A Farm Gate-to-Consumer Value Chain Analysis of Kenya’s Maize Marketing System

Based on the findings of this study, the following actions are proposed for consideration by the Government of Kenya: 1. Raise public investment in maize seed breeding and agronomic research to make it possible for improvements in smallholder crop productivity. Based on research evaluating the returns to alternative investments in agriculture, public expenditures in maize seed breeding and agronomy may constitute the single most important investment to promote broad-based productivity growth and poverty reduction in Kenya. 2. Explore options for improving public and private extension programs to enable farmers to adopt improved farm technologies generated from point 1. 3. Examine options for bringing more land in Kenya under potential cultivation by smallholder farmers. Unless the land constraints in currently densely populated rural areas of Kenya are relieved, it is unlikely that a large portion of farmers in Kenya that own less than one hectare will be able to rise out of the semi-subsistence conditions that keep them trapped in poverty. 4. Support training programs to enable smallholders to develop more effective marketing strategies and to negotiate more effectively with traders, in order to raise the prices that they receive for their maize. 5. Raise public investment in road, rail, and port infrastructure to reduce marketing costs as well as the cost of modern inputs such as fertilizer to the farm gate. Rehabilitating the Kenyan railway system would be a key priority. If this were done prior to 2009, maize imports could have arrived in greater volumes much faster in early 2009 and pushed food prices down faster. 6. When early warning estimates predict a need for large import quantities, remove the import tariff soon enough to allow traders to import over a sufficiently long period to avoid transport capacity constraints and domestic stockouts. 7. Review the rationale for denying import licenses when applied for by traders. 8. Consider the costs and benefits from the standpoint of governments of transitioning from discretionary trade and marketing policy to adherence to more systematic rules-based policies. Nurturing credible commitment in regard to trade policy is likely to promote market predictability and therefore, lead to greater supplies and price stability in food markets during times of domestic production shortfalls. 9. Consider whether current proposals for international stockholding would be effective in the presence of domestic transport capacity constraints. International physical or financial reserves would not be able to relieve localized food production shortfalls unless local transport capacity is adequate to absorb sufficient imports within a concentrated period or unless import licenses are provided or the state carries out or contracts for the importation from the international stock source.