Category Archives: maize

Food Imports to Kenya

While there have been several discussions about maize and other food imports to Kenya such as where the maize came from, who is selling it, and at what price, more is on the way to deal with a national disaster situation, partly attributed to delayed rains and prolonged drought.

Writing in a recent opinion piece in the Standard, James Nyoro, government advisor (who was previously the Rockefeller Foundation’s Managing Director, Africa, and probably the next Deputy Governor of Kiambu), wrote that food imports are normal for Kenya… in normal years, Kenya imports 30% of maize, 75% of wheat, 45% of sugar and 80% of its rice needs.

This comes at a time when all of Africa is talking about embracing agri-business and getting more people and more value out of agriculture. Kenya is probably in a very good place, as it  produces lots of foods, does a lot of local consumption and international exports, and has good networks and communications tools for farmers and government, but still, there is little finance to agriculture, and a lot of prime agricultural lands is being converted to real estate or commercial uses.

The Cabinet Secretary for Treasury recently gazetted and listed companies that were allowed to import duty-free, non-GMO, yellow maize to be used for animal feed including Unga Farmcare 36,000 metric tonnes, Pembe Feeds 20,000, Isinya Feeds 50,000, Sigma Feeds 50,000, Milele Feeds 20,000, Mombasa Maize Millers 36,000, Chania Feeds 4,000, Farmers Choice 30,000, Naku Modern Feeds 2,000, Pioneer Feeds 3,000, Empire Feeds 10,000, Tosha Feeds 90,000, Turbo Feeds 1,000, Treasure Feeds 3,000, Economy Farm Feeds 1,000, Prosper Properties 2,000, Legorn Feeds 3,000, Huduma Feeds 6,000, Eden Millers 5,000, Ohami Feeds 1,000, Tarime Feeds 1,000, and Thika Farmers Group 36,000 metric tonnes

He also set published temporary rules for white maize, sugar, milk, and dates: The ones for white maize included Any person may import white maize if it meets the following conditions—

• The white maize shall not be genetically modified in accordance with the standards applicable in the European Union; i.e it shall not be genetically modified (GMO) maize.
• It shall have a moisture content not exceeding 14.5%;
• Its aflatoxin levels shall not exceed 10 parts per million;
• It shall be accompanied by a certificate of conformity issued by a company appointed by the Kenya Bureau of Standards; and
• It shall have been imported on or before the 31st July, 2017.
• Any person may import dates during the month of Ramadhan.

In a separate notice, he authorized there be no duty on sugar imported between May 11 and 31 July 2017 and as well as on 9,000 tonnes of milk powder imported by milk processors authorized by the Kenya Dairy Board.

Kenya Markets & Agriculture Pricing of Maize, Potatoes, and Milk

What drives the agriculture pricing of maize, potatoes, and milk in Kenya? Part I of a post by  @kwambokalinda of M-Farm

In commercial agriculture, as in any business venture, the aim is to make a profit on an investment, within the environmental and policy framework available for the sector. It is, however, not in question that there exist unsavoury practices practically the world over. Recent potato, maize and milk shortages in the weeks between March 2017 and the present day illustrate as much.

That said, it is pertinent that fault is placed where it lies, and speaking to traders in the Kenyan potato, milk and maize value chains, it was gathered that low rainfall in November 2016, as well as with the rains in April, led to price fluctuations in the weeks after February 2017. Mitigating circumstances lowered prices during the same period, when traders sourced their produce in areas that had rainfall in November 2016, such as;

  • In the case of potatoes, this included Narok and Mau Narok, which are blessed with forest rains and fertile lands in Tanzania.
  • With milk, rains in April meant that costs to access to main roads went up – and with farmers unable or unwilling to ease traders’ burden, the costs are being transferred on to consumers.
  • As for maize, a 90-kilo bag which a farmer sold at Kshs 2,200 in December, had doubled by March 2017: Meanwhile, millers have been consistently buying the maize at Kshs 4,700 per bag

We have to remember to factor such matters into our plans and budgets as Kenyans. Also, we have learned that it takes the government a lengthy period to act or even plan for such occurrences. It would help to have neutral sources of data alongside that of the government to help shape the response to food security challenges in Kenya.

See also, Secrets of a Farm Middle Man 

$1 = Khs 103

Unga Holdings 2016 AGM

The Unga Group had its 2016 AGM at the Intercontinental Hotel today. Revenue and profit were up, but profit was down compared to 2015 which has been boosted by the sale of a Bullpak subsidiary.

In comments at the AGM,  the Unga chairman and MD spoke on various issues such as changing food patterns as seen in new products that they are adding to reach consumers and farmer segments, more technology being deployed in agriculture and the rise of young agri-preneurs  who may be one day disrupt the food chain, difficulty obtaining quality maize, difficulties with getting timely payments from Nakumatt, and overall as slow down in the economy as seen in lower buying power for their products and a tightening of credit at banks.

Ahead of the usual votes to approve the accounts, directors re-election, dividend (Kshs 1/= share)  and re-naming of the company to Unga PLC (as per the 2015 companies act), the shareholders Q&A was the main part of the AGM.unga-2016-agm

Excerpts

  • Dividends & Bonus: Why no bonus after the Bullpak sale? The money from Bullpak went to buy Ennsvalley Bakery (and shareholders had approved it)
  • Product reach: Unga is a national brand, that’s sold mainly in supermarkets, but are not in every part of the country. They are seeing challenges with buyers affording products and will introduce smaller packs of some products to remain affordable and within reach of consumers.
  • Gift items: One shareholder asked for Unga shopping vouchers instead of lunch, and when the Chairman announced that there was a product pack to go with lunch, this got a cheer from the many shareholders, but the very next question was for t-shirts to market the company.
  •                                                                                                                                                                                                                                          The Chairman said they had made changes based on requests at past AGM’s but that she would endeavor to one day to have everything shareholders wanted – dividends , t-shirt, lunch, and product pack.

