Policy Brief on Maize in Kenya

Policy brief
Maize shortage a threat to food security in Kenya

Maize is the primary staple food crop in Kenya. It is the most frequently produced and marketed crop, grown by 90 percent of households and sold by more than 30 percent of the households in areas where the crop is grown. Maize dominates all food security considerations. Maize production has, however, been on the decline, reducing from 2.7 million tones in 1995 to 2.1 million tonnes in 2007. Similarly, maize yields have declined over 30 percent over the same period.

The decline in yields is largely attributed to reduced use of certified seed maize, climate change and low and inefficient usage of fertilizers. This means that the future growth in maize production would have to depend mainly on yield gains made possible by widespread use of productivity – enhancing technologies such as use of certified seed maize, fertilizers and agrochemicals. In deed, seed is known to hold a huge potential of increasing on-farm productivity and enhancing food security. It largely influences the upper limit of productivity of all other agricultural inputs applied into the farming system. This not withstanding, Kenya has been experiencing declining use of certified seed maize mainly due to non-availability of high quality seed of sustainable varieties at affordable prices. Majority of maize farmers (about 83 percent) perceive certified seed maize as being generally very expensive.

Maize production was disrupted in key producing areas of the Rift Valley in particular, as farmers were unable to harvest their crops from the 2007 long rains season in a timely fashion after the outbreak of the post election conflict. Heightened pre-and post harvest losses occurred as the National Cereals and Produce Board (NCPB), the main buyer of newly harvested grain, did not purchase maize after the onset of the crisis. The production losses and limited purchasing activity had a significant impact on household food security. Households in the grain basket received low producer prices therefore earning decreased incomes. Households in deficit production areas and urban areas faced reduced food access due to 10 to 20 percent increase in prices.

The price of maize in Kenya is among the highest in Eastern and Southern Africa, the lowest income quartile of the Kenyan population spends 28 percent of its income on maize. The inefficient maize production-marketing system has contributed to economic stagnation and worsening levels of poverty. Increased productivity, more efficient markets, and rational government policies could dramatically alter the economic contribution of the maize sub-sector – from being a drag on the economy to becoming a key element in accelerated growth and poverty reduction.

Following the post election violence that hit the Rift Valley in early 2008, displaced farmers saw access to their land dramatically reduced; high input prices (in particular fertilizer and fuel) forced low income farmers to reduce the surface under cultivation and the use of inputs; erratic rainfall reduced maize yields in Eastern and Northern Kenya. All the above contributed to a marked decline of maize production during the 2008/09 farming season. Current estimates, taking in full considerations the results of the “short rains” planting season are now pointing towards an overall output of 2.1 million tons instead of the 2.6 million tons initially anticipated. Considering current levels of consumption and draw down from stocks (largely in the hands of private traders), an overall deficit of some 190,000 Mt is expected and current stocks should last until May, well before the onset of the new harvest in the middle of July 2009.

At the same time, the Strategic Grain Reserve (SGR) cannot play its institutional role injecting grains in the market as stock was drawn down during the summer in anticipation of a good rain harvest. However, the season was mediocre and the remaining SGR stock was released on to the market in October-November 2008 in a bid to moderate the sharp rising prices. Due to the limited quantities injected and mismanagement/corruption of the operation, no positive effects were observed.
The shortfall of maize combined with very high prices prevailing in the international markets in the first half of the year have pushed the internal price of maize to a very high level, thereby reducing access to food by the most vulnerable section of the population. At the end of 2008, the retail price of maize flour was Ksh 60/Kg or some 50 percent higher than in the same period last year. Wholesale maize prices equally went up some 50 percent from Ksh 1,350 to Ksh. 2,100 – 2,300.

At the end of November, the government took the following measures in order to reduce the market price: reducing maize flour from Ksh.60/kg for middle income citizens and Ksh. 26 for the most vulnerable; the National Cereals and Produce Board was ordered to release at least 27,000 Mt of maize grains to millers for processing with immediate effect. The government increased the Cereals Board of Kenya (CBK) buying price to Ksh 2,300 per bag from Ksh. 1,950 in order to encourage farmers to sell their maize. These measures have not had any significant impact on the retail price of maize flour, which continues to remain very high.

