Kenya Sees July Corn Harvest, Imports Keeping Prices Stable

Kenya may produce 1 million metric tons of corn next month, helping meet demand for the staple food as the country imports and taps strategic reserves to plug a deficit, the Agriculture Ministry said.

The East African nation currently faces a shortage of 720,000, 90-kilogram (198-pound) bags that will be covered by purchases from the region and the release of 500,000 bags from the national reserve, Principal Secretary Sicily Kariuki said in an interview yesterday in the capital, Nairobi. Using state stockpiles is “normal practice,” she said.

“There is provision for enough food in the country and we don’t expect that imports should affect prices,” she said. “There should be no panic of a crisis, we have enough food.”

Kenya consumes 3.72 million bags of corn a month, which is milled into a flour and cooked to make the staple food, ugali, according to the Agriculture Ministry’s website. Production of the grain dropped after the country was hit by unseasonably dry weather during the March-to-May rainy season.

“The situation may get worse as farmers continue to reduce acreage this season as costs of farm inputs rise,” Standard Bank Plc said June 3 in an e-mailed research note.

Kenya’s annual inflation rate increased to 7.3 percent in May, close to the upper limit of the government’s target of 2.5 percent to 7.5 percent. The cost of food, which carries a weighting of 36 percent in the consumer-price basket, rose 8.9 percent, according to the country’s statistics office.

External Tariff

A 90-kilogram bag of dry corn sold at 3,100 shillings ($35.46) in April in Nairobi, according to the Agriculture Ministry.

Corn imports to Kenya from outside the East African Community common market, which also includes Tanzania, Uganda, Rwanda and Burundi, are subject to a “steep” 50 percent duty, according to an April report by the U.S. Foreign Agricultural Service. That tariff can be lowered in a scenario of “food insecurity,” it said. A ban on genetically modified corn in the market has locked out U.S. corn shipments to Kenya.

To contact the reporter on this story: David Malingha Doya in Nairobi at dmalingha@bloomberg.net

To contact the editors responsible for this story: Shaji Mathew at shajimathew@bloomberg.net Sarah McGregor, Ana Monteiro

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