Posted on June, 13, 2019 at 10:31 am
By ROBERT SHAW
Kenya is a major food importer. Despite its huge potential to improve production capacity, it will remain a major importer of grains for the foreseeable future.
For example, our wheat and rice consumption outstrip production by a 70:30 ratio. In the case of maize, it is 54:41. That means the bulk of wheat and rice is imported.
In a good year, when there is adequate rainfall and good growing conditions, Kenya can be self-sufficient in maize but, mostly, (in)formal imports top up domestic production.
We imported 1.1 million tonnes of maize in 2015 and around 900 million tonnes in 2017. We will need to import around 800 million tonnes this year.
If we could minimise post-harvest losses, which account for as much as 20 per cent of production, that ratio would reduce considerably.
But, we will continue to import large quantities of wheat and rice and smaller quantities of maize on an ‘as and when’ basis.
SHORTAGES
It is vital that we improve the entire supply chain from the day the order is placed to its passage through the port and distribution and sales points.
We must take out, or at least ease, the supply handbrakes and blockages for the simple reasons that basic foods must get to the consumer without hindrance and also to keep prices reasonable.
Shortages, or anticipation of shortages, push up prices. Instances of the latter are creeping in at the moment.
One of the main handbrakes is the government, particularly the Ministry of Agriculture.
Prevarication ranging from outright denial of the need to import to a ‘maybe’ position and then onto a belated acceptance for the need to import is often the pattern.
It happened in 2017 with the then-Agriculture Cabinet Secretary, Willy Bett, and Mwangi Kiunjuri is going down the same path.
NCPB
Clarity of direction and facilitation is the name of the game. The latter needs some amplification.
The government and its parastatals, such as National Cereals and Produce Board, are bywords of inefficiency and graft in the importation and storage of maize. They should be excised from the actual maize importation and distribution.
The government only ought to ascertain the approximate domestic production shortfall and establish a duty-free window for importers and millers to fill the gap.
It should then stand back and get on with other mechanisms to ensure food security.
At present, the country has only one grain bulk handler, which is both a handler and a miller. Having a dual role is, arguably, a conflict of interests.
COMPETITION
More importantly, the volumes involved — three million tonnes a week — require at least one more importer to avoid the delays of a week or more and losses and extra costs of even Sh50 billion a year.
I’m not saying Grain Bulk Handlers is inefficient. Not at all; it has done a good job over the years.
Potential benefits of more competition are that imports would increase, resulting in lower costs of flour by as much as 30 per cent, less artificial shortages, lower costs of handling and quicker turnaround time for carriers.
It must be emphasised that the government is not required to inject cash into such a project.
What it needs to do is ensure transparent bidding and licensing for a second bulk grain handler and a more conducive environment for the winner to set up such an operation.
OVERHAUL
The welcome outcome is that the country, and the consumer in particular, will be the major beneficiaries.
This is, after all, a longer-term strategy; and so the sooner we start the better. But the changes must go beyond that.
The standard-gauge railway’s cargo operation is limping along. Is there not a way its large spare capacity can be used to transport grains at a very attractive price?
Beyond that, the Aegean stables of the NCPB must not only be cleaned up thoroughly, but its overall role must be drastically reduced.
Its oversight role should be minimalised and management of its storage facilities contracted out to qualified private sector players.
Mr Shaw is a public policy and economic analyst
Source: Daily Nation