The East African Community states are among countries that will benefit from low cereal prices expected to prevail this year, following the record-breaking output in Europe and Asia last year.

The world cereal output is forecast at 2,509 million tonnes (including rice in milled equivalent), which is 39 million tonnes lower than in 2014 but still nearly 5 per cent above the average of the past five years.

According to the Food and Agriculture Organisation (FAO), exporting nations are still holding abundant stocks of cereals, hence an increase in prices will be unlikely.

“The world food import bill is forecast to reach a five-year low in 2015, mainly driven by a decline in international prices, low freight rates and a strong US dollar,” said FAO in its latest global food outlook.

The situation will benefit low-income countries that continue to spend millions of dollars importing cereals. As a result, these countries are expected to save on foreign exchange this year.

The EAC member states do not produce enough wheat, rice and maize for their 134.5 million citizens. Although Uganda and Tanzania have increased their maize production, supply still remains erratic and heavily dependent on rainfall performance.

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Prices are expected to remain low despite a slight decline in global grain production this year compared with last year, as abundant stocks held by exporting countries and some importing nations are expected to offset any pressure from the demand side.

“Worldwide cereal production will likely decline by 1.5 per cent from last year’s record-breaking output, mainly due to reduced acreage planted with maize, but the impact will be cushioned by exceptionally high levels of existing stocks,” said FAO.

The world production of coarse grains (cereals other than wheat and rice) will fall below the 2014 record level, but the total inventories are likely to be released to meet the expected demand in 2015/16.

“Given ample inventories to be carried over from the current season, coarse grain markets are expected to remain well supplied in the new season,” said the FAO.

Kenya is the top maize importer in the region. The United States Department for Agriculture predicts a supply deficit in the year 2015/2016, which it says will need to be offset by imports from the EAC unless the government lifts a ban on genetically modified maize.

Maize production in the country, and other parts of the East African region, has suffered due to insufficient rainfall, low availability of fertiliser and an outbreak of the Maize Lethal Necrosis Disease.

On wheat, FAO said overabundant supply of the crop is likely to remain in the 2015/16 season. This follows two consecutive years of record crop harvests, which have made it possible for countries to store the surplus.

“This, coupled with less buoyant growth in demand for feed wheat, could contribute to fairly stable market conditions in the new season,” the organisation added.

Overabundance of wheat in the global market will be good news for the EAC countries because, unlike maize, all member states import the cereal.

Data from the United States Department of Agriculture shows that Kenya not only produces the highest amount of wheat in the EAC, but also imports the most.

The average data analysed between 2008/2009 and 2012/2013 shows that Kenya produced 247,000 tonnes of wheat under an area of 130,000 hectares, and imported 879,000 tonnes.

Tanzania produced 93,000 tonnes under an area of 96,000 ha, and imported 608,000 tonnes in the same five year average period. Uganda produced 24,000 tonnes under an area of 14,000 ha, and imported 155,000 tonnes.

Rwanda produced 81,000 tonnes under an area of 58,000 ha, and imported 16,000 tonnes; Burundi produced 9,000 tonnes under an area of 10 ha, and imported 5,000 tonnes.

The figures also showed the average production per hectare is 1.5 tonnes per ha, with the highest being Kenya at 2.2 tonnes per ha; the lowest is Burundi at 0.9 tonnes per ha.

The United States Department of Agriculture noted that the EAC will cumulatively import about two million tonnes of wheat annually, double the total from 10 years ago, due to its rising population.

Rice is the other important cereal crop whose price is expected to remain low. FAO said a return to more normal weather conditions is behind an expected recovery of global rice production.

Expansion forecast

However the organisation cautions that the expansion is forecast to be modest, dampened by less attractive market prices and a shift towards less expansionary production policies, especially in exporting countries.

“Following an exceptional double-digit growth in 2014, international trade in rice is anticipated to dip by two per cent in 2015, driven mainly by falling demand by countries in the Far East. Although still very tentative, trade in 2016 is anticipated to rebound, sustained by a recovery of imports by the traditional large buyers,” FAO said.

In Kenya, for example, rice is the most important cereal food crop after maize and wheat. However, the country is only able to meet 20 per cent of its consumption needs due to production inefficiencies and increased demand. Other EAC member countries have also been unable to meet local demand.

According to the organisation’s forecast, much of the increase in global rice production is likely to stem from a one per cent upturn in Asia. However, subdued production growth is also expected in Africa, with output even seen falling in Oceania (Australia) and North America (the United States). Crop prospects are somewhat brighter in Latin America and the Caribbean.