Grain traders in East Africa rush for low-cost Uganda maize

Sunday December 31 2017

Farmers weigh and dry their maize at the National Cereals and Produce Board in Molo, in Nakuru County, Kenya. PHOTO | NMG

Farmers weigh and dry their maize at the National Cereals and Produce Board in Molo, in Nakuru County, Kenya. PHOTO | NMG 

By ALLAN OLINGO
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Grain traders from East Africa are rushing to Uganda to buy maize at about half the international price, after a bounty harvest there, amid shortages in the region caused by drought.

Uganda has sold nearly 38,000 tonnes of maize worth $15.2 million to its regional neighbours over the past one month, with the biggest chunk — 30,500 tonnes — going to Kenya.

The Kenya purchases appear motivated by the roaring business traders are doing with the National Cereals and Produce Board (NCPB) for the enhancement of the strategic grain reserve.

Rwanda, through its Gatuna and Cyanika border points imported 5,405 tonnes of the produce from Uganda over the same period, followed by the Democratic Republic of Congo (DRC) which brought in 1,105 tonnes through the Rusizi, Mpondwe and Rubavu border points.

Tanzania has imported 480 tonnes through the Mutukula border.

The Kenyan traders have taken advantage of the low prices in Uganda’s Tororo, Gulu, Masindi and Lira regions to ship in the product from as low as $180 per tonne, and flipping it on the Kenyan market where a tonne is going for as high as $430.

Data from the Regional Agricultural Trade Intelligence Network (Ratin) shows that the maize is entering the country through the Busia, Mutukula and Malaba posts.

Middlemen, millers

Middlemen and millers are reportedly involved in the importation of the low-cost maize from Uganda, pushing farmers into a tight corner as they had banked on selling the produce to the Kenyan strategic stores.

The government had already allocated $70 million for buying 2.4 million bags of maize to replenish the Strategic Grain Reserves.

“These middlemen are just taking advantage of the common market protocol to import low-cost maize. They are paying as low as $18.4 for a 90 kilogramme bag and then blending it with the local produce. This is finding its way into the NCPB silos which is paying $32 for a similar bag. This puts farmers at a disadvantage,” said the Kenya Farmers Association (KFA) director Kipkorir Arap Menjo.

By Monday last week, the cross-border imports had peaked at 1,000 tonnes a week.

The increased imports are an indication of the dire harvest the country experienced due to drought, that led to a biting shortage of maize throughout the year.

In the months after the August harvest, maize prices usually drop to lows of $20 per 90- kilogramme bag, even as the October long rain season boost the second season harvest.

According to Mr Menjo, the cereals depot in Eldoret expressed concerns that the Kenyan farmers could be getting a raw deal given the margins the traders of the imported produce were making.

“Why should they import maize from Uganda yet we have enough. We are seeing delays from the board in accepting maize from farmers, leaving them at the mercy of brokers who are offering prices as low as $25 per 90-kilogramme bag,” he said.

However, NCPB says that it has deployed its staff to ensure the imported cheap maize from Uganda does not find its way in the silos.

“So far we have been receiving very good and steady deliveries of the produce across our North Rift and Western Kenya silos. We have also  deployed policy inspectors to the buying centres to vet and ensure that the imported subsidised maize from neighbouring countries does not end up in our stores,” NCPB  corporate affairs manager Titus Maiyo said.

Maize reserves

Kenya is trying to ramp up its maize reserves, which ran out mid this year forcing the government to import more than 200,000 tonnes from Brazil.

Early December, Kenya’s Agriculture Cabinet Secretary Willy Bett said that the yield for this year is projected to record a deficit, setting the stage for an acute shortage.

“We have received a projected yield of 32 million 90-kg bags, down from 37.1 million bags, and against our projections of 40 million bags. This shortfall was occasioned by the drought and army worm invasion,” said Mr Bett.

NCPB said that by mid-December it had purchased more than 700,000 bags of 90kg maize estimated at more than $22 million.

Kenya has suffered an acute shortage of grain following poor harvest last year resulting from erratic rains experienced during the planting season in 2016.  The country normally imports grain from Uganda and Tanzania to bridge the deficit. 

Last year, Tanzania exported more than 1.5 million tonnes of cereals to it neighbours. However, it is also facing shortages of its own despite producing around three million tonnes of surplus food in the 2016 harvest season, blaming it on unregulated exports which have affected food reserves.

In its previous shortages, Kenya has relied on Malawi and Zambia. The two countries had also banned export of the grain but Zambia lifted the ban in June to allow for the sale of its surplus, after production rose to 3.61 million tonnes in its first half of 2017, from 2.87 million the previous season.