Market Update 11-07-18
The price of maize has been on the rise, currently trading at Sh1,900 per 90kg, as farmers throughout Kenya are preferring to hold the crop in anticipation of better pricing. As other regions begin harvest, farmers hope they won’t be stuck holding old crop. The price of many beans such as pigeon peas and green grams have remained relatively stable. According to the Kenyan Bureau of Standards, the government may have lost an estimated Sh7.6 billion after approximately 4 million bags of maize were deemed unfit for human consumption. The maize, procured last year to be held in the Strategic Grain Reserve, was found to be discolored and contained high levels of mycotoxins and fumonisin.
On Tuesday, the government of Kenya announced that it will be buying maize from the current harvest at Sh2,300 per 90kg. The Strategic Food Reserve Trust Fund (SFRTF) has set a target to procure 2.5 million bags from the current harvest and will begin purchasing maize upon the requested Sh5.7 billion find is released from the government. While the price suggested by the government is above the current spot price, the price was quickly rejected by farmers and governors from the North Rift Economic Bloc claiming that production costs have risen compared to previous crop years due to the eight percent VAT imposed on fuel and agricultural chemicals, making it extremely difficult to turn a profit at the proposed pricing levels.
Maize is trading at UGX 550 per kg in the Greater Kampala area as the new crop is still a few weeks away from entering the market. Red kidney beans are trading at UGX 2,000 per kg in Kampala. The current prices are expected to be the peak before the new crop enters the market and prices begin to relax. For information on drying solutions, please contact any member of the PXAfrica team. Soybeans are available in the Kampala area at UGX 2,000 per kg as demand from Kenya and Rwanda remain strong.
On October 29th, the Ugandan government has approved the African Continental Free Trade Act (AfCFTA) joining Rwanda, Kenya, Niger, Ghana, Chad and Swaziland who have already approved the Act. According to Paul Kagame, president of Rwanda, the goal of the AfCFTA is to promote economic, social and cultural development through eliminating both tariff and non-tariff barriers and turn the continent into a single market. For the Act to become functional, a minimum of twenty-two countries must approve the legislation within their own countries. South Africa is currently going under the ratification process, and an additional thirty-seven countries signed the original agreement at the March 2018 African Union meeting in Kigale, Rwanda.
East Africa Trade Update:
Kenya has become a net importer of goods in comparison to Uganda for the 2017/18 financial year, realizing its first trade deficit with Uganda in the history of recording the statistic. According to a report released by the Central Bank of Kenya, the trade balance has steadily narrowed on a yearly basis starting with the 2011/12 financial year, however Ugandan maize exports to Kenya in the 2017/18 financial year likely tipped the scale. An apparent export opportunity arose as farmers in Uganda realized low prices in local markets, and harvests in Kenya were diminished due to poor weather, which lead to Uganda covering nearly seventy percent of Kenya’s maize imports for the year, just shy of 300,000 metric tons.
Beyond maize, Ugandan commodity exports are up approximately ten percent compared to last year as many products such as coffee, tea, tobacco, fish, base metals, beans and crude oil volumes have increased. The largest single exported product remains coffee, valued at $492 million US dollars, however large gains were realized with beans and maize seeing year over year increases of 89.8 percent and 29.8 percent respectively.