The cost of animal feeds could jump by as much as 30 percent this month on rising input prices, producers have warned, citing a thinning supply of maize in the local market despite the government projecting record harvests last crop season.
Manufacturers of animal feeds have protested a 36 percent climb in prices of maize between January and March, claiming it has raised the cost of production by about a third and put them under pressure to pass the extra costs to farmers.
They say the cost for a 90-kilogramme bag of maize, which accounts for about 50-60 percent of raw materials for production of livestock feeds, has increased from about Sh3,300 per unit in January to Sh4,500 in March.
Consequently, the Association of Kenya Feeds Manufacturers and Poultry Breeders Association of Kenya have in separate letters petitioned Cabinet Secretary for Agriculture Mutahi Kagwe to intervene by facilitating opening of a window for duty-free imports of maize from outside of the East African Community trading bloc.
The claims have come on the back of government projections last November showing maize harvests will reach a record 74 million bags because of favourable weather and price cushion on key inputs such as fertiliser and seeds.
“We are astounded by what is happening in the market because when you go to the ground you will struggle to find that maize [as projected by the government]. The bulk of the stock of maize we are using right now is coming from Tanzania,” Association of Kenya Feeds Manufacturers chairman Joseph Karuri said via telephone.
“We don’t think there’s any farmer who can hoard maize when we are willing to pay about Sh4,500 [per bag] and they were selling for Sh3,500 on average last year.”
Mr Karuri added: “We have not included the higher cost of maize as of now because we are still observing the behaviour of the markets. But if the current prices [of maize] persist into April, then the cost of feeds will go up by roughly 30 percent.”
Kenya endured a biting drought in 2022, seen as the worst in four decades, prompting the Treasury to allow waiver of import duties to smoothen purchase of key raw materials for manufacturing dairy and chicken feed on intervention of the Agriculture ministry.
Imports of maize from outside the seven-nation EAC trading bloc attract a duty of 50 percent in line with the EAC Common External Tariff, while no duty is charged on grain bought from EAC countries.
The lobby for manufacturers of animal feeds claims the Ministry of Agriculture has pledged to table their petition before the Cabinet for consideration. Mr Kagwe was not immediately available as his cell phone was switched off.
“Given the potential impact on the livelihoods of numerous individuals and businesses across the country, we kindly request your intervention in bringing the maize prices back to normalcy,” Timothy Mulwa, chairman Poultry Breeders Association of Kenya, said in a March 24 letter to Mr Kagwe.
“The proposed interventions include but are not limited to duty waivers, and they also draw your attention to the recent report by the Competition Authority of Kenya on the animal feed market inquiry 2024, which cites possible malpractices within the animal feeds input supply chain.”
Findings of a CAK investigation suggested that local feed manufacturers have been overcharged for inputs in contrast to other markets, including South Africa. This is despite the inputs being readily available from the source markets which include Malawi, Uganda, and Tanzania.
The price of dairy and chicken feed, for instance, increased between 30 and 40 percent between 2020 and 2022 mainly due to the high cost of key inputs such as maize, wheat, sunflower cake, and soybean meal.
This resulted in Kenyan farmers paying an average of Sh516 for a kilogramme of chicken meat compared with Sh258 in South Africa. The cost of inputs for poultry feed was estimated to be 42 percent in South Africa and 54 percent in Brazil, according to the findings of the competition watchdog's inquiry.
“We found that the pricing of soymeal to Kenyan feed companies neither reflect supply and demand conditions in competitive markets nor does it reflect the somewhat higher world prices for this traded product,” the report states without naming entities behind the price gouging scheme.
“At the same time, as prices to Kenyan feed companies doubled from early 2021 to over $1,100 (Sh142,205.01) per tonne or Sh120 per kilogramme in Q4 of 2021, soymeal was being exported from Zambia to South Africa at $470 (Sh60,760.32) a tonne net of transport costs, and by Malawi in large volumes to countries outside Africa at lower prices than prevailing in Kenya.”
