An Agriculture Sector Survey undertaken by the Central Bank of Kenya (CBK) shows that the price of key food items could begin to fall in the coming months.
- This optimism by CBK is attributed to continued favourable rainfall in January 2024, expected favourable rain conditions during the forthcoming long rain season, and the availability of quality and affordable fertilizer.
- According to this CBK latest Survey, retail prices of most key food items remained slightly high in January 2024 compared to December 2023, except key vegetable items such as tomatoes and onions, which recorded a price drop.
- The increase in prices of non-vegetables in January 2024 was driven by select items whose prices were relatively higher reflecting seasonal factors, international developments, and elevated energy costs.
The CBK survey mentions weather conditions, transport, and input costs as factors that continue to determine how much farmers are producing and the prices of their produce.
The January CBK Survey, conducted during the period January 15 – 19, 2024, reveals that fewer farmers are now able to access subsidized fertilizer in January 2024 compared to November 2023. This decline is attributed to less cash available from banks, Saccos, family, and or Hustler Fund to give credit to farmers.
Month-on-month changes in retail prices of select food items such as maize, green grams, and beans increased marginally in January 2024 relative to December 2023 but were much lower compared to their respective levels in 2022 and early 2023.
- The price of various rice varieties increased on average in January 2024.
- This upward price pressure reflects high import prices and reduced domestic production due to the flooding of rice fields.
- The price of raw cow milk remained stable in January 2024 relative to December 2023, but that of packeted milk increased marginally.
The price of sugar remained stable in January 2024, compared to the prices that prevailed in November and December 2023. Favourable rainfall has substantially improved cane production and this is expected to moderate prices in the coming months. Concerning sugar prices, the expectation of price decline was informed by the re-opening of local sugar factories and the moderation in global sugar prices.
In the case of cereals and grains, the CBK Survey notes that expected supplies from the lower Eastern region, where harvesting of beans, maize, and green grams is ongoing, will lead to a decline in the prices of these commodities.
The expectation that rice prices will increase was informed by concerns about increasing import costs, driven by a depreciating Kenya Shilling against the US$ and deteriorating supply chains following the disruption of shipments through the Red Sea and the Suez Canal.
- The price of processed and unprocessed milk is expected to decline further, supported by increased pasture resulting from favourable rainfall.
- Price expectations for vegetable items including kales/sukuma wiki, cabbages, spinach, and traditional vegetables point to a less pronounced decline in February 2024.
- Price expectations of onions, carrots, tomatoes, and potatoes point to a decline, consistent with subsiding rainfall as these crops do well in a limited rainfall environment.
Expectations about prices of edible oils point to a decline in February 2024. This was informed by the observed easing of international prices following the recovery of global palm oil production.