The situation was further complicated by reported poor handling of the Strategic Grain Reserve, of market interventions and decisions on imports. Several sources suggest that big producers and traders are holding on to their stocks in order to create an artificial shortage of maize on the market and keep prices at a high level at the same time they are exporting maize to neighbouring countries.

In January 2009, the president Hon Mwai Kibaki declared the food shortage a national disaster. As a short term measure, the government approved the importation of 900,000 MT (10 million 90Kg bags) duty free maize grains into the country in order to boost supply. This was to be done by both the government and the private sector. The government was to import seven million bags (630,000 Mt) for its Strategic Grain Reserves, while the millers and traders were to import three million bags (270,000 Mt). In addition and in order to keep the local domestic production within the country, exports of maize grain and flour was banned. It is not expected that new imports of maize will reach the country before February/March 2009.

For the time being, the government has indicated that 10 million persons are highly food insecure. This number includes a provisional estimate: (i) of 3.2 million drought affected marginal farmers, agro pastoralists in the arid and semi arid districts of northern and eastern Kenya; (ii) about 150,000 Internally Displaced (IPDs); (iii) 850,000 school children that will be incorporated into an emergency school feeding programme; (iv) 3.5 million urban slum dwellers, and (v) about 2.2 million persons affected by HIV/AIDS, including HIV orphans.
Policy Recommendations

From the foregoing discussions, it seems clear that any reductions by lowering overhead costs, company’s mark-ups or shortening the market chain. Maize prices can also be reduced by addressing non-price constraints influencing pricing of maize. It is, therefore recommended that:
A) Maize millers be restructured to lower overhead costs, shorten distribution chains and lower profit margins.
Reducing dependence on expensive bank overdrafts could substantially reduce overhead costs by about 30 percent while the maize distribution chain can be shortened by elimination of sub-agents level. Millers should also lower their profit mark-up margins from current level to about 15 percent. It is estimated that implementation of these measures could help reduce maize prices by about 15 percent.
B) Review laws and regulations governing the seed sub-sector.
Specifically, the seeds and Plant Varieties Act, Cap 326, should be reviewed and harmonized to accommodate accreditation of private seed inspectors and facilitate self regulation. This should complement the process of seed inspection and certification by KEPHIS. The government should also hasten rationalisation and harmonization of seed regulation within the region to ensure free flow of maize, without compromising quality. This could provide an alternative source of cheap seed, especially if both local and imported continues being expensive.
C) Seed varieties developed by research institutions such as KARI should be made available to all interested parties through simple and transparent bidding systems.
Successful bidders should preferably be granted non-exclusive rights over the varieties but must ensure that the varieties maintain their distinct attributes and quality. The law should also be reviewed to entrench payment of royalties for publicly-funded breeding programmes.
D) Unnecessary bureaucratic procedures in variety release should be removed.
Presently, it takes too long to have the varieties officially released even after the National Variety Release Committee has given its recommendations for official/ formal release. The National Variety Release Committee should be empowered to be officially releasing new varieties.
E) Irrigated seed production should be promoted.
Seed companies and maize research institutions should promote irrigated seed maize production, both in the research sites and seed growing areas, to allow for both distance and time isolation, and for production of seed in less populated and isolated regions.
F) The government should pursue policies that improve the competitiveness of the agricultural sector relative to other sectors through, for example, increasing appropriate productivity-enhancing investment in agriculture such as rural infrastructure and agricultural extension.
G) Accountability and transparency
We also question the ways of channelling public aid to those who are most in need. We fear that the lack of transparency and accountability which has tainted the Kenyan administration for decades is reflected in this matter as well. The intention of a government when it declares a “national disaster” can be a noble one. The ensuing influx of funds, however, also creates new temptations for those who know to turn the system to their personal advantage. We see relief food marked ‘not for sale’ ending up in the shops a practice trend that has to stop.

let your inputs flow,especially on the policy recommendation