Private-Sector Responses to Public Investments and Policy Reforms: The Case of Fertilizer and Maize Market Development in Kenya
Joshua Ariga and T. S. Jayne
Overview of Interventions in Kenya’s Fertilizer and Maize Marketing Systems
I
n Kenya, as in most of Africa in the early 1990s, the key agricultural policy challenges revolved around the classic “food price dilemma”: how to keep food prices at tolerable levels for consumers while maintaining adequate incentives for producers to feed the nation and raise farm incomes. Kenyan policymakers had for many years attempted to strike a balance between these two competing objec- tives through controlling maize and maize meal prices. The National Cereals and Produce Board (NCPB), a state-run maize marketing agency, generally offered maize prices higher than those prevailing in parallel markets and sold to millers below prevailing market prices in urban areas. The marketing margin for the NCPB became insufficient to cover its costs, and it consequently incurred massive deficits during the 1980s (Jayne and Jones 1997). A similar storyline applied to
This study builds on and is made possible by over a decade of sustained data collection, capacity- building, and policy analysis conducted under the Tegemeo Agricultural Monitoring and Policy Analysis project, a joint collaboration between Egerton University and Michigan State University, funded by the U.S. Agency for International Development–Kenya. The authors also acknowledge the Bill & Melinda Gates Foundation for its support of research and capacity-building activities related to agricultural markets in Africa through an agreement between Egerton University and Michigan State University.