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Where will Tanzania sell its maize?

Posted on December, 6, 2018 at 10:47 am


By APOLINARI TAIRO & By DOROTHY NDALU

Tanzania is looking for buyers for its surplus maize at a time when the region is grappling with a bumper harvest and falling prices.

The Ministry of Agriculture has tasked the country’s envoys in the region to find a market for the maize, estimated at four million tonnes, following President John Magufuli’s directive to marketing agencies to help sell off the stock.

The president directed the Cereals and Other Produce Board of Tanzania, the Tanzania Investment Centre and and the Tanzania Trade Development Authority to help farmers secure foreign markets for cereals and cash crops to absorb Tanzania’s huge surplus.

Tanzania has a stockpile of more than four million tonnes of maize, and is expected to produce 16 million tonnes more by the end of 2018, against a local demand of 13 million tonnes.

The government has directed the National Food Reserve Agency to keep some 200,000 tonnes of cereals.

Agriculture Minister Japhet Hasunga said last week that the government was targeting Kenya, South Sudan, Malawi and the Democratic Republic of Congo to sell off the surplus maize.

Bans, subsidies, crises

Malawi is said to have set aside $27.2 million to purchase maize.

In August, Dar had lifted the ban on maize exports to neighbouring states as a first step to tapping foreign markets for maize and other cereals after protests from farmers over low prices in the domestic market.

Prime Minister Kasim Majaliwa announced a ban to exports of maize and other cereals a year ago to control food prices.

But, even as Dar seeks buyers for its maize, farmers in Kenya are up in arms, protesting the low maize prices caused by earlier maize imports.

There is a maize glut anticipated, since the government plans to absorb only 2 million of the 46 million bags expected in the current harvest season.

Kenyan government officials and their private sector counterparts have been accused of abusing the government maize subsidy programme last year, leading to distortions in the market.

The country spent Ksh6 billion ($60 million) to subsidise maize imports after a drought caused shortages and sent the price of the staple soaring.

A Senate committee said last week that the maize crisis led to a flood of duty-free maize imports.

Regional co-ordination

More than 10 million bags of maize were imported under the subsidy programme, and some was then sold to the National Cereals and Produce Board at a profit, the committee found.

Recently, Kenya’s Strategic Food Reserve Board announced a maize price of Ksh2,300 ($23) for a 90kg, against the farmers’ demand of Ksh3,200. Farmers in the North Rift have threatened to abandon the crop if their demands are not met.

The government already owes producers Ksh2.2 billion ($22 million) for supplies to the Strategic Food Reserve.

It is against this that Tanzania is going to the market to seek buyers for its surplus.

In Uganda, where there has been a glut as well, the government has launched a scheme to provide price support for maize farmers, after they protested the near-record low prices.

As of July 2018, prices had declined by 42 per cent compared with the same period last year, an Eastern Africa Grain Council report shows.

Under the scheme, the government has made credit available to maize traders through commercial banks at reduced interest rates, so that traders can borrow working capital to buy maize from farmers at Ush500 ($0.13) per kilogramme.

Regional supplies

The collapse of maize prices is attributed to increased regional supplies, particularly in Kenya; the relaxation of maize restrictions by Tanzania; and increased production throughout the EAC.

Unlike Tanzania and Kenya, Uganda does not have a national food reserve or state trading corporation to directly intervene in markets to stabilise prices.

The Grain Council recommends improved co-ordination of food security policies and interventions across East Africa so that no country falls victim to unintended consequences of policy decisions by neighbours.

“The nature of government policies in Kenya and Tanzania (setting prices significantly above prevailing market prices, introduction and lifting of export ban) over the past 12 to 24 months have contributed to the current predicament facing farmers in Uganda,” the council says in its latest Grain Watch report.

Source: The EastAfrican