Secrets of a Farm Middle Man

The middle-man* is widely derided, as one of many layers between farmers and consumers, who squeeze the farmers prices lower and increase the cost of foods to consumers. But what does a middle-man do, and why do they do it?

  • The money is insane. e.g. Middle-men get paid Kshs 50 per (90kg) sack of potatoes at the village, and others get Kshs per sack at the market. With every lorry having over 100 bags, a middle-man can make over Kshs 10,000/= per day just dealing at a market. But how much he /she has to share this cut, with others around the market system is another story.
  • Taxes: Cess/market fees are paid at the market of origin only. Along the highway, there are weigh-bridges,  but lorry with perishable items can’t afford to stay and queue while items go stale or rot. So they pay Kshs 2,000 per lorry to bypass the weigh-bridge, and if they don’t have a cess receipt, it costs Kshs 1,000 to pass a police roadblock.
  • The further the market is from the farm source, the bigger the profit for the transporter or middle-man e.g. transport all the way to Mombasa, or to Tanzania where a lot of Kenya produce ends up, and vice versa.
  • It does not tolerate strangers. A farmer can’t just drive up with his lorry, and expect buyers to embrace him/her. It can even be murderous.
  • It’s a relationship business. They have to network &  know where to find and sell produce and deliver on time.
  • Middle-men value and deliver on quality. If several lorries are waiting to clear at a market, they can choose the ones with produce from a certain area that is desirable compared to that from others. Also, lorries with produce from single farms are desirable over those collected from many different farmers or areas.
Middle men travel far to search for farm products.

Middle-men travel far to search for farm products.

  • We are the reason they exist. Hotels and restaurants need food like chips every day of the year, regardless of where the potatoes come from. The middle-man economy ensures that this happens.
  • The business is hard work. The trades and operations are done very early in the morning and end at about sunrise. This may tie in with the Equitel loans that start at 1 a.m. peak and are disbursed by 5 a.m. before Equity Bank branches even open. When you visit a market in the daytime, you see retail trade & prices, while the wholesale business has already been completed.
  • There is honour in this: Middle-men will under-cut each over deals, but will not cross each other on payments, which they do via mobile money or bank deposits.
  • When farmers talk to middle-men about the money they make, some immediately want to abandon farming, while forgetting that they have one resource that the middle-man doesn’t – their land.

Notes

  • * There are lots of women in the business – so “middle-man” can also mean “middle-woman”
  • $1 = Kshs 100

Yara and the Kenya Fertilizer Market

This week Yara had a lunch meeting in Nairobi to highlight their investments, plans, products and solutions, for Kenyan farmers. Yara Kenya Country Manager, James Craske, also spoke about the global fertilizer environment, including regional markets, production, challenges, and other aspects of the industry.

Yara East Africa breiefingExcerpts

History: Yara, the largest nitrogen fertilizer producing company in the world  (33 million tons in 2014),  and has been shipping to Africa since 1929.  Yara East Africa has been in Kenya for 20 years, has 20 – 50% market share in most of the sectors they specialize in (e.g they call their CAN fertilizer – Yara Bela Extra). They will be doing a roadshow in the North Rift area, starting in Eldoret-Uasin Gishu area.

Farmer Focused: They are farmer focused on developing farmers and improving farm profitability. They  target to increase a farmers earnings by a factor of 4:1 after he or she  invests in their fertilizer. They have crop specific guides like for maize, coffee, tea, horticulture variants and other crops, and have trained 55 interns to work with the farmers in Kenya.

Distribution Network: They have 80 distributors and 10,000 stores in Kenya. They also sell directly to large commercial farms of more than 500 hectares. Freight is  big cost factor for farmers in Kenya.Craske said they can load a 30,000 ton vessel in Norway and ship the fertilizer to Mombasa for $30 per ton, but it costs  another $70 – $80 per ton to get the fertilizer from Mombasa to Eldoret.

Production potential: Countries that have natural gas like Tanzania and Mozambique are natural places to produce fertilizer. But local production may be a challenge as fertilizer components come from many countries e.g.  Saudi Arabia, Russia, China and processing is sometimes a dirty process.  Kenya is a 500,000 metric ton fertilizer market and Tanzania is a 200,000 one. A urea factory costs about $1 billion and it is expected that a factory will need to produce about 1 million tons per year to break-even so they will have to factor in some exports from Kenya to invest in one here. (There’s a factory that is being built in Uasin Gishu, by Toyota, that may produce fertilizer blends)

Counterfeiting: This is a big concern for Yara and they carefully monitor their products distribution channels to stop contamination and counterfeiting e.g. people re-using their branded bags or people taking other subsidized government fertilizer and selling it in Yara bags – as has happened  in Tanzania. It is  estimated that 20% of Kenya government subsidized fertilizer may end up in Uganda, and in Kenya, any Yara store found selling open bags is kicked out of their program, and in Asia, every Yara bag has a tracking barcode to discourage counterfeiting.