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Covid-19 Supply Chain and Markets Update 8 May 2020 © The Center on Conflict & Development Conflict & on Center The © MARKETS WATCH | UPDATE WFP KENYA COUNTRY OFFICE COVID-19 SUPPLY CHAIN AND MARKETS UPDATE Economic Conditions cutting back on their operations to keep costs low as revenues deteriorate. Source: https:// Kenya’s private sector activity dropped tradingeconomics.com/kenya/manufacturing-pmi in April 2020: The Stanbic Bank Kenya Inflation: According to the Kenya National Purchasing Managers’ Index (PMI™)1 – Bureau of Statistics, the overall year-on-year which tracks business performance in the inflation in April 2020 stood at 5.62 percent manufacturing and services sector – fell to 34.8 in April, from 37.5 in March and from a revised 5.51 percent in March 2020. 49.0 in February 2020. Readings above The Consumer Price Index (CPI) increased by 50.0 signal growth in business, so the latest 0.86 percent from 107.00 in March 2020 to data points to the biggest contraction in 107.92 in April 2020, meaning that, nationally, private sector activity since October 2017, the average cost of a household basket of when a record low of 34.4 was reported. The goods (food and non-food) as well as services coronavirus pandemic is leading to reduced has increased by 7.92 percent compared to business output as firms are affected by the base period of the new CPI (February falling consumer demand, input shortages 2019). and lockdown restrictions. Businesses are reducing staff numbers, lowering wages and Kenya currency exchange rate: As of Thursday 7th May, Kenya’s currency was KES 3.75 weaker to the US Dollar compared to 1 The Stanbic Bank Kenya Purchasing Managers’ Index (PMI™) is based on data compiled from monthly replies 13th March, when the first COVID-19 case was to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have reported in the country. The rate dropped been carefully selected to accurately represent the true by one percent compared to last week, when structure of the Kenyan economy, including agriculture, mining, manufacturing, services, construction and retail. the Kenyan Shilling closed at 107.275 against The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. the Dollar, see figure 1.Kenya is a net Survey responses reflect the change, if any, in the current commodity importer, so a weaker shilling month compared to the previous month based on data collected mid-month. makes commodity imports expensive. COVID-19 Supply Chain 8 May 2020 | and Markets Update 1 Kenya’s exchange rate to the us dollar Staple Food Availability, and 108 Global and Regional Prices 106.18 106 1ST COVID-19 WFP is actively contributing to the food Case in Kenya security and price monitoring efforts of the 104 Kenyan Government through the War Room 102.42 102 under Ministry of Agriculture, Livestock Kenya Shilling and Fisheries leadership for the COVID-19 100.89 100 response with the aim of i) maintaining a flow of produce from production to markets, 98 ii) ensuring minimal disruption to markets and access of population to food and iii) 96 managing pricing spikes and volatility. WFP 24/04 18/02 19/02 20/02 21/02 22/02 24/02 25/02 26/02 27/02 28/02 02/03 03/03 04/03 05/03 06/03 09/03 10/03 11/03 12/03 13/03 14/03 16/03 17/03 19/03 20/03 23/03 24/03 25/03 26/03 27/03 30/03 01/04 02/04 02/04 03/04 06/04 07/04 08/04 09/04 14/04 15/04 16/04 17/04 20/04 21/04 22/04 23/04 26/04 27/04 28/04 29/04 30/04 05/04 07/04 is also supporting the Council of Governors to establish county food security situation Figure 1: Kenya’s exchange rate to the US Dollar. Source: Central Bank of Kenya rooms to mirror the national war room. Food Availability in Kenya: The weekly update from the Food Security War Room led by the Ministry of Agriculture states that the current food balance sheet data shows that the country has enough stocks to sustain the country until the end of June. This food availability outlook was validated on 1st May using one-month estimates for eight food commodities2 in 30 counties that submitted data (see figure 2). For these 30 counties3, which represent 60 percent of the 2 Cereals: maize, rice, wheat, millet, sorghum; legumes: beans, green grams; tubers: Irish potatoes. 