SPECIAL REPORT

CROP PROSPECTS AND FOOD SUPPLY SITUATION IN KENYA

May 1997

• PROSPECTS FOR THE 1997 LONG RAINS FOODCROPS
• FOOD SUPPLY SITUATION

As a result of the reduced harvest in 1996/97, the overall food supply situation remains tight with sharply increased food prices, which are beyond the reach of large sections of the population. Food aid distribution continues in pastoral and marginal agriculture areas affected by a prolonged drought during the 1996/97 "short rains" season. Early prospects for the 1997 main "long rains" cereal crop, to be harvested from October in the main growing areas, are favourable reflecting abundant rains in late March and April. In pastoral areas of the Eastern and North-Eastern Provinces, the good rains have resulted in a recovery of pastures and replenishment of water supplies, gradually improving the food situation. However, precipitation was late and heavy in most parts, delaying planting operations and causing reductions in maize planting intentions. Despite prevailing high prices of maize, preliminary estimates indicate the area planted to be below target. However, providing good weather continues during the remainder of the growing season, yields and production should increase substantially over last year in response to larger use of agricultural inputs.

The long rains season, which normally starts in mid-March, was generally late by ten days to two weeks. However, precipitation in the third dekad of March and the first dekad of April was above normal in most parts, except in some areas of Western, Nyanza and Eastern Provinces. The late but heavy rains resulted in reductions in the area planted to the main maize crop, particularly in the highly mechanized areas of the Rift Valley Province where shortages of machinery were experienced. In this province, plantings by the end of April, when the sowing period is normally over, were estimated at only 80 percent of the target area set by the Ministry of Agriculture. The delay in planting has also left crops more vulnerable to an early cessation of the rainy season. In general, the maize crop at the post-emergence stage is reported to be in good condition, but more rains are still needed in the remainder of the growing season. The above-average precipitation since late March has also benefited pastures and replenished water catchments, thus improving the animal health situation.

Prices of maize at planting time, at 1 400 to 1 600 Kenyan Shillings per 90 kg bag, were more than double their level at the same time of the previous year. In the main growing areas of the Rift Valley Province (Eldoret, Kitale, Nakuru) the price of maize in March-April was 160 percent higher than in 1996. However, despite the production incentives provided by the high prices and the abundant rains, the expected rise in the area planted to maize did not materialize due to the delayed start of the season, as well as the switch from maize to wheat in certain areas. In areas where this substitution is feasible and took place last year (e.g. Uasin Gishu District), stable prices of wheat have prevented farmers from switching back to maize, for which prices have fluctuated widely in recent years

Preliminary estimates by the end of April indicate an area planted to maize of 1.044 million hectares. This is below the target level of 1.2 million hectares set by the Ministry of Agriculture but similar to the normal level of 1995. In the important maize growing Rift Valley Province, which accounts for some 60 percent of the long rains season maize output, plantings declined by 19 percent from the reduced level of the previous year due to the factors mentioned above. By contrast, in Nyanza, Eastern and Central provinces, where the short rains are important for crop production and the 1996/97 crop was severely reduced, plantings have increased significantly in response to the good rains of the current season. The small plots and low mechanization of agriculture in these provinces meant that farmers could cope better with the delayed start of the rains.

The early outlook for the wheat crop, currently being planted, is promising and sowings are forecast to remain at the above-average level of last year. By contrast, the areas planted to beans and Irish potatoes are estimated to be reduced reflecting severe shortages of seeds as a result of the poor harvest of the 1996/97 short rains season.

Providing favourable weather continues in the remainder of the growing season, maize yields are anticipated to increase from both the normal and last year�s reduced level, in response to a higher use of agricultural inputs. While prices of seeds and fertilizers have remained stable from last year, or even declined in parts, prices of maize have risen substantially, making input utilization economically attractive. The positive effect on yields will be greater in the main growing areas of the Rift Valley Province where almost all farmers apply fertilizers and some 60 percent buy certified seeds.

Overall, early forecasts point to a maize output above both the average and last year�s below normal crop, but lower than the bumper crop of 1994. A good wheat crop is also expected. However, production of beans and Irish potatoes is anticipated to remain at low levels.

Following a drought reduced cereal harvest in 1996/1997, stocks of the main staple maize and other foodcrops have been seriously depleted and the food supply situation is tight. Food prices have risen sharply, posing serious problems for poorer segments of the population, particularly in urban areas where price increases have been larger than in rural areas.

Stocks of maize held by the National Cereals and Produce Board (NCPB) by the end of April, including its recent imports, amounted to 72 000 tons, well below the target of 270 000 tons set for the Strategic Grain Reserve. The drawdown of NCPB stocks reflects large distributions of relief food to drought affected areas. Maize stocks held by farmers are estimated to be at minimum levels following the reduced 1996/97 production, while those of traders and millers are considered to be negligible. On 30 April 1997, the price of maize in the Nairobi market, which has been increasing steadily since March 1996, was quoted at 1 500 Kenyan Shillings per 90 kg bag (US $ 320 per ton), 108 percent above the level a year ago. Bean prices, quoted at 6 200 Kenyan Shillings per bag ( US $ 1323 per ton) increased 206 percent from last year. The higher rise in bean prices also reflects very limited imports due to the poor 1997 short rains crops in neighbouring countries. Shortages and high prices of beans are expected to continue well into 1997. Prices of Irish potatoes have also increased significantly. The increase in food prices is well above the general price inflation in the country, estimated at 9 percent in 1996 and projected at 15 percent for 1997.

Table 1 shows average maize and bean prices for April 1996, October 1996, and April 1997 in six major urban centres.

Table 1: Average Wholesale Prices for Dry Maize and Beans at Six Major Urban Centres
April 1996/April 1997, (K.Sh/ 90 kg.bag) and Percentage Change April 97/April 96.

