Food supply challenges

by World Grain Staff
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This year has seen the countries of eastern Africa, particularly Kenya, struggling with some new and worrying food supply problems. As harvest approaches, they’re hoping for a better supply situation in the new marketing year.

Faced with short supplies of corn (maize), Kenya’s government declared a food emergency on Jan. 9. A U.S. Department of Agriculture (USDA) attaché report said that about 10 million Kenyans, (approximately 25% of the population) were or soon would be at severe risk of food shortages. A later attaché report, published in May, showed little improvement. "The food security situation in Kenya continues difficult and deteriorating, partly because the Kenyan port-to-fork food delivery infrastructure remains inadequate to service the nearly unprecedented volumes of food grains needed in the Kenyan interior," the report said.

It painted a disturbing picture of the infrastructure limitations Kenya faces. "Reportedly, ships are waiting as long as four weeks to discharge bulk commodities at the only Kenyan port, the Port of Mombasa," it said. "Almost all of the discharged food grains must be bagged for transport and distribution to millers. This labor-intensive and very slow bagging process frustrates the ship offload capacity."

Problems persist once the grain is off ships. "Once loaded, the trucks ply a single, two-lane, east-west highway through the major population sites within the country," it said. "Kenya’s narrow-gauge railway does not operate efficiently enough to provide a viable alternative to truck-transport, even though east-west truck freight rates are reported to be very expensive."

The attaché also reported depleted government grain stocks and said that rains needed to plant and grow the new crop had not yet developed. "As a result, we expect that Kenya will need to import at least an additional 600,000 tonnes of commercial white corn for human consumption through the coming marketing year," the report said. "White corn availability from South Africa and the United States will also play a major role in determining Kenyan-white corn imports, but we assume, in our supply and demand analysis, that between the two major whitecorn exporters, Kenyan importers will be able to source the needed quantity."

The situation is made worse by a growing number of Somali refugees crossing the border into Kenya.

Kenya’s millers were running earlier this year at 30% to 40% capacity of between 1.3 and 1.5 million bags a month. (1.3 million bags are roughly equivalent to 117,000 tonnes). Twenty-five of the larger millers are grouped in the Cereal Millers Association, with many smaller millers in the United Millers and Farmers Association, formed as the corn crisis hit.

The Regional Agricultural Trade Intelligence Network (RATIN), which covers East Africa, put Kenya’s corn stocks in mid-June at 580,000 tonnes, compared with a consumption requirement of 675,000.

"This leaves a national maize deficit of 95,000 tonnes, which is to be met through imports," it said in its East Africa Food & Trade Bulletin. "From January to June 2009, Kenya received a total of 108,155 tonnes and 55,169 tonnes of corn from Uganda and Tanzania, respectively, through informal cross-border trade."

It also noted that Kenya’s National Cereals and Produce Board (NCPB) is currently importing corn from the U.S. and South Africa for its Strategic Grain Reserve.

"Currently, NCPB holds about 151,323 tonnes and 20,288 tonnes under SGR and relief food, respectively," it said. "The national bean stocks stood at 36,380 tonnes as of June 15, 2009, though volumes from the current season are too low. However, stocks have been boosted by inflows from Uganda."

According to RATIN, Kenya’s Ministry of Agriculture is projecting national corn production of 2.4 million tonnes from the planted area. "The crop yield will depend on continued rains in June through August during critical stages," it said. "The Rift Valley has been projected to produce 1.22 million tonnes, while the Eastern region is anticipated to produce 72,000 tonnes in the long rains season. However, a total crop failure is expected in the lower Eastern region due to very little rainfall."

Crops from early-harvesting areas in parts of Nyanza, Western Highlands and the South Rift are expected to reach markets by July and August. "National supply will remain constrained until a significant harvest comes into the markets starting in October 2009 from Rift Valley and Western Highlands," it said.

TANZANIA, ETHIOPIA ALSO STRUGGLING

Ominously, the attaché said Tanzania may soon be facing a short supply situation similar to Kenya’s. "Rains have been slow to develop in time to plant the marketing year 2010 crop," the report said. "Government-held stocks appear untenably low, and local white corn flour prices are increasing."