3 Reporting counties: Bomet, Busia, Elgeyo Marakwet, Embu, Garissa, Homa Bay, Isiolo, Kericho, Kilifi, Kirinyaga, Kisii, Kisumu, Kitui, Kwale, Machakos, Makueni, Marsabit, Meru, Nakuru, Nandi, Narok, Nyamira, Nyandarua, Nyeri, © ©2010CIAT/NeilPalmer Siaya, Taita Taveta, Trans Nzoia, Uasin Gishu, Vihihga and Wajir. Figure 2: Food availability outlook as of 1st May 2020. Source: Ministry of Agriculture (Food Security War Room) COVID-19 Supply Chain 2 and Markets Update | 8 May 2020 country’s food demand, there is sufficient stock Farm Inputs: Supply, Price and for most key commodities except tomatoes and wheat (which Kenya imports). However, some Access to Finance counties4 are having deficits in the majority of key food commodities, but their demand is able The Farm to Market Alliance (FtMA), through the to be covered by other counties. The Ministry Cereal Growers Association, continues to monitor of Agriculture is following up to understand the farm input supplies and prices and access to finance reason for these deficits in counties that typically for farm inputs. Table 2 shows average fertilizer have enough food commodities. prices in counties monitored by FtMA. Global and regional imports and prices as The monitoring teams reported low purchasing reported by the Food Security War Room power due to lack of credit services. Rice: Sixty percent of Kenya’s rice imports come Where no farmer service centres are available, from Pakistan, 30 percent from Thailand and 10 the majority of farmers are purchasing inputs percent from India. Global supply is sufficient to from stockists in urban centres. The new public meet demand (600 million mt of supply vs 500 sector transport rules have increased travel million mt of demand). Global prices rose by 15 costs, which is having a knock-on effect on percent from February to March including in farmers. key source countries, e.g., Thailand, 12 percent There has been a noted increase in the cost of increase. Indian exports have stalled; however, accessing inputs, which is attributed to increased imports continue from other source countries. travel charges as vehicles adhere to the capacity Wheat: Forty percent of Kenya’s wheat imports restrictions imposed by COVID-19 regulations. come from Russia, 25 percent from Argentina and 10 percent from Tanzania. Global supply is 5 sufficient to meet demand (1 billion mt of supply vs General situation overview in the 12 counties 700 million mt of demand). Prices in major export monitored by the Farm to Market Alliance countries rose in March (e.g. by 4 percent in Russia (FtMA) and 12 percent in Argentina). Russia has halted Farmer service centres and individual farmers exports; however other countries such as the USA are stocking up on farm inputs (seeds, fertiliser and Argentina continue to export. and agro-chemicals) in response to the onset of Maize: At this time of the year, Kenya mostly the long rains season. relies on regional imports. The country imports Fertilizer shortages are reported in Busia, approximately 65 percent of its requirements Kakamega and Siaya counties. from Uganda, 20 percent from Zambia and 15 percent from Tanzania. Regional imports are FtMA is using digital extension as an alternative supplemented by inflows from Mexico and Ukraine. form of knowledge transfer to farmers on good Global supply is sufficient to meet demand (1.5 agronomic practices and use of farm inputs. billion mt of supply vs 1.1 billion of demand). The They have successfully rolled out two interactive regional surplus is expected to decrease by voice response (IVR) services: a fall army worm approximately 20 percent due to reduced advisory and a potato production guide, with production. Global maize prices dropped by 5 over 15,000 farmers reached. The IVR includes percent in March compared to February. However safety messages related to COVID-19. regional prices (e.g., in Uganda) increased WFP continues to raise awareness among and due to seasonal patterns and panic buying. sensitize food value chain actors on food safety Regional imports from Tanzania and Uganda and quality and on COVID-19 issues through continue. International imports (from Mexico and market-based applications, radio talk-back Ukraine) are unlikely to reach Kenya before the end shows and radio advertisements. of import window, which is 30th May 2020. 5 Busia, Elgeyo Marakwet, Homabay, Kakamega, Kisumu, Meru, 4 Bomet, Homabay, Kericho, Nandi, Narok, Vihiga and Wajir. Nakuru, Narok, Nyandarua, Migori, Siaya and Tharaka Nithi. Counties/Fertilizer Uasin Gishu Elyeyo Bomet (Bomet Narok (Narok Meru Nyeri Nyadarua Nakuru Brand (Ainobkoi) Marakwet central) north) DAP fertilizer 2,650 2,900 2,733 2,650 2,800 3,000 3,000 3,000 Baraka fertilizer 3,100 3,200 3,033 3,000 3,100 3,150 3,100 3,000 Yara milla Power 2,850 2,900 2,917 3,000 2,900 2,950 2,900 2,800 Table 2: Average fertilizer prices as of the week ending 30th April 2020 (KES/50Kg bag) Source: FtMA - Agro-dealers and farmer coordinators COVID-19 Supply Chain 8 May 2020 | and Markets Update 3 Farmgate, Wholesale and Retail Retail Price Trends in the Arid Regions and Price Trends the Refugee Camps Retail price trends in Kakuma camp and Maize Farmgate and Wholesale Price Trends Kalobeyei settlement (average) Farmgate prices have remained largely stable Compared to last week, there was a stable inflow in the five counties monitored in the last two of various key commodities in the markets so 6 weeks.
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