Source:Marketing information Branch, Ministry of Agriculture, (compiled by WFP Nairobi).
1/ Rosecoco beans
2/ Provisional

In pastoral areas of the east and north-east, most affected by drought since last November, above normal rains in April regenerated pastures and replenished water supplies. Pastoralists who moved in search of food and water are returning to their homelands. Animals are recovering gradually and milk production is also starting to recover. The improved condition of animals, together with water availability and a partial recovery of the livestock prices is resulting in a progressive improvement of the food and health situation in these areas. However, the depletion of grain reserves and resources, coupled with the prevailing high prices of food, means that the pastoral population will remain dependent on food aid for the coming months, until the livestock are fully recovered.

In the marginal agricultural districts of the Eastern, Central and Coastal Provinces, where the short rains crop failed for the third consecutive year, the food situation is anticipated to remain tight until the next harvest from July. However, the rains in April have improved water availability, allowed production of vegetables and other short cycle crops, and has boosted fishery resources. This has eased food difficulties somewhat.

Food aid distribution programmes continue in 40 districts of the pastoral and marginal agricultural areas. Under the Emergency Operation 5803, approved jointly by FAO�s Director-General and WFP�s Executive Director in February 1997, relief assistance is being provided from WFP resources to 852 000 drought-affected persons, in addition to continued assistance with the school feeding programme for 350 000 children. Government allocations of food aid target a higher number of population but its nutritional impact is diminished by the low quantities distributed per person.

1996/97 supply/demand balance for maize

Revised official estimates of the 1996 long rains maize production indicate a crop of 2.07 million tons, 250 000 tons above the earlier estimate of the FAO/WFP Crop and Food Supply Assessment Mission of October/November 1996. By contrast, the estimate of the short rains crop has been lowered to 90 000 tons, less than one-quarter of the Mission�s forecast. In aggregate, the 1996/97 maize output is estimated 2.16 million tons, 20 percent lower than of the previous year�s normal volume. Opening stocks at the beginning of the season, estimated from extensive surveys undertaken by the Ministry of Agriculture among farmers and traders, and considering NCPB stock position by October 1996, amount to 583 000 tons. At the revised consumption level of maize of 96 kg per caput per year, and taking into account feed, seeds and other uses, as well as minimum closing stocks, domestic availability of maize in 1996/97 falls short of utilization requirements by 721 000 tons. To cover part of this deficit, the Government plans to import up to 180 000 tons of maize for its relief distribution programme. International food aid assistance, (mainly from WFP), amounts to 38 000 tons of maize. The remaining deficit of 503 000 tons is expected to be covered by commercial imports. An updated maize supply/demand balance for 1996/97 (October/September) is shown in Table 2.

Table2: Kenya - Maize supply/demand Balance Sheet, 96/97(October/September) (000 tons)

Population: 28.85 million

1/ The maize import requirement of 721 000 tons calculated by FAO differs slightly from the Government�s estimate of 639 000 tons, mainly because the latter has been calculated considering only the food use of maize.

Current maize import position

The Government expects the maize deficit in 1996/97 to be covered as follows: 180 000 tons by NCPB, 360 000 tons by the commercial sector and the remainder by international food aid.

Following the declaration of a food emergency in February 1997, the Government has authorized duty-free imports of maize until the end of June, up to a maximum of 360 000 tons. After that deadline, the previous regulation of 25 percent levy on the value of imported maize (or 2,5 Kenya Schillings per kg.) will be reinstated. The Government intends to protect domestic production by avoiding imports at harvest time, thus preventing disruption of the market as occurred in 1994/95. However, it should be noted that the harvest starting in July concerns only the bi-modal rainfall areas, while the bulk of the crop is normally gathered from October onwards. Not only does the maize crop harvested in July account for less than 20 percent of the long-rains output, but also most of it is grown in the Eastern and parts of the Central Provinces where production is mostly for subsistance. Marketable surpluses come only from parts of Nyanza and Western provinces. If the authorized volume of duty-free imports is not realized by the end of June, maize import would have to face a 25 percent duty and prices would rise considerably from July to September, particularly since NCPB does not have stocks to release into the market during this period which used to be the practice in the years before market liberalization.

Maize imports for food relief distributions and by the commercial sector have been recorded since February. Food aid imports until the end of March amounted to 88 000 tons. This includes 38 000 tons imported by WFP and 50 000 tons by NCPB, which is about to receive another 50 000 tons and plans a further import of 80 000 tons for distribution until early August.

Licenses for commercial imports authorized by the Government total 360 000 tons. Actual imports registered at the Mombasa port reached 235 000 tons by 30 March 1997. An additional 80 000 tons were expected in April. The private sector appears to be responding positively to Government's trade incentives, despite the ceiling imposed on the volume to be imported at zero tariff and corresponding time limit. These constraints coupled with changeable trade regulations in recent years, render the import business, as perceived by traders, to be quite risky.

Projections, taking into account the scheduled arrivals, indicate that maize imports from all sources until the end of April amount to 421 000 tons, representing more than half of the import requirement of 721 000 tons estimated by FAO.

However, after taking into account food aid imports, FAO estimates that, in order to fully cover the deficit and maintain normal consumption levels in 1996/97, commercial imports should reach 503 000 tons. Even if all of Government authorized commercial maize imports materialize (360 000 tons), there would still be a shortfall of 143 000 tons, This deficit could be somewhat lower if unrecorded cross-border commercial imports are accounted for. As additional food pledges are unlikely in the coming months, NCPB may consider revising upward its maize import target, now set at 180 000 tons. Alternatively the ceiling of duty free commercial imports might need to be increased to allow sufficient supplies in the lean months before the next harvest in October.