The measures include the subsidising wheat production through a special fund, based on production levels, and opening a commercial bank to give farmers access to loans at low interest rates.
Funding for the subsidy will come from a 2% levy on all exports, while the bank will be funded with a 10% levy paid on imported wheat. A scheme will also be introduced, either through national cereal boards or commodities exchange to:
- Guarantee markets and prices for locally produced wheat;
- Initiate research to determine appropriate wheat varieties to be grown;
- Determine quality preferences of millers;
- Develop production practices that will help boost production efficiencies and profitability, thereby attracting more investments for wheat production.
According a USDA grain report released earlier this year, Kenya had produced between 380 000t and 450 000t of wheat per year over the past three years. Total consumption had, however, increased from 1,95 million tons to 2,06 million tons per year due to changing dietary preferences. The area under production, however, remained static at approximately 170 00 ha.
In Tanzania, the area under production and yields had remained relatively stable over the past three years at about 100 00 ha and 100 000t/year. However, total consumption in that country increased from 990 000t to 1,95 million tons over the same period.
According to the USDA report, less than 1% of farmers grow wheat in Tanzania and 32% of this wheat is exported, while 91% of the wheat consumed is imported.
One of the objectives of the new initiative is to encourage millers to source wheat locally before importing supplies from beyond the region, to which milling companies in the two countries agreed at the meeting.
Progress on the implementation of these measures will be reviewed at a meeting in Mombasa, Kenya scheduled for November.
