Wheat farmers in Kenya and Tanzania have emerged beneficiaries of the prolonged trade war between the two nations.
The two countries have agreed setting up a special fund, whose proceeds shall be drawn from a levy capped at two per cent of the cost, insurance and freight charged on all exporters throughout the EAC.
The fund shall subsidise wheat farmers’ efforts and will be based on production levels. Also, part of the revenues accruing from the 10 per cent levy that millers pay on the wheat they import from outside the EAC will be reserved as capital for opening the bank.
The two countries have agreed to fund part of the production costs for wheat farmers and create a commercial bank to enable wheat farmers to access loans at a 5-6 per cent per annum interest rate.
Authorities from the two countries also agreed to create a scheme, either through national cereals boards or commodities exchanges, to guarantee market and prices for locally produced wheat.
Other measures agreed upon include a study to determine the production capacities of wheat grains in each country, actual cost of production in each country, quality preferences for millers, mechanisation of agriculture and application of economies of scale.
The countries also agreed to carry our research on appropriate wheat varieties that would increase yields and to provide incentives to encourage new investments in wheat production, improvement of quality and productivity.
The recommendations were approved by Principal Secretaries for Trade Dr Chris Kiptoo (Kenya) and Tanzania’s Prof Adolf Mkenda.
Kenya produces 300,000 tonnes of wheat per annum and consumes 1.8 million, tonnes leaving a deficit of 1.5 million tonnes, while Tanzania produces an estimated 75,000 tonnes per annum.
During the meeting the millers agreed to voluntarily mop up wheat grain produced in Tanzania and Kenya before importing from outside the region.
This is one of the recommendations made to bolster wheat farming, improve the competitiveness of the locally produced grain and curb massive imports of the commodity from outside the East African Community.
The authorities will review the progress on the implementation in a meeting for November in Mombasa.