Highlights

FAS/Nairobi forecasts an increase in Kenya’s corn, wheat and rice production in the marketing year (MY) 2017/2018 mainly due to a recovery from the effects of the severe drought experienced in MY 2016/2017. Consequently, post expects the demand for the three commodities to increase due to a surge in human consumption of corn, wheat and rice based food products, and due to increased use of corn and wheat in livestock feeds manufacture. Imports of the commodities will offset the supply shortfall.

Corn

The drought situation in Kenya in the MY 2016/2017 was a major setback in the efforts by both the national and the county governments to increase corn production. The drought compounded other underlying constraints such as soil acidification, lack of access to improved seeds, and the effects of maize lethal necrosis (MLN). While production has largely been stable in the key commercial production areas of Rift valley, drought-induced production losses were significant in the smallholder production areas in Eastern and Central Kenya. Kenya’s Meteorological Department (KMD) has forecast favorable weather patterns in MY 2017/18, and expectations are Kenya’s corn production at that time will rebound. In addition, the Government of Kenya (GOK) and the county governments in the corn producing areas are putting in place recovery programs that include distribution of certified seeds and fertilizers to farmers. GOK is also continuing with its food security investment program at the Galana/Kulalu irrigation scheme, and in establishing storage facilities in order to reduce postharvest losses and reduce aflatoxin contamination.

Corn

2015/2016

2016/2017

2017/2018

Year

Kenya

Jul 2015

Jul 2016

Jul 2017

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

1700

0

1700

1700

175

Beginning Stocks

213

213

258

258

315

Production

2800

2800

2850

2500

450

MY Imports

1000

1000

1000

1300

1650

TY Imports

10001000

1000

1300

1650

TY Imp. from

0

0

0

0

0

Total Supply

4013

4013

4108

4058

2415

MY Exports

5

5

0

10

10

TY Exports

5

5

0

10

10


Feed and Cons.

350

350

375

375

160

FSI

3400

3400

3450

3450

1900

Total Consumption

3750

3750

3825

3825

260

Ending Stocks

258

258

283

223

345

Total Distribution

4013

4013

4108

4058

2415


Corn remains the staple food crop in Kenya and consumption is expected to continue increasing despite the diversification of Kenyan diets. Demand for corn in the manufacture of animal feeds is also expected to increase due to recent major private sector investment in the subsector. Kenya will therefore remain a corn deficit country and the need for imports will remain into the foreseeable future. In MY 2016/2017, imports into Kenya from other East African Community (EAC) countries were minimal due to the general supply shortfall in the region. The GOK is reportedly exploring other non-EAC sources while taking into account the steep EAC common external tariff currently set at 50% ad-varolem and

Kenya’s import ban on genetically modified (GM) products.

In the last few months, retail prices for corn and corn products have increased substantially due to the dwindling supply. In February, 2017 for instance, the price of 90-kg bag of corn was at an average of Ksh 3,500 ($35 USD) compared to Ksh 2,800 ($28 USD) in September, 2016. The occasional release of the strategic reserves by the Kenya’s National Cereals and Produce Board (NCPB) has not reversed the upward trend.

Wheat

FAS/Nairobi forecasts wheat production in Kenya to increase modestly in 2017/2018 after a recovery from the drought that affected production in the Timau/Laikipia region in MY 2016/2017. In addition to the unstable weather conditions, wheat production in Kenya continues to be constrained by widespread use of recycled seed by farmers, and the resultant prevalence of the wheat stem rust (Ug99) disease. Efficient wheat farming is also hindered by the unending subdivision of family-owned farms into smaller units for inheritance purposes.

Wheat consumption in Kenya continues to increase due to changing dietary patterns and an expanding and robust food service sector. In both rural and urban areas, a growing preference for wheat products is evident across the income groups and both commercial and home-baking have become common. The popularity of international pasta, confectionery and breakfast cereals brands in the Kenyan market also points to the increasing embrace of new dietary patterns. A limited amount of wheat is also used in the manufacture of livestock feeds.

