Market Update 01-23-19
The NCPB announced they will begin buying Wednesday, January 23, the board’s acting manager said. Albin Sang claims that president Kenyatta gave the directive earlier, but they were waiting to be given the go ahead from the Strategic Food Reserve Trust Fund working with the the Treasury to begin purchases. With the continued increase in bureaucratic layers surrounding NCPB purchases, farmers should be even more hesitant to sell product to the NCPB after the past few years’ transgressions.
Maize prices have been steady in Kenya over the past two weeks as Nairobi and Nakuru have continued to trade at Sh2,200 and Sh2,000 /90kg respectively. Elsewhere, maize is trading at a slight discount compared to the first week of January. Current prices in Thika are Sh2,000 /90kg, while in Eldoret maize is trading at Sh1,900 /90kg. The price of pigeon peas and green grams are unchanged since our last publication, for expanded price information please reference the select market values table below.
On Thursday, Makueni County announced a new grain processing facility to be built in Makueni County. The processing facility will largely focus on green grams, but will include other pulses like cowpeas, dolichos, and other beans that are grown within the area. Kivutha Kibwana, governor of Makueni says, “We are focusing on grain processing with the plans to construct the Makindu grain processing facility to add value to pulses and enable farmers to be able to access both local and export markets.” As of recent estimates, Makueni County has over 255,000 hectares devoted to the production of various pulses. While we believe that grading and handling to meet quality standards is a huge area for value add processing, we hope there will be private, ideally farmer group involvement in the running and operating of the facility.
President Uhuru Kenyatta has announced that the price at which the government will procure maize has been increased from the original price of Sh2,300 /90kg to Sh2,500 /90kg. As farmers throughout the North Rift have expressed their support for the increase in price, the overarching concern is that under current market dynamics, it is still particularly hard to turn a profit growing the staple commodity. In addition to the procurement news, the NCPB has also announced that it will be releasing 1.7 million bags of maize into the market. The released maize will be sold at Sh1,600 /90kg, valuing the grains at Sh2.7 billion. Concurrently, the NCPB will also be releasing 300,000 bags of maize priced at Sh1,400 /90kg that are unfit for human consumption but can be used in animal feed. The quality of the maize not fit for human consumption should be heavily scrutinized by regulators, and they should ensure that it is not mixed with any other maize streams and sold back into human consumption silos. Being labeled as fit for animal feed is likely a stretch.
North Rift farmers are growing more worrisome as a lack of details have been released regarding the distribution of fertilizer prior to the onset of the long rains season. Albin Sang estimates that fewer than 500,000 bags of fertilizer are currently available in stores, representing about 17 percent of what is required to plant for the upcoming season. The Ministry of Agriculture has been public in assuring that planting fertilizer will be provided, however, the prior contract covering the importation of fertilizer concluded on January 11th adding to the uncertainty.
The price of maize has fallen slightly in Kampala and Mubende, trading at UGX 680 per kg and UGX 620 per kg respectively, as the new crop has continued to enter the market. While maize prices in Kigumba and Masindi have been unchanged over the past two weeks, traders in the capital expect prices to fall further before rebounding towards the end of the month. In Kampala, nambale beans are trading at UGX 1,900 per kg and red kidney beans are trading at UGX 1,950 per kg as prices have remained consistent. Sesame seeds are still available in the market and are currently selling at UGX 4,400 per kg.
Uganda and Tanzania have entered a series of bilateral trade agreements over the past few months limiting restrictions on the flow of goods between the two countries. More specifically, the Tanzanian government has granted permits to importers to buy Ugandan produce, sugar that was wholly produced in Uganda, sunflower oil and soybean oil. According to the Ugandan Minister of Trade, Amelia Kyambadde, trade performance between Uganda and Tanzania can be further enhanced if certain tariffs are eliminated on goods moving between the countries. Further meetings on trade are sure to happen in 2019 as ministers from both Tanzania and Uganda have signed an agreement to address the tariffs and how they will jointly proceed on the topic. Uganda has historically had a negative trade balance with Tanzania, however, total exports to Tanzania have increased from $56 million USD in 2014 to $68.8 million USD in 2016, before decreasing to $49.8 million USD in 2017. Over the same period, Tanzania’s exports to Uganda have increased from $75.7 million USD to $91.7 million USD.
In addition to the positive trade talks with Tanzania, Uganda has also begun to enforce policies enacted on goods within its own boarders. The Uganda National Bureau of Standards (UNBS) last July announced new regulations requiring a certification, denoted by a quality mark on the goods before the product can be sold to the public. As of January 1st, these regulations are now in effect, and any goods without the proper certification are subject to be seized by the government. The regulations, which largely cover consumable products such as beverages, cosmetics, food and electronics were set, claiming to protect consumers and make Ugandan made products more competitive in export markets due to enhanced quality assurance. Actual results are questionable.