Maize is the main staple food in Kenya for a large proportion of the population in
both urban and rural areas. Maize consumption is estimated at 98 kilograms per person
per year, which translates to roughly 30 to 34 million bags (2.7 to 3.1 million metric tons)
per year. Maize is also important in Kenya’s crop production patterns, accounting for
roughly 28 percent of gross farm output from the small-scale farming sector (Jayne et al.,
2001).

Kenyan policy makers have been confronted by the classic “food price dilemma.”
On the one hand, policy makers are under pressure to ensure that maize producers receive
adequate incentives to produce and sell the crop. Rural livelihoods in many areas depend
on the viability of maize production as a commercial crop. On the other hand, the food
security of the growing urban population and many rural households who are net buyers
of maize depends on keeping maize prices at tolerable levels. For many years, policy
makers have attempted to strike a balance between these two competing objectives – how
to ensure adequate returns for domestic maize production while keeping costs as low as
possible for consumers. Maize marketing and trade policy has been at the center of
debates over this food price dilemma, including discussions over the appropriateness of
trade barriers and the role of government in ensuring adequate returns to maize
production.

Improving the competitiveness of Kenyan maize production is also a primary
means of resolving the food price dilemma. The ability to reduce the costs of maize
production can ensure greater profitability to producers at lower prices while
simultaneously improving poor consumers’ access to food. Achieving lower production
costs also allows domestic producers to compete more effectively with imports from
other countries.

The purpose of this study is to assess the costs of maize production in Kenya and
Uganda. We start from the fact that there is no single “cost of production” for maize. Cost of production varies according to region, the type of technology package employed,
farmers’ management practices, and the weather. In light of this, the study disaggregates
cost of production into seven region/technology categories, five in Kenya and two in
eastern Uganda, in order to compare the relative competitiveness of maize among these
regions and technology packages. Variations in cost of production within each
region/technology category reflect differences in farmer management practices and
micro-variability in soils and rainfall. Therefore, within each region/technology category,
we present costs of maize production estimates for three terciles: low-, medium- and
high-cost producers. The results hold important implications for who will benefit and
lose from the removal of regulatory and informal trade barriers between Uganda and
Kenya (see RATES, 2003).