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Kenyans can celebrate food price relief, but they are not out of the woods

However, while food price inflation eased from double digits in 2017 to 0.5% year on year in October following a general recovery in agricultural production, the country is not completely out of the woods.

Production of maize, one of the country’s staple foods, recovered by 8% year on year in the 2018/19 marketing year to 3.2 million tonnes, partly contributing to the aforementioned deceleration in food price inflation. But over the past couple of months, hardly a day passes without stories of declining maize prices adding to the pressure on Kenyan farmers.

While the bearish trend is typically presented as a function of abundant supplies following a good harvest, this is hardly the case. Yes, Kenya’s maize production has recovered to a degree, but it remains below the annual consumption of 4.2 million tonnes. In fact, the country will require imports of about one million tonnes of maize in the 2018/19 marketing year, which is 17% lower than the previous season. This is according to data from the US agriculture department.

Consumption doubles: price cycles are temporary

The decline in maize prices is rather due to harvest pressure, as Kenyan maize farmers typically harvest between September and November. Therefore, prices should recover somewhat early next year as the recently harvested supplies clear or stabilise. So, to Kenyan farmers who are complaining about low prices, the lower price cycle is temporary.

I say this because the expected imports in the 2018/19 marketing year still far surpass the usual import volumes of about 500,000 tonnes in Kenya. To be fair, this is not only a function of declining production but also increasing consumption. Between 2000 and 2018, Kenya’s maize consumption almost doubled as the population grew from 31 million people in 2000 to nearly 50 million people in 2017, according to data from the World Bank.

Read the Full story in Business day 

This article was originally published on Business Day on 22 November 2018.


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