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How can Kenya better manage maize prices? Effects of import tariffs, regional trade and producer price support




Author(s):  Mercy Kamau, Mary Mathenge and Lilian Kirimi

High food prices remain the greatest challenge in Kenya today. While it is well known that most urban consumers rely on the market for their food, research has shown that most rural households in Kenya are also net buyers of food (Jayne et al. 2001). A consumption and expenditure survey conducted by Tegemeo Institute between June and July 2009, showed that low income groups in Nairobi were spending a high and increasing proportion of their income on food (Kamau et al. 2010a) and that 44% of households are undernourished, i.e. their caloric intake was below the recommended minimum daily caloric intake of 1600 kcal/person per day (Kamau et al. 2010b). These findings can be directly linked to high food prices in Kenya. A direct link also exists between high food prices and poverty. An increase in maize market price was found to increase rural poverty rates and to transfer income from most small-scale maize buying farmers to a small number of larger maize surplus farmers (Mghenyi and Jayne 2006).

Maize prices in Kenya have been steadily increasing and have not receded to the levels preceding the 2008 food crisis. Between January 2008 and August 2012, the wholesale price of maize grain increased by 19%, while the retail price for maize grain and flour increased by 114% and 127% respectively.

Such increases in the price of maize, the main staple in Kenyan households, are bound to have a direct impact on the welfare of Kenyans in terms of increased hunger and poverty. The important question is whether government and other players can take action to mitigate against such damaging price escalations.

While various initiatives and instruments have been used in efforts to manage food prices in Kenya, the outcomes/results have not been as effective. This is evidenced by the high and rising food prices currently being experienced. In this brief, we analyse some of the policy interventions in maize marketing to provide evidence on their effects on maize prices and hence on food security. We do this by analysing trends in maize prices over time to identify their relationships (if any) with specific policy interventions.

How can Kenya better manage maize prices? Effects of import tariffs, regional trade and producer price support







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