Wed 20 Jan 2010

WEEKLY RATIN’S GRAIN MARKET REPORT: Grain prices across the East African region generally stayed firm heading into the second week of January, but individual market movements were not uniform, with the gains and declines generally minimal. The highest market gain for instance, for beans was in Dar at $963 per metric ton representing a 1.3 percent rise from the price registered in the first week of January. The lowest price was registered in Kampala at $599 per metric ton, this being attributable to good bean harvests in Uganda most of which crossed into Kenya through informal trade captured by the Regional Agricultural Trade Intelligence (RATIN).  The prices of Maize remained stable across most markets in the region clearly because of the relatively stable supply arising from the harvest that has been going on since the last quarter of 2009. In Dar, prices averaged at $419 per metric ton, $385 in Nairobi and $230 per metric ton in Kampala.

The fluctuating adjustments of local currencies to the US dollar had considerable influence on day-to-day grain trading although overall, the rate of decline in currency had a less than serious impact on trade considering that most of the countries have been enjoying relatively stable supplies in recent weeks because of the harvesting season that has been on-going.

The price of rice showed a general downward trend with the only positive gain registered in Mbeya- Tanzania with an increase of $11 from $846 per metric ton. Millet showed some of the highest gains with prices rising from $646 in the first week to $741 in Mombasa but also falling drastically from $563 to $474 per metric ton in Mbeya. Sorghum prices ranged from a low of $344 per metric ton in Kampala to a high of $$530 in Iringa-Tanzania in the second week of January.The general outlook is that the prices of grains will begin to rise with the Kenyan case being more dire relative to her East African neighbors. Studies show that there is a shortfall in maize supply of up to 16 million bags, portending a bad scenario for Kenya by April 2010. 

There has been speculation for awhile now that the duty waiver on maize that has been in place for almost one year and was to expire on January 16 would not be renewed, but the Minister of Agriculture Mr. William Rutto gave an assurance the waiver would be extended until June this year when it is hoped the situation would have improved. There are concerns however that the benefits of these duty waivers do not trickle down to ordinary consumers leading the Kenya government to challenge the private sector to be accountable for the relatively high maize prices over the waiver period. Reports also indicate that Tanzania is facing a shortage of about 1.3 million tons of grain, according to the minister for Agriculture, Food Security and Cooperatives, Mr. Stephen Wasira.

He told reporters in Dar es Salaam yesterday that the information was obtained during an assessment conducted last December. The minister said during the 2008/2009 harvest season, the country collected 5,218,626 tons of grain which fell short of country's requirement of 6,567,071 tons. He said the shortfall in harvests was caused by erratic weather conditions as some parts of the country, notably the southern highlands, which is the major grain producer, received little rains.

He said rains were also little in the eastern parts of the country. But, the grain shortage notwithstanding, Mr. Wassira said the general food situation in the country is encouraging as the statistics shows that Tanzania will enjoy a marginal surplus of food crops to be harvested at the end of this farming season.

He said the country projects to harvest 10,772,679 tons of food crops, while national needs stand at 10,569,845 tons per annum. "We are only experiencing grain deficit which is the main staple food to most Tanzanians, but generally, the situation is under control as the data shows our total harvests of food crops will rise by 102 per cent," Mr. Wassira said.

He said according to the December assessment that covered eleven regions, which include Dar es Salaam, Arusha, Dodoma, Kilimanjaro, Manyara, Mara, Shinyanga, Coast, Mwanza, Singida and Tanga, are still experiencing food shortage.

The duty free window was introduced a year ago due to agitation by the populace in the face o f soaring food prices. The situation threatened to go out of hand before the Kenyan government stepped in with the duty waiver. It is however hoped that the customs union protocol adopted by the EAC will help ease the food situation by allowing for free movement of commodities across the region. The anticipated implementation of the Simplified Trade Regime (STR) by EAC and COMESA is also likely to enhance movement of goods across the region thus ensuring supply and possibly affordability of food commodities