High prices of maize continued to pull traders into Kenya, with Uganda and Ethiopia selling more in the third quarter of this year compared with the same period last year.
Data from cross-border trade over the past three months shows that maize exports from Ethiopia to Kenya were 62,000 tonnes whereas those from Uganda were 51,000 tonnes — which was higher than the third quarter of 2016, but 34 per cent lower than the quarterly average.
“In Ethiopia, the prices increased before the October harvest and the fall armyworm infestation in the western surplus-producing areas, increasing inflation that has raised real and speculative purchases for exports to Kenya,” said the October East Africa Cross-Border Trade Bulletin.
The report projects that up to June next year, exports from Ethiopia to Kenya will increase.
“Although inflation worsened by currency devaluation will sustain high prices in Ethiopia in local currency, maize exports in regional currencies or dollars are likely to be cheap in Uganda,” reads the October analysis on cross-border trading.
Most traded commodity
Maize is the most traded commodity across the region followed by dry beans, rice and sorghum.
Uganda, Tanzania and Ethiopia are the main sources of maize, but in September Kenya sold the grain to Uganda even as the country was importing it from Mexico to plug a severe shortage. Maize prices had fallen after the end of a long dry spell.
According to data, maize prices across key markets like Kigali, Nairobi, Dar es Salaam and Kampala vary by a huge margin that analysts say provides opportunities for regional trade but shows a lack of a well-functioning integrated market as a result of transactional and policy constraints.
The report also reveals that the total amount of rice traded across the region hit a four-year high of 63,000 tonnes pushed by exports from Tanzania to match regional demand.
In June 2016, Tanzania’s Minister for Agriculture, Livestock and Fisheries Charles Tizeba banned maize exports in an effort to curb practices that jeopardised food security such as pre-harvest sale of produce, to encourage value addition, and to promote the export of flour instead.
But even with the ban, there has been increased informal grain trade across regional borders, making maize the most dominant commodity traded in the unofficial market between the Kenya and Tanzania.
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Smuggling and complicity
Tanzania’s food export bans are sometimes frustrated by smuggling across porous borders and complicity by Customs officials. The maize passes through the Namanga and Isebania border posts.
Re-exports of imported rice by Somalia to the eastern region of Kenya were high over the three months to September due to increased demand following exceptional increases in maize prices as a result of tight supply from below average production and reduced regional inflows.
“Exports from Tanzania and Somalia compensated for the 62 per cent drop in exports from Uganda stemming from below average rains that reduced the June to August harvests,” reads the report.
Kenya, Uganda and Ethiopia accounted for 46 per cent, 25 per cent and 16 per cent, respectively of the regional rice imports.
In Kenya, rice prices have been increasing following a steep decline in local production and expensive imports, putting pressure on households that are already grappling with the high cost of living.
The cross-border analysis predicts that up to June 2018, Tanzania’s surplus maize is expected to be below average for the second consecutive year.
“Exports from Tanzania are expected to remain below average because of ‘unregulated maize grain export’ but the prices are expected to be above average stemming from the cost associated with circumventing the ban,” reads the cross-border analysis report.
Maize prices in Burundi and South Sudan are expected to remain high to June 2018 due to the worsening macroeconomic situation in Burundi, which has led to continued depreciation of the Franc, and deteriorating security in South Sudan.