Discussion Paper No. 296 of 2022 on Determinants of Maize Prices in Kenya

Abstract

White maize is the main staple food in the diet of over 85 per cent of the population in Kenya. It is the cheapest source of calories among the cereal grains, making up about 65 per cent of the total food calories consumed by households in Kenya. Therefore, maize availability and affordability are very important for food security. Using annual data from 1990 to 2020, this paper undertakes an analysis of the key determinants of maize prices to inform policy actions in improving the maize market. The key findings show that the average retail maize prices increase even as the quantities produced increase, implying that the produce is not adequate to meet demand. The value of fertilizer and seeds is positive, implying that the cost of production has an effect on maize prices. Further, even when there are imports, this does not ease pressure on maize prices. As such, it is recommended that the government supports farmers to increase their yield by adopting appropriate technology and utilize the unused arable land by increasing farming areas; subsidizing farm inputs to reduce the cost of production; provide support on effective use of fertilizers in crop production; and encourage and promote modernization of maize production through public private partnerships.