Nairobi: The ban on food exports by neighbouring Tanzania will pile pressure on domestic maize prices, analysts have warned, citing poor production prospects in the country’s main grain basket areas. Tanzania said on Tuesday it had halted food exports to tame rising prices of staple goods, which have pushed its inflation rate higher for six straight months. Tanzania’s inflation rose to 8.6 per cent in April from 8.0 per cent in March on higher food and fuel prices, reflecting rising inflation across east Africa.
'We will not allow the export of food, especially maize, between April, May and June,' Tanzania’s Agriculture minister Jumanne Maghembe said.
The government said it has directed officials at the country’s strategic grain reserve to start selling maize to markets in urban centres whenever shortages of the country’s staple food occur.
Analysts and market dealers said the latest move by Tanzania is likely to trigger distortions in the domestic grains market through panic-buying and hoarding.
'The action by Tanzania cuts off supplies to our market and the immediate impact will be an imbalance in demand and supply. Prices will climb on this effect,' Dr Adrian Mukhebi of the Kenya Agricultural Commodity Exchange Limited (KACE) said.
Maize trade in the region is mainly driven by informal cross-border imports and exports—meaning that the decision by Tanzania to block its borders will affect the flow of the commodity.
'Unfortunately production of most key staples in the region such as maize has been affected by bad weather and even supplies in the other global markets may not come cheap because of overall pressure on commodities,' Dr Mukhebi said.
New data released by the UN’s Food and Agriculture Organisation (FAO) showed that maize prices in Kenya have increased by an average 20 per cent between March and April alone on the effects of the grim production forecasts.
'A higher increase of 33 per cent was recorded in Kisumu, a deficit area in the west of the country near the Uganda border. The rising price trend started in February as a result of the drought reduced 2010/11 secondary crop and in the past month has been sustained by uncertain prospects for the 2011 main crop,' the agency said.
The Meteorological Department had predicted below normal rains during this year’s traditional April-May long rain season and warned on major effects on the country’s food production.
High costs of key oil-based input such as fertiliser have also affected food production this year. Prices of fuel used to drive farm machinery such as tractors also continue to affect farmers across the country.
The country also suffered a surprise shortage of planting seeds last month and coinciding with the onset of the April rains—an issue that is expected to reflect on the country’s overall maize production at the end of the season.
'Insufficient rains in parts of the country, seed shortages and high fuel prices may result in reductions in the area sown this season. Maize prices in April rose to 39 per cent compared to 11 per cent in the same period last year, although they are still below the record levels reached two years ago,' FAO said.
Market analysts said Kenya’s woes are replicated across the east Africa region—pointing to possible shake-up in the key food markets. 'We seem to share most of the challenges in east Africa as a region and the outlook could be grim for all of us,' John Mwangi, a maize dealer in Nairobi said.