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For more than a year maize prices in Kenya and Malawi have been much higher compared with other countries in the east and southern Africa (ESA) region.

Several factors explain this.

In Malawi, high fertiliser prices which resulted in lower fertiliser usage affected maize supply. This was compounded by adverse weather and trade bans, leading to lower-than-usual production.

In Kenya, high maize prices have been driven up by excessive margins. Sellers are charging prices that are more than the import parity price – the maize price from surplus producing countries, plus transport costs for importing into Kenya.

This is particularly concerning for a country with about 1.2 million of the population facing acute food insecurity.

We are economists at the African Market Observatory, which monitors prices of staple foods and conducts research on market dynamics, including market concentration and barriers to entry, within and across countries in ESA. The analysis is complemented through in-depth field work.

Maize grain prices in selected east and southern African countries (Fig 1)

Maize is the leading staple food in the region. It is commonly traded across borders to meet overall regional demand. Tanzania is the leading producer of non-genetically modified maize and exports to other countries in the region. Since 2023, Tanzania has become an important source of maize exports to the region with bumper harvests due to above average rainfall.

Malawi generally produces enough to meet its requirements while Kenya has consistently been a net importer of maize due to the large population.

If maize markets were working well, the prices in both Kenya and Malawi would consistently reflect the prevailing prices in surplus-producing countries in the region, such as Tanzania, in 2023 and 2024. Competition authorities should take a regional approach to ensure that markets are working well in terms of pricing and trade.

This would entail monitoring markets, assessing barriers to regional trade, and intervening in cases of anti-competitive conduct.

Malawi’s poor harvest

Malawi is typically able to exceed its annual maize requirements of around 3.1 million tonnes. But the country had a poor harvest in 2023. This has been linked to low fertiliser supplies and use in 2022.

The use of fertiliser increases the amount of crop harvested per area of land (crop yield). In May 2022, there was a significant increase in the prices of fertiliser (such as urea) in Malawi due to supply shocks that increased prices across the world. The world prices subsequently declined while fertiliser prices in Malawi remained high, and in general fertiliser prices in the country have been higher than in its neighbouring countries. When compared with five other countries in the region (including Zambia and Kenya), Malawi had the highest fertiliser prices and mark-ups.

Faced with high prices, farmers bought less fertiliser. Fertiliser imports in 2022 were around half of the 2021 volumes (Figure 2).

Delays in fertiliser procurement through Malawi’s Affordable Input Programme added to the problem. The government programme typically provides 250,000 tonnes of fertiliser on a subsidised basis to 2.5 million households.

Some parts of Malawi were hit by Cyclone Freddy in March 2023. But this only affected 440,000 acres (178,061 hectares) of crops. By our estimates, this accounted for about 10% of the overall crop production area.

This means that much of the poor harvest in 2023 was linked to low fertiliser usage.

Malawi fertiliser imports, by year (Fig 2)

Tanzania, for its part, has had a good harvest with an estimated 4 million tonnes of excess maize this year. This is seven times the projected import requirements for Malawi in 2024 and is enough to cover the region’s overall deficit.

If regional markets were working as they should, the price of maize in Malawi would be equal to the price (plus associated import costs) at which maize would be bought from Tanzania. We estimate the import parity price was US$265 per tonne at June 2024 prices. Maize was selling in Malawi for US$433 per tonne, giving a difference of US$168, which is an extra charge, or “excess margin”, of 63%.

The maize price in Malawi is much higher than it would have been had there been normal trading between the two countries.

Kenyan maize dynamics

Kenya’s maize production between 2020 and 2022 averaged almost 3.4 million tonnes per year. To meet its 4 million tonne annual consumption, it has been a net importer of maize.

Kenya imports maize from Tanzania and other countries in the region, including Uganda and Zambia. For instance, in 2023, about 43% (219,260 tonnes) (ITC Trademap)of Kenya’s total maize imports were from Tanzania.

Considering this, Kenya’s maize prices should be similar – that is at import parity levels – to those of its trading partners. But maize prices in Kenya have been much higher than in the rest of the region.

From January 2023 to April 2024 (Figure 3), Kenya’s prices have been marked up substantially above the cost of importing maize from the south-west of Tanzania, which is the maize producing region. In the same period, Kenya’s average price was US$624 per tonne. We calculate the average import parity price as US$359, resulting in average excess margins of about 82% between January 2023 and April 2024.

Kenya’s maize prices (Fig 3)

Most recently, Kenya’s maize price almost halved from over US$600 per tonne in April 2024 to US$315 in May 2024, before increasing to US$374 in June 2024.

This maize price is still above the import parity price from Tanzania at around US$249, meaning that the maize price in Kenya has a 50% excess margin. Overall, Tanzania’s maize prices have been declining since the harvest in April 2023 due to bumper production in 2023 and 2024.

The sharp decline in Kenyan maize prices was likely due to imports from neighbouring countries (such as Tanzania and Uganda) and maize coming on the market that was being hoarded by producers in the hopes of selling maize at higher prices.

This further highlights that maize markets in Kenya are not working well because producers have the ability to distort prices by restricting supply.

The dysfunctional regional markets allow traders and producers to continue to charge higher prices for maize in Kenya. In well functioning regional markets, cheaper maize from neighbouring countries would drive down maize prices in Kenya.