The International Grains Council (IGC) puts Tanzania’s 2009 corn crop at 2.7 million tonnes, unchanged from a year ago. According to the Tanzanian Ministry of Agriculture, Food Security and Co-operatives, agriculture provides full-time employment to over 70% of the population.

"It is estimated that Tanzania enjoys 100% self-sufficiency in food and, in better years, is a net exporter of grains and cereals," it said in a web site note on the country’s agricultural achievements.

Ethiopia has also been hit by drought. It suffers from a long-term cycle of drought and hunger. The most recent IGC report included a reminder of how much international flour trade is noncommercial. As an example, it pointed out that in 2002-03 and 2003-04, Ethiopia had been the single biggest destination for U.S. flour. The IGC put its wheat production at 1.9 million tonnes in 2009, down from 2 million in 2008 and its corn production at 3.6 million tonnes, down from 3.5 million in 2008. That makes it a big producer in terms of Sub-Saharan Africa, but it’s still well below the needs of 85 million people.

Some aid from the U.S. goes to bolster its important livestock industry. "With an estimated 40.9 million cattle and 37 million sheep and goats, the livestock sector is one of Ethiopia’s key agricultural industries, contributing 30 to 35 percent of agricultural gross domestic product and 15 to 18 percent of total export earnings, and employs one-third of Ethiopia’s rural population," the USDA said in a report on aid in 2008.

ZIMBABWE MAKES CHANGES

Despite improved agricultural production and a more liberal import policy, Zimbabwe is still suffering from high levels of food insecurity, according to a report issued by the United Nations Food and Agriculture Organization (FAO) and the World Food Programme (WFP) in June.

"Good rainfall meant 2009 production of the staple crop, corn, is estimated to have more than doubled, to 1.14 million tonnes, an increase of 130% on the record low harvest of 2008," it said.

However, it also forecast record low winter-season wheat production of about 12,000 tonnes, "reflecting the high cost of fertilizers and quality seeds, farmers’ lack of financial liquidity, and the uncertainty of the electricity supply for irrigation," it said.

Faced with inflation that had reached a high of 56%, Zimbabwe’s government decided in March of this year to abandon the Zimbabwe dollar and liberalize much of the economy. By using the U.S. dollar and the South African rand, it has managed to bring the rate of inflation down to zero.

"Grain market reform includes free movement and buying and selling of grain in the country, removal of import duties and designation of the government’s Grain Marketing Board as a buyer of last resort to maintain a floor price for maize and protect domestic producers," the WFP said. "This has filled the shops with products and reduced prices. Still, for most households without access to foreign currency, basic necessities remain out of reach."

"Liberalization of the grain market is the most important change in a decade for the improvement of the agricultural sector in Zimbabwe," said FAO Economist Kisan Gunjal, co-leader of the UN mission to Zimbabwe in early May that produced the report. "But the full impact of the reform on production next season remains to be seen, especially in light of financial liquidity constraints and other problems of economic transition."

"This year’s improved harvest comes after two consecutive years of poor production," said WFP’s Jan Delbaere, also a co-leader of the mission. "Having depleted their food stocks and sold livestock and other assets to cope with the effects of recent crises, many rural households are still struggling to survive."

Total domestic cereal availability for 2009-10 is estimated in the WFP/FAO report at 1.39 million tonnes, compared with projected total utilization of 2.07 million, leaving an import requirement of 680,000 tonnes. "To meet this gap, cereal imports of about 500,000 tonnes, mostly by the private sector, are expected, providing there are no import restrictions," WFP said.

The report also contains a provisional estimate that about 2.8 million people in Zimbabwe will face food shortages in the 2009-10 marketing year (April-March). It further estimates that they will need 228,000 tonnes of food aid, including 190,000 tonnes of cereals.

According to the government-owned newspaper, the Herald, Zimbabwe’s liberalization of its market has helped the millers. Victoria Foods, one of its big three millers, has been able to increase capacity utilization from 15% to 50%, it said in a report at the end of May. Another of the three, National Foods, has been able to increase its capacity usage to around 45%, although the report did not say from what level.

Chris Lyddon is World Grain’s European editor. He may be contacted at: chris.lyddon@ntlworld.com.

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