Make markets work for regional food security

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DAVID NALO

The shortage in maize seed supply in Kenya has, in some quarters, been met with a degree of alarm. Some are blaming it on the East African Community (EAC) Common Market bringing with it higher demand from the other Partner States such that Kenyan farmers are missing out as a result. However, this expansion should rather be greeted with the acknowledgement that the EAC integration process is working.

It is saddening to see Kenyan farmers queuing for hours waiting for maize seed at various depots across the country only to be told there is a shortage or none available. But let me ask this: Is this the fault of the expanded EAC market? Or is it an issue of lack of proper planning to help ensure that Kenya and Kenyans can actually benefit from the expanded demand of certified seeds and other products?

In Eastern, Central and Southern Africa, there are three major countries that produce certified maize seeds, namely Kenya, South Africa, and Zimbabwe. As a result of a number of political, economic and social problems in Zimbabwe over the last decade, its production of maize seed for export has fallen dramatically. This has resulted in consumers of maize seed to increasingly turn to Kenya and South Africa to meet their demand; the EAC Partner States are, in particular, turning to Kenya.

This means that Kenya has moved from a situation where it was able to sufficiently meet its national demand for maize seed, to a situation of excess demand for maize seed in the region which has in turn led to shortages at a national level. Excess demand, in the simplest of terms, means the demand for maize seed is greater than the supply of maize seeds. This is on the one hand is due to the decrease in supply from Zimbabwe and on the other hand it is a result in an increase in demand from the region as a whole.

The expanded market as a result of the Customs Union and the Common Market has meant that Kenyan seed companies can freely export to the region and thus help cater for the increasing demand from the other Partner States. However, in the short term this is having a negative impact on Kenyan farmers. This is so because the Kenya Seed Company (KSC) has not yet been able to adjust its production (supply) to cater for the growing demand. It may also be indicative of overall systemic issues such as lack of planning, in terms of stockpiling, and poor market analysis.

In order to adequately respond and cater for the increased demand for maize seed in the region, several things need to be taken into account. First, the supply of the maize seed needs to increase. Given that Kenya is one of the only major maize seed producers in the region, we can deduce that Kenya has a comparative advantage in maize seed production.

This means that it can produce maize seed at a lower opportunity cost than other Partner States and thus sell it at more competitive prices.  When the market opens up to international trade, as has been the case since the inception of the EAC Customs Union and Common Market Protocol, the other Partner States prefer to buy maize seeds from Kenya as they can acquire them at a lower price. This is in fact beneficial for Kenyan producers, as it provides them with an opportunity to further expand their production to meet this demand and thereby increase their profits. It may also help create employment opportunities in the region as more labour is required to increase maize seed supply.

Secondly, at the Summit in December 2010, the five EAC Heads of State made a strong commitment to develop a policy and strategy to ensure food security in the region especially when a fellow Partner State is faced with shortages, due to drought or famine. The integration process is helping Partner States respond to issues of food security through markets working more efficiently. Furthermore, there is a robust policy framework that will ensure that effective contingency planning is in place to address potential shortages. In particular, effective planning means that Partner States can assist one another without it having a detrimental impact on their own domestic economies.

Finally, with the integration process moving forward, Kenya will only see an ever growing demand from the region, especially with the shortages of supply from Zimbabwe. However, rather than viewing this as a detriment, as is part of the current sentiment in Kenya, it should be viewed as a great opportunity  where Kenya will be able to reap benefits from the EAC Customs Union and Common Market in a relatively short period of time. Thus, for maize seed producers to seize this opportunity growing demand in the market, whilst continuing to meet national demand for maize seeds, they need to:

*    Increase production of maize seed;
*   Expand existing stockpiles of maize seed;
*   Undertake the necessary market research on a regular basis to determine both national and regional demand for maize seed.

The current shortage should be seized as an opportunity created by the seed companies and other agencies that are experiencing the need to be aware of what is happening in the region so that they can develop coping strategies, early warning systems, and other such like mechanisms to deal with spikes in demand without impacting negatively on our local farmers.

The EAC is providing the ideal platform for such planning to occur at a regional level. Furthermore, the larger market is providing opportunities for the business sector to expand. In the case of maize seed, it is imperative that Kenyan seed producers seize this opportunity as soon as possible.

Mr Nalo is the Permanent Secretary, Ministry of the East African Community

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