Transcript Kenya’s food security and food price situation

Kenya’s Maize Pricing Situation:
Challenges and Opportunities
TEGEMEO INSTITUTE OF AGRICULTURAL
POLICY AND DEVELOPMENT
September 18, 2009
Trends in local and import parity
grain prices in selected markets
in the 2000-2009 period
Wholesale grain prices in selected
markets (2000-2009)
3200
2800
Ksh per 90kg
2400
2000
1600
1200
800
400
00
01
02
03
04
N a ir o b i
M om b as a
05
06
07
08
09
N ak u ru
E ld o r e t
General upward trend since 2002 with sharp increases from 2008
Wholesale grain prices in selected
markets (Jan - Aug 09)
3250
3000
Price/90 kg bag
2750
2500
2250
2000
1750
1500
Jan-09
Feb-09
Nairobi
Mar-09
Mombasa
Apr-09
May-09
Kisumu
General decline for Mombasa & Kisumu prices
Prices in other markets increasing
Jun-09
Nakuru
Jul-09
Eldoret
Aug-09
Nairobi local and import parity
prices (2000-2009)
4500
import parity with 50% tariff
suspended January 2009
4000
Ksh per 90kg
3500
3000
2500
2000
import parity assuming no tariff
1500
1000
wholesale, Nairobi
500
00
01
02
03
04
05
06
07
08
09
Local vs. import parity prices in
selected markets (2009)
3500
3250
Price/90 kg bag
3000
2750
2500
2250
2000
1750
1500
Jan-09
Feb-09
Nairobi
Mar-09
Apr-09
Mombasa
May-09
CIF Msa
Jun-09
Jul-09
Aug-09
CIF Nbi
Source: MoA/RATIN
Locally produced maize cheaper up to Feb/March 2009
Gap between local and parity prices reducing
Proportion of imports in the stocks held by traders increased in most markets
(80% in Nakuru)
Posho mills account for 40% of maize milled in rural areas
Mombasa local vs. import parity
prices (2008-2009)
4000
50% import tariff
waived Jan 2009
3500
Ksh per 90kg
Import parity, Mombasa
3000
2500
W holesale, Mombasa
2000
1500
1000
2008:01
2008:07
2009:01
2009:07
Nairobi local vs. import parity prices
(2008-2009)
4500
4000
50% import tariff
waived Jan 2009
Import parity, Nairobi
3500
3000
W holesale, Nairobi
2500
2000
1500
1000
2008:01
2008:07
2009:01
2009:07
Import cost build-up for maize
imported from South Africa
Exchange Rate (Ksh/USD) - July 09
77.80
Year - July 09
$
Maize FoB Ex-Durban
Freight Charges Per ton ($40-50)
Insurance (1.5% of Fob)
Cif Mombasa - June USD
KSH (C & F Mombasa) per bag
Tariffs Payable to GBHL USD/ton- (Ksh)/bag
Stevedoring (Vessel Discharge)
6.50
Terminal handling
4.50
GBHL – Delivered to W/hse (Bagged)
4.00
Transport to Miller (Ksh 380/MT)
KPA Charges
Stevedoring
1.50
Wharfage
2.00
Clearing/Agency Fee ($1 - $3/ton)
2.00
Warehousing Charges (Ksh 500/ton) 4 wks
IDF $ per ton (2.25% Cif )
Bagging
5.00
Shorehandling
1.00
Transport to Miller (Ksh380/MT)
Landed Mombasa - June Ksh per 90 kg bag
Transport cost to Nairobi
Handling
Landed Nairobi (Ksh per 90 kg bag)
GBHL
Conventional
210
210
45
45
3.15
3.15
258
258
1,808
1,808
45.52
31.51
28.01
34.20
10.50
14.01
14.01
45.00
40.67
2,071
225.02
10.00
2,306
28.01
35.01
14.01
45.00
40.67
35.01
7.00
34.20
2,047
225.02
10.00
2,282
Diff
(25)
(25)
Cargo Handled (MT) at the Port (GBHL &
Conventional) 2008-2009
2008 (12 months)
Cargo Handled
Bulk Wheat
Bagged Rice
Bulk Maize
Bulk Sorghum
Bulk Salt
GBHL Conventional GBHL Conventional
703,788
109,291 433,169
44,388
71,264
19,883
177,521
11,857 509,558
186,164
130,165
91,252 18,850
49,864
173,858
52,348
Bagged Sugar
Relief Cargo
Sim Sim
Fertilizer
Total
2009 (6 months)
1,011,474
27,578
106,364
1,748
256,987
6,207
106,522
251,755
850,199 961,577
717,131
Source: KPA
Unused capacity at GBHL
Importers use facility as a warehouse when there are large import volumes due to
constrained transportation
Trends in maize grain
and flour prices
Trend in maize grain/flour prices
(2000-2009)
60
50
Ksh per kg
40
retail sifted maize flour, Nairobi
30
20
wholesale, Nairobi
10
wholesale, Eldoret
0
00
01
02
03
04
05
Similar trends in grain and flour prices
06
07
08
09
Comparison between grain and
flour prices in the 2008-2009 period
60
retail sifted maize flour, Nairobi
Ksh per kg
50
40
wholesale, Nairobi
30
20
wholesale, Eldoret
10
2008:01
2008:07
2009:01
2009:07
Increase in price of maize meal higher than that of grain
Late 2008, grain prices declining while flour prices increase
Other factors besides grain price associated with increase in flour prices are
uncertainties in grain markets in terms of policy, energy cost, poor infrastructure
Farm-gate & wholesale grain prices
vs. retail flour prices (2008-2009)
55
50
retail sifted flour, Nairobi
Ksh per kg
45
40
wholesale, Nairobi
35
30
25
farm-gate, Nakuru
20
15
2008:10
2009:01
2009:04
2009:07
2009:10
Share of retail sifted maize flour price to:
Percentage of retail price
50
45.7%
40.3%
45
40
35
30
25
20
14.0%
15
10
5
0
farmer
traders
miller/retailer
Production and marketing costs have not been deducted
Farmers get a relatively higher share of sifted meal retail price
Share of retail posho maize flour price to:
Percentage of retail price
60
58.1%
50
40
29.1%
30
20
12.8%
10
0
farmer
traders
miller/retailer
Policy implications
• Emphasize on strategies to reduce cost of
producing maize locally
– Domestic maize is cheaper
• Use short-term and long-term measures to
deal with soaring food prices
– High food prices hurt even producing households
• Duty removal has had a moderating effect
on local grain and flour prices
Policy implications
• Suspension of duty earlier would promote
more timely availability of grain in times of
domestic shortfall
• Facilitate sourcing of grain from the region
by streamlining custom clearance
procedures
• Poor road/railway infrastructure hampers
capacity to transport grain
• Unutilized capacities increase cost
Thank you
World maize prices
320
USD per metric tonne
280
240
200
160
120
80
40
00
01
02
03
04
05
06
07
08
white maize, SAFEX, South Africa
yellow maize, US Gulf
09