and effectively help to reduce domestic prices, some important steps need to be taken by the government.

“Kenya needs to engage in government-to-government dialogue with Ethiopia to provide special measures to facilitate grain trade,” says the agency.

EAGC notes that Kenya should revise conformity assessment requirements currently enforced by the Bureau of Standards at Moyale border.

“At present, Certificates of Conformity (CoC) are required per vehicle load (truck) and not per consignment. This means that a single consignment of maize transported in five separate trucks require five separate CoCs,” notes EAGC.

This, says CoC, raises the cost of doing business and amounts to a significant non-tariff barrier to trade considering each CoC costs Sh30,700 inclusive of VAT.

The lobby also wants duty on maize from Ethiopia to be zero-rated. It says this can be achieved by alternatively introducing a duty remission scheme at zero percent import duty for gazetted maize millers for specific quantities of the produce from Ethiopia.