Tanzania has imposed a new requirement on grain traders to obtain an export license before shipping corn out of the country, in a policy move that has locked grain supplies already bought from Kenyan millers at the border.
Kenyan millers say the new requirement could shut down their operations at a time when grain shortages and other production costs are pushing the price of flour to Ksh200 (US$1.70) for a two-kilo packet.
Millers say the requirement wasn’t there before, after the two countries settled their trade dispute last year.
This has resulted in hundreds of trucks getting stuck at the Namanga border post, disrupting Kenya‘s grain supply as Tanzania is the only source of corn from which processors source grain after local supplies have dried up.
“Our rails have been prevented from continuing into Kenya and we are currently incurring more costs in delay charges even though our milling facilities have stopped due to lack of stock,” said John Gathogo, the animal feed manufacturers’ advertising secretary.
Grain Belt Millers Association chairman Kipnge’tich Mutai said over 400 trucks were stuck at the border following a standoff between traders and authorities.
“Although there is some corn in Tanzania, the strict conditions for obtaining an export permit make it difficult for our members to import the grain into the country,” Mr Mutai said.
Kenya relies mainly on corn supplies from Tanzania to meet rising demand for flour after supply in the local market has dwindled. Most stocks from Uganda go to South Sudan because of the high prices.
Corn from Tanzania and Uganda supplements available stocks as the country does not produce enough to meet annual needs.
The price of flour in supermarkets last week peaked at Ksh 186 (US$1.58) against Ksh 150 (US$1.28), one of the steepest weekly increases in the market.
This was caused by high corn prices with a 90-kilogram bag now selling for Ksh 5,500 (US$46.55) from Ksh 5,000 (US$42.59) last week, a move that will hurt consumers.
The government last month waved off levying a 50 percent tariff on corn imported outside the East African region and allowed millers and traders to ship 540,000 tonnes in a bid to control currently high flour prices.
$1 = Ksh 117.40