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Kenya govt fails to heed corn-miller stocks warning

May 22 2017 11:47
Paul Richardson and Samuel Gebre, Bloomberg

Nairobi - Kenyan corn millers warned the government twice in the past six months the country faced a shortage of the staple that’s left strategic reserves at less than a day’s supply.

Grain processors advised the government in November that a shortfall was looming and in February suggested that a 50% import duty be removed to enable shipments, said Paloma Fernandes, chief executive officer of the Cereal Millers Association.

The nation, which declared a drought emergency in February, only gazetted the removal of the import tax in April, which meant shipments only started arriving this month.

“We’d foreseen this shortage because it happens every five years or so when there’s a drought in Kenya,” Fernandes said on Friday from the capital, Nairobi. “The millers have an early-warning system. We know exactly what supplies we receive and when we realize supplies are low, we tell the government.”

Kenya’s strategic reserves of corn declined to 4 500 metric tons this month, the National Cereals and Produce Board, which manages food stocks in East Africa’s biggest economy, said last week. The Agriculture Ministry plans to spend 6 billion shillings ($58m) through July importing 450 000 tons of corn to offset a shortage that resulted from below-average precipitation during Kenya’s March-to-May rainy season.

While the ministry was made aware of a potential corn shortage in December, it had expected that farmers would be able to help cover the deficit, said an official at the ministry who declined be identified because he isn’t authorised to speak to the media.

Ultimately, growers only had a month’s worth of the grain, compared with the three-months’ worth estimated by the ministry, the official said. Agriculture Secretary Willy Bett and Principal Secretary Richard Lesiyampe didn’t answer calls to their phones seeking comment.

Avoiding hunger

Similar measures to those in Kenya are being introduced in neighboring countries that have been hit by the regional drought, which has left 17 million people facing hunger, according to the Food and Agriculture Organisation.

Burundi last week removed taxes on key commodities such as rice, beans and cassava for two months, citing a scarcity, while neighboring Uganda suspended its import tax on unprocessed rice, a staple in the country.

East African countries face a food-production deficit equivalent to about 30% of consumption, according to Anne Mbaabu, head of markets at the Nairobi-based Alliance for a Green Revolution in Africa.

“The food situation is genuinely real,” said Mbaabu. “The government has to do what it can to avoid hunger and feed its people.”

The price of milled corn, a staple food known as unga in Kenya, rose to as high as 155 shillings ($1.50) for a 2-kilogram, from 103 shillings a year ago. That fueled annual food inflation of 21% in April, the fastest pace since February 2012, and squeezed families in a country where almost half of the population lives on less than $2 a day.

Corn imports

Kenya may need to import more corn than it has already planned, Fernandes said. The requirement will only be known once estimates of the crop that’s currently being planted are made available around the end of May, she said.

“It sounds like the amounts we have coming in may be about 10% less than we require, but it’s difficult to make that call until we have the crop-estimates figure,” she said. Kenyan mills, which were operating at about 30% of their capacity in March and April, require about 144 000 tons monthly to meet demand, Fernandes said.

Kenya consumes 4.32 million tons of corn a year. It produced 3.34 million tons of the grain in 2016, the smallest harvest since 2011, when the last major drought occurred in the country. Production this year may be 2.95 million tons, the Nairobi-based Business Daily newspaper reported on Monday, citing the Agriculture Ministry.

Read Fin24's top stories trending on Twitter:

kenya  |  corn  |  maize  |  agribusiness
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