Read more about agricultural trade and markets in Kenya and Ghana in this report.
KENYA
The Kenyan market is due to face more maize imports due insufficient stocks. Re-elections will be held on 17 October 2017, after the annulment of the country’s previous elections. It does not seem that the re-elections will have any impact on the on-going subsidisation of white maize.
Maize production was fairly limited and markets are waiting for new dry maize crops to become available in November. Kenyan market expects 120 000 tons of white maize vessels respectively from South Africa and Mexico, as well as another 20 000 ton vessel from Zambia during October. So far no Ugandan imports have been received.
Prices have remained fairly unchanged at US$247/ton since mid-May 2017 for both Nairobi and Mombasa white maize prices. The government is selling maize at US$247/ton to millers through their subsidisation programme, and making it mandatory for millers to sell at this price, hence prices have been at this level since May 2017.
Wheat
At the moment domestic wheat supply is insufficient to cater for the demand. Millers had previously overestimated the wheat crop, but with harvesting underway, it seems the crop is much smaller than anticipated. Imports have fallen short due to lower orders. The high Kenyan wheat consumption rate will also inevitably add to the country’s already distressed import account.
Economy
Kenya’s exports are dominated by agricultural sector and primarily driven by coffee, tea and flower exports. The sector is integral to the growth of the economy, accounting for a great share of employment and adding approximately 28% to the total Kenyan nominal gross value add.
Kenya is a country with bright potential and a gateway for foreign investments into East Africa, however in 2017, shaky agricultural growth, rising oil prices, increased political risk and violence will cap the year’s economic performance.
Source: ABSA AgriBusiness and CIAfrica
GHANA
Agriculture contributes about 18,9% to Ghana’s gross domestic product and long-term outlook for growth in this sector is uncertain. Most of the country’s farmers operate on small scale and don’t have sufficient access to equipment, irrigation technology and fertiliser, as well as agricultural credit facilities.
Lower interest rates can bring some relief and it appears that the Ghanaian central bank will lower interest rates further to stimulate growth in loans. The bank is able to do this since inflation has reached a three-year low and is expected to decline further to 8,3%, which is close to its target of 8%.
International investment
Chinese investment in Ghana’s mining sector could lead to further foreign investment, which will increase fiscal income, but will also drive the country’s debt upwards. It appears that China may extend a loan as large as $15 billion in exchange for primary mining commodities like bauxite. Ghana already pays a premium on borrowed funds due to high debt levels.
Cocoa production
Expectations are that Ghana will see a record cocoa harvest as production has increased 22% year-on-year. The government institution Cocobod buys the harvest, but due to low international prices and insufficient funds to purchase the harvest, farmers may have to wait for payment for their harvest. This could negatively impact next year’s season.
Agricultural exports
Cocoa and cocoa products are mostly exported to the United Arab Emirates, while wood, wood products and charcoal go to Italy. France imports fruit, nuts, citrus peels and watermelon from Ghana.
Oil investments starting to pay
Investments in the country’s oil fields are starting to show yields and it seems like its current account deficit may deliver a surplus in 2018. This can be ascribed to anticipated higher international crude oil prices and growth in the country’s gas and crude oil production sectors.
Source: Absa AgriBusiness and BMI
This market report was supplied and compiled by Karabo Takadi, agricultural economist at Absa.
