For as long as I can remember, there has always been stories about unscrupulous traders engaged in magendo(contraband), mainly sugar. Cheap sugar from abroad is imported tax free and floods the market. As a result, Kenyan sugar farmers have become destitute.
Last year, cheap imported maize flooded the country and Kenyan maize farmers had nowhere to sell their produce at a reasonable price.
Why is maize and sugar imported from far away countries cheaper than that grown in Kenya? Granted, the ministry of agriculture has tried to ameliorate this problem by offering select farmers subsidised fertiliser, at around sh1500 per 50kg bag.
But that hardly makes a significant dent in the farmers’ costs.
“…Government should should go further in ensuring the overall [maize]production cost is lowered.…We still hope that the government will increase the price to enable us break even. We spend between Sh2,800 and Sh3,000 to produce one bag of maize," [maize farmer]Mr Korgaren said.
https://www.nation.co.ke/news/North-Rif ... index.html
In Kitui, ndengu farmers have been complaining of being forced to sell the produce at Sh30 per kilo, instead of the promised sh100 per kilo. https://www.standardmedia.co.ke/article ... ppointment
Subsidize heavily the price of fertiliser, seeds and farm chemicals for all farmers. The ministry of agriculture should aim to lower the cost of a 50kg bag of fertilizer to sh50. With extremely low input costs, farmers will be able to sell their produce - maize, sugar, ndengu, wheat etc at significantly lower prices.
This will mean the price of a 2kg packet of unga could even be reduced to sh40.
Imported sugar, maize etc would be more pricey than local produce, thus ending magendo for good. This will save the government billions of shillings per year that is currently lost due to magendo.
Farmers will be happy. Consumers, especially people living in towns will be happy, because of the lower price of unga and other locally produced food, meaning lower cost of living.
Currently, many Kenyans do not believe it when economists say the economy is growing, because they do not feel any improvement vis-à-vis their cost of living. Radical subsidisation of agricultural inputs would change all that.
If one had access to Kenyan data about variables like:
- estimated amount and cost of sugar & maize imported illegally in the past 5 years, and
- amount and cost of sugar & maize imported legally in the past 5 years, and
- current input costs per acre of maize/sugar, and
- current average number of kilos produced per acre of maize/sugar;
Then, get expected values for all the above stats, with the heavy agricultural subsidisation in place. It would be possible for an economist or mathematical modeller to come up with answers about whether Kenya eventually saves money or loses money if it subsidises farmers heavily.
The result would most likely be that Kenya would save a lot of foreign currency if it greatly subsidised farmers. In addition, the benefit in terms of socioeconomic development will be almost infinite.
But most importantly, this would reduce the rich-poor gap, thus resulting in other benefits like reduced crime, and better quality of life across the board.
Business advice and ideas.
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