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Kenya

The impact of rising food prices on disparate livelihoods groups in Kenya

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Summary of Main Findings

The sustained rise in food and non-food prices is expected to accentuate food insecurity among the most vulnerable livelihood groups especially the urban, pastoral and marginal agricultural households. Domestic food supply, in particular maize, is expected to tighten significantly in Kenya during the July 2007-June 2009 marketing year. Long rains maize production in 2008 is projected at 2.12 million MT, comparing unfavourably with 2007 long rains output 2007 of 2.52 million MT. Although total maize production (short and long rains) for 2007 was estimated at 2.7 million MT, the MoA reported considerable pre- and post harvest losses of up to100,000 MT, thus reducing overall carryover stocks. The expected reduction in maize output in 2008, which will likely sustain the current upward pressure on prices, has resulted from a complex combination of factors, namely:

- Poor weather conditions during long rains 2008 in the central highlands and eastern and coastal lowlands.

- An estimated 20 percent of land taken out of production in key production areas of the Rift Valley, due to post-election violence and the increased price of fertilizer and tractor hire.

- A 24 percent increase in cost of production will increase farm-gate, wholesale and retail prices.

- Sub-optimal application of standard agronomic practices which will likely reduce maize yields.

- Shortage of cereals from August 2008 will increase dependence on the regional and international market for imports; high import prices will be passed onto consumers.

- Regional market price trends are soaring, suggesting that the price of commercially imported food will become increasingly prohibitive.

- Price of fuel, transportation and basic transaction costs will be passed on to consumers, through higher prices.

- Overall inflationary trend in other sectors is compounding the situation by out-pacing the rise in wage rates.

Several compounding factors are accentuating the impacts of rising prices, including:

- Disruption of input and output markets in conflict epicentres in pastoral areas of Marsabit, Turkana, Samburu, Marakwet and West Pokot.

- Reduction in household production and purchasing capacities due to the debilitating impacts of HIV/AIDs among, highest among urban dwellers and marginal agricultural households around the Lake.

- Poorly integrated markets, in part due to heightened transaction costs coupled with limited number of markets participants especially in the pastoral livelihood.

- Overwhelming dependence on maize as the key crop and staple, in some areas grown in an inappropriate agroecology.

- High prices of production inputs that either result in a reduction in area put to maize or sub-optimal application of farm inputs.

- Stagnant incomes and salaries based in many cases on volatile sources of incomes, while the overall inflation is rises at an increasing fast pace.

- Setting of producer prices, by the Government through NCPB, above market rates, while close to 70 percent of the Kenya population are net buyers of maize, predominantly in the urban, marginal agricultural, the pastoral and agro pastoral livelihoods.

Who are the most vulnerable to the price increases?

- The urban livelihood is considered most vulnerable to price, production and labor shocks because virtually all household food and non food needs are purchased from the market.

- The rural poor who do not own enough land for subsistence, and rely upon other sources of income. Poverty rates are particularly high in Coast Province, the southeastern marginal farming areas, the agro-pastoral areas of in the northwest and large areas of Western and Nyanza Provinces.

- People living with HIV/AIDS -the highest prevalence reported in Western and Nyanza Provinces.

- Practicing pastoralists, whose terms of trade are deteriorating as the rise in the price of food and non-food commodities supersedes the rise in livestock prices.

- Pastoralists that have dropped out of the pastoral economy after losing livestock.

- Vulnerable populations presently dependant upon free food assistance (IDPs in the Rift Valley and northern Kenya, refugees in the camps in North Eastern and Turkana, and drought-affected families situated principally in the arid and semi-arid districts).