Kenya’s wheat production deficit has increased over the years, with local production currently accounting for less than twenty percent of the total supply, and therefore necessitating imports. In the MY 2016/2017 the bulk of the Kenya’s wheat imports were from Russia, Lithuania, Latvia Germany, Poland, Canada and Estonia. Wheat imports from the U.S. remain primarily for Food Aid programs. Imports into Kenya by registered regional millers are assessed a 10 percent ad-valorem tariff; otherwise the EAC external tariff of 35 percent applies. FAS/Nairobi forecasts a modest increase in wheat imports in the MY 2017/2018. Wheat exports from Kenya are minimal, and attributable to the limited cross-border trade with the neighboring countries.

Wheat

2015/2016

2016|2017

2017/2018

Jul 2015

Jul 2016

Jul 2017

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

170

175

175

175

175

Beginning Stocks

221

221

275

275

315

Production

420

420

450

400

450

MY Imports

15941594

1625

1600

1650

TY Imports

1594

1594

1625

1600

1650

TY Imp. from US

57

57

0

44

0

Total Supply

2235

2235

2350

2275

2415

MY Exports

10

10

10

10

10

TY Exports

10

10

10

10

10

Feed and

150

150

150

150

160

FSI

1800

1750

1900

1800

1900

Total

1950

1900

2050

1950

2060

Ending Stocks

275

275

290

315

345

Total22352185

2350

2275

2415

Kenya mainly produces Basmati, the aromatic variety of rice, in irrigation schemes that are managed by National Irrigation Board (NIB), a GOK agency. In addition, GOK and county governments have been promoting the New Rice for Africa (NERICA), an improved, rain-fed, upland rice variety. NIB is also responsible for the rehabilitation of the irrigation schemes.

Rice

Rice consumption in Kenya continues to increase rapidly due changing dietary preferences, higher incomes and urbanization. Local production has not been able to meet the demand and the deficit is offset by imports by private traders. Imports are mainly from Pakistan, Thailand, India and Vietnam. There are also modest imports from neighboring EAC countries of Tanzania and Uganda. EAC maintains common external tariff of 75 percent ad valorem or $345 USD per ton, whichever is higher for rice imports from non-EAC countries. Kenya has however been granted by EAC “the stay of application”, based on limited local production, and therefore applies the former tariff structure (that was applicable before July 1st, 2015) of 35 percent ad-valorem or $200 USD per ton, whichever is higher. This waiver is reviewed every year by the EAC secretariat.

Kenyan consumers prefer the aromatic rice varieties and retail prices invariably reflect this preference. Retail prices for Basmati rice at the mills have typically ranged between Ksh 110 (1.00 USD) per kilogram in January to Ksh 125 (1.25 USD) per kilogram in December, and mirrors the rice production/ supply cycle. In MY 2016/2017 this cycle was however breached due to the tight supply situation brought about by lower than normal production. In February, 2017, just two months into the calendar year the retail price at the mills was already Ksh 150 (1.50 USD) per kilogram underlying the adverse impact of the prevalent drought not only to producers but to consumers.

Rice, Milled

2015/2016

2016\2017

2017/2018

Market Begin Year


Oct 2015

Oct 2016

Oct 2017

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

35

35

40

40

40

Beginning Stocks

90

90

90

80

50

Milled Production

90

90

100

70

100

Rough Production

136

136

152

106

152

Milling Rate (.9999)

6600

6600

6600

6600

6600

MY Imports

460

460

470

470

480

TY Imports

460

460

470

470

480

TY Imp. From U.S.

0

0

0

0

0

Total Supply

640

640

660

620

630

MY Exports

10

10

10

10

10

TY Exports

10

10

10

10

10

Consumption and Residual

540

550

560

560

570

Ending Stocks90

80

90

50

50

Total Distribution640

640

660

620

630