Maize markets in Malawi and Kenya are dysfunctional

Markets in Kenya and Malawi are characterised by excessive margins and high prices for maize and key inputs used in the production of maize. This is made worse by regional markets not working well in terms of pricing and trade.

This requires competition authorities to take a regional approach to monitoring markets and assessing barriers to regional trade and intervene in cases of anti-competitive conduct.

Namhla Landani, Economist at the Centre for Competition, Regulation and Economic Development, University of Johannesburg

Arthur Khomotso Mahuma, Economist and Researcher at the Centre for Competition, Regulation and Economic Development, University of Johannesburg

Source: allafrica.com

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Most parts of the country will likely experience prolonged dry spells and poor distribution of rainfall between October and December.

The Tanzania Meteorological Authority (TMA) on Thursday released the climate outlook for short rainy period locally known as Vuli season, indicating that the below normal to normal rainfall condition, warmer than usual temperatures are expected across bimodal areas during the season.

Speaking at a press conference in Dar es Salaam, TMA’s Acting Director General Dr Ladislaus Chang’a said generally that, below normal to normal rains are expected over most parts of northern coast and northeastern highlands.

Adding that normal to below normal rains are expected over the Lake Victoria Basin during the Vuli, 2024 rainfall season.

The rains are expected to start during the fourth week of September, 2024 over the Western part of the Lake Victoria Basin and spreading in other areas during October, 2024. The Vuli rains are expected to cease during the fourth week of December, Dr Chang’s noted.

The season is specific to areas of the northeastern highlands (Arusha, Manyara and Kilimanjaro regions), northern coast (northern part of Morogoro region, Coast Region (including Mafia Isles), Dar es Salaam and Tanga regions, Unguja and Pemba isles), Lake Victoria Basin (Kagera, Geita, Mwanza, Shinyanga, Simiyu and Mara Regions) and the northern part of Kigoma region.

Dr Changa said during the Vuli 2024 rainy season, reduced soil moisture is expected in many bimodal areas, especially over north-eastern highlands and the northern coast. This situation is expected to affect crop growth.

In addition, crop pests and diseases are expected to increase in the season thus affecting crop production.

Similarly, availability of forest products such as honey are expected to be affected due to water deficiencies and insufficient flowering.

“Farmers are advised to use sustainable farming methods and technologies to conserve water and soil moisture. In addition, they are advised to prepare farms in-time, plant early maturing and drought tolerant crops,” he urged.

The anticipated below normal rainfall is likely to cause food scarcity, thus causing conflict between wildlife and the neighbouring community.

“The authorities responsible are recommended to educate the communities at risk to take precaution measures regarding the likely impacts. On the other hand, the community at risk is advised to report intrusion of wild animals in their domicile,” he said.

Transportation sector especially land transport is likely to benefit from the expected few rains during the season. It is advised that, rehabilitation of the infrastructure should be planned and implemented in this period.

Decrease in water levels in rivers, reservoirs and aquifer recharge is likely to occur in most of the areas especially where below normal rainfall is forecasted.

The authority called for proper water allocation and to use available water sustainably for mineral processing, power generation, industrial, domestic and other use.

Journalists are advised to seek and make use of sectoral advice from experts to prepare and disseminate sector-wide articles and reports in simple language with the aim of informing and educating the public on the use of the forecasts in mitigating the effects of adverse weather conditions including shortage of rains.

Source: allafrica.com

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Tanga — A TOTAL of 79 households, comprising 367 people and 995 livestock, have voluntarily relocated from the Ngorongoro Conservation Area (NCA) to Msomera Village in Handeni District, Tanga Region.

They have also voluntarily relocated to some places like Karatu and Monduli among others at their own choices as part of ongoing relocation initiative.

Speaking to the relocating residents yesterday, Deputy Permanent Secretary of the Ministry of Natural Resources and Tourism (responsible for natural resources), Commissioner of Police (CP) Benedict Wakulyamba explained that the relocation is part of efforts to protect the Ngorongoro Conservation Area.

He noted that the move aims to improve the living conditions of residents and provide them with economic opportunities outside the conservation area.

ALSO READ: Follow procedure to relocate to Msomera, says govt

“The decision you made today demonstrates your understanding of the conservation challenges and shows your wisdom in moving to enhance your lives, while preserving the unique Ngorongoro Conservation Area, which is exceptional in Africa and the world,” CP Wakulyamba said.

He encouraged the relocated residents to act as ambassadors for the sixth phase government’s efforts in improving social services and economic opportunities in Msomera Village.

He also urged them to inform others still living in the conservation area to consider relocating.

CP Wakulyamba emphasised the importance of adhering to relocation procedures to avoid potential challenges and ensure that the residents become legal occupants of their new locations.

In a report on the voluntary relocation initiative, Chief Conservation Officer and Project Manager, Flora Assey noted that since the initiative began in June 2022 until August 2024, approximately 1,598 households, comprising 9,618 people and 39,779 livestock, have relocated from the conservation area to Msomera Village and other designated areas.

Senior Conservation Officer Engineer Daniel Chegere, representing the Commissioner for Conservation, highlighted that the Ngorongoro Conservation Area Authority (NCAA) continues to educate residents about the benefits of relocating to areas with modern infrastructure and essential social services, which offer safer living conditions compared to the conservation area.

Engineer Chegere also assured that the security situation in the conservation area remains stable, with enhanced protection measures in place, allowing tourists to continue their activities safely.

Source: allafrica.com

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