Kenya, the economic and financial hub of East Africa, will put incentive measures into practice to increase wheat production together with neighboring Tanzania. Measures include subsidizing wheat production through a fund and opening a bank to give farmers access to loans at low-interest rates.
Two neighboring states in the East Africa, Kenya, and Tanzania, will implement an incentive program for increasing wheat production. The program was approved by the principal secretaries for trade in Kenya and Tanzania, Dr. Chris Kiptoo, and Prof. Adolf Mkenda. The program includes the subsidizing wheat production through a special fund and opening a bank to give farmers access to loans at low-interest rates. Funding for the subsidy will come from a 2% levy on all exports, and the bank will be funded with a 10% levy paid on imported wheat. One of the goals of the new initiative is to encourage millers to source wheat locally before importing supplies from beyond the region.
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 to a USDA grain report released earlier this year, Kenya had produced between 380 thousand tons and 450 thousand tons of wheat per year over the past three years. Total consumption had increased from 1,95 million tons to 2,06 million tons. The area under production, however, remained static at approximately 17000 hectares. In Tanzania, the area under production and yields had remained relatively stable over the past three years at about 10000 hectares and 100000 t/year. However, total consumption in that country increased from 990 thousand tons 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.