1. Kenya’s Maize Pricing Situation: Challenges and Opportunities TEGEMEO INSTITUTE OF AGRICULTURAL POLICY AND DEVELOPMENT September 18, 2009

2. Trends in local and import parity grain prices in selected markets in the 2000-2009 period

3. Wholesale grain prices in selected markets (2000-2009) General upward trend since 2002 with sharp increases from 2008

4. Wholesale grain prices in selected markets (Jan - Aug 09) General decline for Mombasa & Kisumu prices Prices in other markets increasing

5. Nairobi local and import parity prices (2000-2009)

6. Local vs. import parity prices in selected markets (2009) 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

7. Mombasa local vs. import parity prices (2008-2009)

8. Nairobi local vs. import parity prices (2008-2009)

9. Import cost build-up for maize imported from South Africa

10. Exchange Rate (Ksh/USD) - July 0977.80 Year - July 09$ GBHLConventional Maize FoB Ex-Durban210 Freight Charges Per ton ($40-50)45 Insurance (1.5% of Fob)3.15 Cif Mombasa - June USD258 KSH (C & F Mombasa) per bag1,808 Tariffs Payable to GBHL USD/ton- (Ksh)/bag Stevedoring (Vessel Discharge)6.50 45.52 Terminal handling4.50 31.51 GBHL – Delivered to W/hse (Bagged)4.00 28.01 Transport to Miller (Ksh 380/MT)34.20 KPA Charges Stevedoring1.50 10.50 28.01 Wharfage2.00 14.01 35.01 Clearing/Agency Fee ($1 - $3/ton)2.00 14.01 Warehousing Charges (Ksh 500/ton) 4 wks45.00 IDF $ per ton (2.25% Cif ) 40.67 Bagging5.00 35.01 Shorehandling1.00 7.00 Transport to Miller (Ksh380/MT)34.20 Diff Landed Mombasa - June Ksh per 90 kg bag2,071 2,047 (25) Transport cost to Nairobi225.02 Handling10.00 Landed Nairobi (Ksh per 90 kg bag)2,306 2,282 (25)

11. Cargo Handled 2008 (12 months)2009 (6 months) GBHLConventionalGBHLConventional Bulk Wheat703,788109,291433,16944,388 Bagged Rice71,26419,883 Bulk Maize177,52111,857509,558186,164 Bulk Sorghum130,16591,25218,85049,864 Bulk Salt173,85852,348 Bagged Sugar27,5786,207 Relief Cargo106,364106,522 Sim 1,748- Fertilizer256,987251,755 Total1,011,474850,199961,577717,131 Cargo Handled (MT) at the Port (GBHL & Conventional) 2008-2009 Source: KPA Unused capacity at GBHL Importers use facility as a warehouse when there are large import volumes due to constrained transportation

12. Trends in maize grain and flour prices

13. Trend in maize grain/flour prices (2000-2009) Similar trends in grain and flour prices

14. Comparison between grain and flour prices in the 2008-2009 period 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

15. Farm-gate & wholesale grain prices vs. retail flour prices (2008-2009)

16. Share of retail sifted maize flour price to: Percentage of retail price Production and marketing costs have not been deducted Farmers get a relatively higher share of sifted meal retail price

17. Share of retail posho maize flour price to: Percentage of retail price

18. 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

19. 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

20. Thank you

21. World maize prices