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How animals have ‘conspired’ to keep prices of unga high

FINANCIAL STANDARD
By Domnic Omondi | July 19th 2016

NAIROBI: The country’s livestock may be behind the high prices consumers are currently being forced to pay for a packet of unga.

It is as if British novelist George Orwell’s Animal Farm is playing out in real life in Kenya, with cows, goats, sheep, pigs and chicken on the verge of wrestling maize farms from humans.

The country’s silos started running short of maize, a staple in millions of household, in March. Since then, the price of unga has shot up, forcing ugali-loving consumers to dig deeper to pay for it. Since March, the price of maize flour has increased 16 per cent, from about Sh90 to Sh110.

And while you can blame the situation on a ruthless system that favours profit over human survival, or on the inefficient production of maize, there is a rather overlooked part to the equation: feeding livestock with maize brings better returns than feeding the crop to humans.

Nick Hutchinson, the chairman of the Cereal Millers Association (CMA) and CEO of Unga Feeds Ltd, one of the biggest animal feed manufacturers, thinks we are scrambling for the little maize available with poultry, cows and pigs — and it looks like humans are losing.

Significant ingredient

Maize is a significant ingredient in these animals’ feeds, and while it is impossible to get accurate statistics on maize consumption in the animal feeds sector, Mr Hutchinson says the figure is quite high.

“Based on production capacity/utilisation estimates from Akefema [Association of Kenya Feed Manufacturers] and our own assessment of the market size/maize utilisation in the various livestock diets, we [CMA] estimate something around four million bags of maize are used per year in the production of animal feeds,” he said.

And the competition is bound to get tougher for humans. According to Hutchinson, “the animal feeds sector is growing year on year, so requirements will increase”.

Further, in his June Budget speech, Treasury Cabinet Secretary Henry Rotich said the manufacture of animal feeds would be exempted from value-added tax. This is set to increase production.

According to the Economic Survey 2016, the country produced 3.8 million tonnes of maize in 2015 — or 42.2 million 90-kilogramme bags — up from 3.5 million tonnes in 2014.

Kenya imported 481,000 tonnes of maize last year and had 541,000 tonnes in stock. The survey notes that about 2.6 million tonnes went to food, 80,000 tonnes went to animal feeds, 1.2 tonnes was processed and 582,000 tonnes wasted.

Interestingly, of the 4.5 million tonnes of maize the country had last year, only 660,000 tonnes (or 7.3 million bags) went into maize meal — or was finely ground into maize flour for ugali.

Also extracted from maize is maize germ, which is important in the manufacture of chicken feed, and maize germ oil. In 2015, the production of maize germ stood at 14,000 tonnes, with imports adding up to 1,000 tonnes.

Dennis Otieno, a senior research fellow at Tegemeo Institute, does not think the Government’s estimate of the amount of maize that goes into chicken feed is accurate.

“For quite a long time, they have been estimating it at 1 per cent of the stock available, which is very low,” said Dr Otieno, adding that it is generally not very clear how the Government goes about estimating the amount of maize stock available.

When Business Beat asked National Cereals and Produce Board CEO Newton Terer how much maize goes into animal feeds, he said millers were better placed to answer us.

Wycliff Ongeri, a veterinary doctor who has been marketing animal feeds for years, agrees that the demand for animal feeds, especially those that use a lot of maize, such as for dairy, poultry and pigs, has been increasing.

“It is a fact that the uptake of animal feeds has grown very fast, as many people have got into poultry, dairy and pig farming,” Dr Ongeri said, adding that the demand for animal feeds has been growing by more than 10 per cent each year.

Critical resources

And animals are not just taking away from human beings the maize that has already been harvested — they are also taking away a critical resource needed in its production: land.

A number of farmers in areas that have traditionally grown maize are now cutting down the crop to grow grass as they look to capitalise on the booming dairy industry. And most have no regrets.

The farmers growing grass, such as Boma Rhodes, for hay like it because, unlike maize and beans, it requires very little attention. It is also harvested four times a year, while maize is harvested once or twice a year.

