Kenya's duty-free maize import plan flops amidst rising global prices

Kenya's plan to import approximately 900,000 tonnes of white maize by next month has encountered hurdles due to costly global supplies. Recent data from the Ministry of Agriculture and Livestock Development reveals that only about one-third of the desired imports had reached the country by the end of June, just before the duty-free import window is set to close.

Between February and June 2023, Kenya imported a meager 259,470 tonnes of maize, representing 29 percent of the expected imports. As previously anticipated, most imports came from neighboring East African Community countries, particularly Tanzania, rather than from outside the region.

The Ministry attributed the reduced imports to a tight global market and decreased local demand, resulting from lower purchasing power. Despite the government offering a duty-free import window for maize from outside the East African Community and Comesa, eligible millers and traders reported inadequate global supplies, higher freight and insurance costs, and a dollar shortage, which hindered substantial imports.Additionally, the imported maize arriving at Mombasa is slightly more expensive than local supplies. This situation has raised concerns, especially since, in December last year, the National Treasury allowed the importation of 900,000 tonnes of white maize between February and August to address shortages caused by a decline in local production.The import shortfall is expected to disrupt the government's projected maize balance sheet until September 2023. The plan was to supplement 5.4 million 90-kilogram bags with imports as carryover stocks from June and 19.7 million bags from estimated long rains harvests.

Initially, the Ministry had projected a surplus of 13.3 million 90-kilogram bags of maize after considering a consumption rate of 8.3 million bags between July and the end of September. With an estimated monthly consumption of 2.761 million 90-kilogram bags and a population estimate of 50.6 million, the Ministry aimed to maintain a stable supply for the citizens.

However, the underperformance of the duty-free import window might bring some relief to local farmers. There were concerns that massive imports could flood the domestic market and dilute the prices of their produce. In March, the government urged farmers to release hoarded maize supplies to avoid potential competition from imports.

Despite the duty-free importation of maize, the country's average price of maize grain continues to rise, dashing hopes for cheaper maize flour supplies in the short run. The situation remains challenging, and the government and stakeholders in the agriculture sector will need to work together to find sustainable solutions to meet the country's maize demands."