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Kenya’s Maize Pricing Situation: Challenges and Opportunities
a Presentation by Dr. Lilian Kirimi, Tegemeo Institute
at the Kenya's food situation: challenges and opportunities Roundtable
held at Laico regency hotel, Nairobi on 18th september, 2009

 

The presentation by Dr. Kirimi focused on the evolution of maize grain and flour prices in Kenya for the period 2000-2009. It showed that domestic maize prices in the major markets of Nairobi, Mombasa, Nakuru, Eldoret and Kisumu have been on an upward trend since 2002, with sharp increases from 2008. However, between January and August 2009, prices in other markets were increasing while those in Mombasa and Kisumu were generally declining, a situation that may be attributed to a price moderating effect of imports from Uganda and Tanzania.

A comparison of local and import parity prices in Nairobi over the 2000-2009 period indicates that imported maize has been more expensive than domestically produced maize up to February/March 2009, the only time when there would have been an incentive to import maize. Indeed, the waiver granted in January 2009 has restrained the increase in grain prices, with the gap between local and parity prices reducing. Tegemeo’s assessment in early September 2009 indicates that the proportion of imports in the stocks held by traders has increased in most markets, being about 80% in Nakuru. Maize grain and flour prices have shown similar trends between 2000 and 2009. However, beginning late 2008, grain prices have been declining while flour prices have been increasing. This may be attributed to other factors besides grain price such as poor road and rail infrastructure, high energy costs, and uncertainties in grain markets in terms of policy. However, retail maize meal prices, and marketing margins between maize grain and maize meal, have fallen as the year has progressed. This decline may be due to increasingly greater access of imported maize to informal maize trading and processing systems, which are less costly than the industrial milling sector and which compete effectively against it for low- and middle income consumers. This is important given that posho mills account for 40% of maize milled in rural areas. As long as grain is circulating in informal markets, consumers can buy and mill it at neighbouring posho mills, ensuring that the less expensive products are available to most low-income consumers.

In conclusion, Dr. Kirimi indicated that there is need for strategies that will adequately deal with the evolving food security situation during the 2009/10 cropping season and beyond. In the short term, the government needs to expand relief efforts, maintain duty waiver on maize and introduce waiver on wheat and rice, ensure access of imported maize to informal traders and posho millers, and follow clearly-defined and transparent rules for triggering government intervention to reduce market uncertainty. Additionally, there is need to raise awareness and sensitization on diversifying food consumption and to establish regular periodic government-private sector consultations to coordinate decision making on stocks and imports. In the long term, there is need to emphasize on strategies that reduce cost of producing and distributing maize locally such as improvement in roads and railway infrastructure.

Download the Presentation(ppt)

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