Tikoishi ole Nampaso, a farmer in Narok, wants little to do with maize. He only has a few stalks of the crop on three acres.

Back in 2014, he planted maize on 20 acres, expecting to harvest 20 bags per acre for a total of 400 bags.

He ended up with only 130 bags.

Mr Nampaso has since switched to growing grass, and the returns are much better, he said. He sells his grass mostly to dairy farmers from Limuru who use it for hay.

“For grass, you just put fertiliser and it will grow. Grass does not have a lot of expenses,” he told Business Beat.

And unlike with maize, where he used to be paid at the end of the month, or even later if payments are delayed, he gets paid in cash immediately he sells his grass.

Big switch

Many of the farmers in Githunguri, Thika, have also made the big switch. Instead of growing maize, they are now growing Napier grass and getting better returns.

The pressure that animal feeds exert on maize is so high that the Government released about 600,000 bags of grade three and four maize in March, which, while not suitable for human consumption, can be used for animal feeds.

But while talk of a maize shortage rises to a crescendo, the crop is attracting mold in some farmers’ silos.

Raymer Chebosi, a farmer in Kitale, currently has hundreds of bags of maize in his stores.

“No one is selling maize right now because the prices farmers are being offered are too low,” he said.

Mr Chebosi added that, depending on where one’s shamba is, an acre of maize can yield a harvest of between 25 and 30 bags. But sometimes the weather, pests and seed quality conspire against farmers, leading to yields of just 10 bags and acre.

He said that just as is happening in Narok, farmers in the maize-rich area of Trans Nzoia are making the switch to grass to feed the region’s booming small-scale dairy farming sector.

This is now turning into a classic battle of man versus beast, only this time round, the beast seems to be winning.

To ease the pressure on consumers, millers have proposed a raft of measures.

Aside from the efficient production of maize and its storage, they want the Government to consider allowing the importation of yellow maize from the black seas, which includes countries in Western Europe like Bulgaria and Russia.

Currently, yellow maize, which is fit for both human and animal consumption, from this region attracts duty of 50 per cent of its value.

Increased importation of yellow maize would ease the pressure on the white maize predominantly grown in Kenya and most suitable for human consumption, they said.

In 2009, when the country was in the middle of yet another maize shortage, the Government appealed to animal feed manufacturers to consider using yellow maize as a raw material to ease the pressure on white maize. The Ministry of Agriculture even went ahead to offer them licences to import yellow maize duty-free.

But an even more critical and sustainable solution to the maize issue is getting Kenyans to change their eating habits, experts say.

According to Hutchinson the trend around the world is that as an economy grows, people move away from maize to wheat. This is yet to happen in Kenya.

On average, over the last nine years, millers have purchased 255,000 tonnes of wheat from local farmers against the country’s annual consumption of 1.75 million tonnes. And consumption has been growing at 15 per cent a year.

However, Kenyan wheat farmers are bogged down by high costs of production compared to their counterparts around the world, according to the millers.

Studies have also quashed the myth that maize gives as much energy (calories) as other cereals.

According to Kenya National Bureau of Statistics data, last year, the average Kenyan consumed about 60 kilogrammes of maize over 12 months (or five kilos a month). This means he or she got 51,600 calories.

Food alternatives

On the other hand, the average Kenyan consumed about 35 kilogrammes of wheat over the year, getting 114,450 calories.

The bottom line is that for every 100 grammes of maize, an individual gets 86 calories, compared to 327 calories from wheat of a similar amount.

Even better is the calories an individual gets from potatoes.

Potatoes’ yield of calories per acre is about 9.2 million. This is higher than maize at 7.5 million calories, rice (at 7.4 million), wheat (at 3 million) and soybeans (at 2.8 million).

And yet, in 2015, we only produced about 2 million tonnes of potatoes, of which 1.7 million tonnes went into food. Each person ate, on average, 37.6 kilogrammes of potatoes from which they received 73 calories.

If nothing is done to boost the intake of other food alternatives, then humans may be left scrambling to find options after they have been kicked out of the maize kingdom. By then, it might be too late.

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