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Regional food prices expected to go up

Saturday January 11 2014
food

Increase in prices is attributed to a looming shortage of the essential foods due to poor weather, inadequate fertiliser supplies to farmers and delayed planting. Photo/FILE

East Africa is expected to record shortages of some of its essential foods within the first half of the year due to projected poor weather, inadequate fertiliser supplies to farmers and delayed planting, further challenging policymakers to improve food security and control food-driven inflation.

Economists and agriculturalists have warned that some of the crops whose production is expected to decline are maize, wheat, rice and beans.

Milk production is also expected to decline due to lack of pasture, following the onset of the dry season and the spread of animal diseases in some parts of the region.

As a result, economists fear the prices of staple foodstuff like maize, beans, wheat products, milk, beef and mutton may increase, triggering a rise in inflation, which has so far remained at the single-digit level in all the five EAC member countries.

In 2013, East African countries maintained single-digit inflation rates for most of the year, thanks to good harvests, which stabilised prices of food.

READ: EAC countries held single-digit inflation in 2013

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In Uganda, a general decline in commodity prices coupled with low demand for goods and services helped the country maintain an annual inflation rate of 5.5 per cent in 2013, the lowest in two years.

Kenya ended the year with an inflation rate of 7.2, a decline from 8.29 reported in September last year.

Tanzania kept its inflation rate at an average of 6.20 per cent for the second half of last year while Rwanda ended the year with the lowest inflation rate at 4.58 per cent down from 5.1 per cent recorded in October.

Burundi recorded the highest inflation rate averaging 9.7 per cent, by the end of last year.

In Kenya, prices of essential foodstuff, like maize, milk and wheat, are expected to increase in the early months as the effects of last year’s poor rains begin to be felt. The situation, experts warn, may be aggravated by the dry season, which is normally associated with water scarcity and lack of pasture.

The situation is similar in Tanzania. Already, the price of a 50kg maize meal bag has gone up from Tsh36,000 ($22.5) to Tsh43,000 ($26.8). Hussein Kamote, the director of policy and research at the Confederation of Tanzania Industries said that: “Maize millers are likely to increase the price of their products because they use electricity whose tariff was recently increased. The same will apply to rice because its polishing also requires electricity.”

However, things are different in Uganda as the government is worried about an abundance of maize, which could lead to a decline in prices, with farmers being the biggest losers. The anticipated bountiful harvest has been occasioned by favourable rains in the second season of 2013.

Okaasi Opolot, the director of crop resources in the Ministry of Agriculture, Fisheries and Animal Husbandry said the government fears that maize prices could drastically drop.

In Kenya, poor rains, last year’s General Election, which coincided with the planting season and shortage of fertiliser, all led to reduced acreage of the crop.

Research by Egerton University’s Tegemeo Institute of Agriculture, Policy and Development found that farmers harvested 28.9 million bags during last year’s long rains season against the government’s projected 43.4 million bags for 2013/2014 crop season, which ends early this year. On average, the country consumes 3.7 million bags of maize every month, translating to 44.4 million bags a year.

Worsening the situation is the performance of the short rains, which was poor, short-lived and unevenly distributed.

“The short rains were not good enough and we will definitely experience a decline in maize production,” said Anthony Kioko, chief executive officer at Kenya’s Grain Growers Association.

The average price of a 2kg maize flour pack of popular brands ranges between Ksh100 ($1.2) and Ksh120 ($1.4) and there is fear the price might increase due to the shortage.

READ: Kenya rules out maize import licences as production falls

According to Cabinet Secretary for Agriculture, Livestock and Fisheries Felix Koskei, as at December 31, last year, estimated maize stocks stood at 13.3 million bags with farmers holding 8.5 million bags, traders 2.1 million bags, millers 500,000 bags and the National Cereals and Produce Board 2.2 million bags.

“Maize availability from domestic production is likely to be enough to cover up to May 2014. The expected shortfalls should be made through imports by the private sectors,” said Mr Koskei.

Kenyans consume an average of 940,000 bags of wheat every month, translating to 11.3 million bags a year. However, Kenya does not produce enough wheat for consumption and relies heavily on imports.

“We only produce 40 per cent of our wheat and import up to 60 per cent and things can be difficult if the crop does not perform well. However, so far the situation is still not bad but we will definitely need to import,” said Mr Kioko.

Mr Koskei said the current wheat stocks available are estimated at 600,000 bags. According to the Agriculture Ministry, though the area under crop production increased by 13 per cent to 148,703 hectares in 2012 from 131,509 hectares in 2011 with challenges to increase production still enormous.

“The crop still continues to experience challenges such as high cost of key inputs, poor marketing channels especially for small scale farmers,” said the Ministry in its Economic Review of Agriculture report.

In Tanzania, the prices of wheat products have already gone up.

Kenyans should also prepare to pay more for milk mainly in the early months of the year as the dry season takes hold.

The chairman of the Dairy Producers Association, Peter Lelei, anticipates an increase in milk prices between January and April.

“The dry season normally starts in September to May. Though the rains fell up to early November, the performance was not good enough. The dry season has now began and milk production will definitely decline,” said Mr Lelei.

He said the poor rainfall witnessed both in the long and short rains seasons prevented milk processors from stocking enough milk powder for the dry season.

According to the Kenya Dairy Board, the country produces an average of five billion litres of milk annually while deliveries to processors was about 500 million kilogrammes last year.

Mr Koskei said milk production is likely to decline significantly in the arid and semi-arid areas due to last year’s poor rains, but adds that the situation will not be too bad as an increase in production is expected in high potential areas.

Decline in milk production

Uganda also anticipates a decline in milk production due to various reasons among them the spread of disease and lack of pasture.

Dr Jolly Kabirizi, a scientist at the Livestock Resources Research Organisation said there will likely be a shortage of milk during the year due to increased cases of livestock diseases.

However the good rains in parts of the country mean that other staples like bananas, potatoes, cassava and millet will perform well, which could reduce internal demand for maize in Uganda.

Deborah Mwegigye, the acting manager at the Uganda Commodities Exchange, adds that the price of maize will be affected by the ongoing war in South Sudan, a major market for the crop.

Currently the bidding price for a kilogramme of maize grain sold at the Uganda Commodities Exchange (UCE) stands at Ush1,000 ($0.39).

By Jeff Otieno, Dicta Asiimwe and Joseph Mwamunyange

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