Food Price Surge In Kenya Causing Grief, Here’s What It Tells Us About What’s Wrong With African Cities

Sukuma wiki (collard greens) and tomatoes, which have experienced dramatic price surges in the past few months in Kenya. (Photo/Annie Bungeroth/ CAFOD)

FOOD prices in Kenya have soared in recent months to push inflation to a five-year high; the prices of two main staples – maize and potatoes -have reached record highs. The same goes for milk, of which Kenyans consume more per capita than the rest of East Africa – as well as other fresh vegetables such as spinach, cabbage and tomatoes.

It has left many families struggling to make ends meet, and although drought has been blamed for last year’s poor harvest, the effects of which are being felt now, some see a darker hand in the dramatic price surges- the upcoming general election in August. The view is that the government is “looking for money” to fund its campaign.

But looking on the longer term trends, the current spike is just the latest in a longer, slower food price inflation that has been unfolding over the past few years,that may have less to do with the immediate causes like drought and an upcoming election, but more to do with a broader structural problems of African cities.

We have looked at price data of some basic commodities from the Kenya National Bureau of Statistics (KNBS) over the past ten years, and calculated the percentage change in price between 2005 and 2015, as well as the compounded annual change in price, year on year.

We have discovered that contrary to what you might expect, fuel, in the form of petrol and kerosene, has had some of the lowest price increases of the selected items in this consumer basket.

Going by 2015 data, petrol is only 33% more expensive than it was a decade ago, and for kerosene it is even lower, at 10.2%.

Kenya has an Energy Regulatory Commission (ERC), whose rates have kept the trends in fuel prices well below those of other commodities, restraining inflation in that segment as a matter of policy.

There is a monthly announcement by the ERC on mandated fuel prices, and if you’re paying attention to this, you might think that fuel prices are inevitably rising. But on long-term trends, and especially relative to the prices of other commodities, they are not.

THE LONGER VIEW

What has experienced sharp and sustained rise in prices is agricultural fresh produce, and perhaps your market woman’s kind smile may have distracted you from it.

According to 2015 KNBS data, tomatoes are nearly three times as expensive as they were a decade earlier, a 170% difference. In the past decade, every year tomatoes have been 10.4% more expensive than they were the previous year.

The same goes for carrots whose prices have nearly tripled as much; we’re looking at a difference of almost 169%.

Onions, dry beans and meat (beef with bones in this dataset) are all nearly three times as expensive as they were a decade ago, with price increases of between 160-165%.

All the while, the average wage earnings per employee have had a much more modest increase over the same period of time.

The KNBS data shows that the average monthly earnings of workers have risen from Ksh24,524 ($245 at current rates) ten years ago, to Ksh50,187 ($500) per month, a 104.6% increase, or just about double.

DISPARITY

This, of course, masks great disparity in earnings between workers, not to mention the fact that poor people spend a greater percentage of their income on food. It means that low-income earners will be especially hard hit by high food prices.

The wage inflation hasn’t kept up with the prices of agricultural produce, but is about at par with the increase in the price of bread, eggs, milk, maize flour and sugar, whose price inflation has been below that of income, implying that on these relative measures alone, an average worker can continue to afford them.

Why have the prices of fresh produce risen so rapidly in the past ten years?

Partly, it has to do with the fact that commodities such as petrol, diesel and kerosene in Kenya are subject to the regulation of the ERC, and so are somewhat insulated from the pressures of hard market forces.

The prices of maize flour are also externally influenced by the National Cereals and Produce Board (NCPB), which sets a price floor for maize purchases; the same goes for milk, which is impacted by the dynamics of the Kenya Cooperative Creameries (KCC) and other local and private dairy cooperatives.

Fresh produce has no such ‘cushion’; there isn’t a comparable National Tomatoes Board that dictates minimum prices.

But there’s something else at play here. Kenya is urbanising quickly — it is estimated that 27% of the country’s population is urban, which is expected to cross the 50% mark by 2050 according to data from the World Bank.

Contrary to what you might expect,city dwellers eat morefruits, vegetables, meat and fish that those living in the rural areas, and less cereals and pulses, says data from the African Development Bank, which was focusing on West Africa but will likely also apply to many other African regions.

IRONIC

It is a factor of the dynamics of rural poverty. Though the rural poor may have the land and the harvest, they need money much more than they need the produce. It results in an ironic situation where farmers actually eat less fresh produce, proportionally, than those in the cities.

The price inflation of agricultural commodities could therefore be a factor of increased demand as people move into the cities, and have more disposable income to spend fruits, vegetables and meat.

And there’s another little appreciated trend that has shaped urban growth in Africa, and is acting as a brake on cities’ reaping the benefits of growth, and driving the prices of basic commodities, especially fresh produce, upwards.

It isurban sprawl. In several African cities the rate of physical expansion (going by land area) has been faster than that of population growth.

In other words, city growth has been fragmented and sparse. In Kigali, for example, the city’s built up area expanded by 18% a year, one of the highest in the world for the time period the data covers. Uganda’s capital Kampala too, saw physical expansion of 10.6% per year, while population growth, though still quite rapid, was lower at 4.3% a year.

This means that many African cities are actually becoming less, not more dense,sustained and intensifiedby an unlikely factor: the presence of the motorcycle taxi, .

LANDLORD

Typically residential areas used to be built in areas with some level of accessibility– near a road, a railway, or a walkable distance from a bus stop. But now, you don’t even need a road to build a housing complex. All you need is a path that a motorcyclecan pass over and you are in the landlord business.

This kind of urban sprawl, if not well managed, decreases the benefits of connectivity within urban areas.

Cities are typically engines of a country’s economic growth, because labour productivity is higher in towns than in the rural areas. But a sprawling city means that distances between neighbourhoods are long and transport costs are high.

A resident of Nairobi, on average, can reach no more than 8% of all jobs available in the city within 45 minutes, shows data from AfDB. By contrast, in greater London in 2013, this figure was 21.6%.

Around Nairobi and many other towns, you will notice that fresh produce is often transported either by handcart or by motorcycle. Though on the surface they seem cheap, they are hugely inefficient from a technological perspective, particularly if you are transporting perishable goods like fruit and vegetables.

It means that food prices are a reflection of the cost of getting it around much more than the cost of producing it.

The result is a ‘motorcycle taxi vicious cycle’. Cities continue spreading out because the presence of the motorcycle taxi, among other factors, makes it convenient to do so, but in the process they are unable to build the critical mass to make mass transport economically viable.

In other words, one could argue that tomatoes and carrots are the early warning signals that tell us something is fundamentally wrong with the way we are structuring our cities.

Source: africapedia

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