An Analysis of the Determinants of Maize Import Volumes in Kenya

Abstract

The objective of our study is to investigate the key factors that determine maize import volumes in Kenya. To achieve this objective, we used time series secondary data from FAOSTAT, World Bank and World Trade Organization (WTO) for the period 1963 to 2016. We consider this period to be long enough to allow us to accurately capture the domestic maize price patterns before and after the onset of maize market reforms in Kenya. Our econometric analysis of the time series data using an error correction version of Autoregressive distributed lag model shows that maize import volume is determined by trade openness, domestic price of maize and gross domestic product in the long run. In the short run, the results show that maize import volume is determined by exchange rate, lag of exchange rate, lag of maize import volume and production. The findings suggest that to reduce overreliance on maize imports, effective management of macroeconomic environment should be stimulated to create a favourable environment for improving domestic maize production so as to discourage a surge in maize imports and at the same time improve the country's food security.

Tradeoffs Between Maize Importation and Reliance on Local Production: A Case of Commercial Maize Millers in Kenya

“…Maize cultivation is practiced on both large-scale and small-scale systems. Small-scale systems account for 70% of the total production whereas large-scale systems account for only 30% of the total production [2].…”

“…Maize is Kenya's most important food crop and has huge importance in the country's food security and economic well being. It accounts for 36% caloric food intake and 14% of the household income in Kenya [2,42]. Maize is also an important raw material for industrial use.…”

“…Countries in the EAC and COMESA region that used to have surplus maize are now rationing their maize exports in order to feed their population. This has forced some of the large-scale firms to source their maize from outside the region, which has proved to be costlier and economically non-viable for most of the firms [6,2].…”

“…Several studies have been conducted on the effect of maize importation on producer and consumer welfare [2]. More studies have been conducted on the sustainability of maize production in Kenya [44].…”