Kenya subsidizes maize prices, Ethiopian exporters call for corn exports to be immediately opened up

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The government of Kenya has placed controls on maize distribution in collaboration with millers to put a halt to rising prices.  Experts urged the Ethiopian government to work with exporters and expand exports of surplus maize.

Currently the Ethiopian government via the Ministry of Trade (MoT) allowed selected exporters, who have their own farm or work via contract farming with other commercial farmers and government trading enterprises and farmers’ unions to export the product to Kenya and other south and east African countries, affected by droughts that occurred over the past two years.

Since the government identified that the country harvested a surplus of maize it partially lifted the ban, which was imposed during the 2015/16 budget year when the regional drought affected the country.

According to experts, the price of maize in the country went up after exports were re-instated.

Experts said that a quintal of maize now sells for 700 birr, a sharp increase from 400 birr a few months ago.

“It indicates that the producers or farmers have been getting a better local price since exports began,” an expert said.

“Increasing maize exports will likely benefit the country more,” they added.

According to a source, who requested anonymity, this period is a good opportunity for the country.

Maize is common food for the southern part of the country, which consumes 72 kg per capita; it is not a staple diet for the biggest producers in country, which are west Oromia and west Amhara.

Studies indicated that maize consumption in Amhara is about 22 kg per capita, while the per capita consumption in Oromia is about 40 kg. The two regions use maize for local drinks.

The Kenyan per capita consumption for maize, which is a staple in their diet, is 94 kg.

The Eastern Africa Grain Council (EAGC), met with maize growers and exporters early in March here in Addis Ababa, also urged Ethiopia to export the product to Kenya, Uganda or Rwanda.

Experts said that Ethiopian maize production and yield is the highest in the east Africa. The production has doubled in the last 10 years.

It was disclosed by the Agricultural Transformation Agency that four million metric tons of maize has been produced in the past harvest season and one million tons of this is surplus.

The country has to use its current comparative advantage and earn a lot of money by opening maize exports to all investors.

Experts told Capital that the government should consider the opportunity to expand the export by adding the potential exporters including big companies.

The farmers’ product has to be exported during this period, while prices are high.

Experts said that the farmers are leading their life marginally so if they can export more maize it will dramatically help them.

The issue is also the food security for Ethiopian farm due to that the government has to expand the export.

“The farmers buy their staple food like teff and other commodities by selling their maize. It is all about the benefit for the farmers so it needs to be exported now,” they explained.

Currently Belayneh Kindie Import and Export Plc who was allowed by the government to export the product is effectively supplying maize to the Kenyan market. Belayneh Kindie, owner of the Belayneh Kindie Import and Export Plc, recently told Capital that his company exports from its own farm and Ethio Agri-Ceft.

The new law that the Kenyan government issued is a game changer so before the market decreases the government of Ethiopia must act fast, Ethiopian exporters based in one of the countries in the region told Capital.

The Kenyan government announcement that issued mid this week under the title of ‘Drought Alleviation (Government Food Subsidy) Program’ indicated the price maize flour will be reduced by half.

The public notice announced by the Kenyan Ministry of Agriculture, Livestock and Fisheries on Tuesday May 16 stated that as part of the government’s food subsidy programme, which seeks to reverse the recent rise in prices of essential food commodities.  “It is notified to the general public that effective Wednesday 17th May, 2017; the government has partnered with various millers to offer white maize flour at  subsidized rates across the country,” the Kenyan government announcement explained.

“The new notice indicates that the Kenyan government will be the sole supplier of the maize for the selected 20 millers in the country,” experts at Nairobi told Capital.

According to the announcement, the price of two kg of maize flour is 90 Kenyan shillings. Experts said this is a 50 percent reduction. Previously the price of two kg of maize flour was USD 1.80 but that has come down to USD 0.90.

Exports said that the price of maize in the region has reached up to USD 360 per metric ton, while the country imports wheat, which is one of staple foods in Ethiopia, by USD 260 per metric ton. So the country could make a 100 USD per metric ton profit by exporting maize, according to exports.

About nine million farmers are engaged in maize production, according to latest study.  Eighty percent of the tradable surplus of maize comes from west Oromia and west Amhara. maize is partially used by urban residents by mixing it with wheat flour or other foods, the product is also an  input for some types of manufacturing.

Some of the exporters claimed that the current maize export excluded them, however they have been working to fulfill requirements set by the government.

However MoT rejected the accusation. Recently Ayana Zewde, State Minister of MoT, told Capital that other companies and farmers’ unions were allowed to export the product to parts of Africa where severe drought has occurred.

Ayana said that since the government decided to export the product, it has tabled a precondition to restart exports to the region. The precondition is that maize exporters must have their own farm or a contract agreement with other commercial farms from whom they can buy the crop.

The state owned Ethiopian Trading Businesses Corporation was also allowed to export maize it collected from farmers.