“an Empirical Analysis of Market and Price Structure of Maize Sector in Kenya”
Research Proposal
“An Empirical Analysis of Market and Price Structure of Maize Sector in Kenya”
GILBERT KIMUTAI ARAP BOR
REG. NO. D.PHIL/046/07
MOI UNIVERSITY
SCHOOL OF BUSINESS & ECONOMICS
DEPARTMENT OF MARKETING AND MANAGEMENT SCIENCE
January 2010
CHAPTER ONE
1 Background to the study
Maize is the staple food for the majority of Kenyans, as it is to many low-income populations across the countries of Eastern and Southern Africa. According to the USAID policy synthesis, it accounts for 50% of the low-income household expenditure in Kenya. Argwings-Kodhek and Jayne (1997)indicate that since the full liberalization of the market for maize in December 1993, average maize meal prices have declined by 31%, 51% of this decline being attributable to a decline in milling margins and the remaining 49% being due to lower grain prices in 1995 in response to a favorable harvest.
Over the past two decades, Kenya like most other developing countries has implemented two major economic reforms in her staple grain markets. In the mid 1980’s, the reform of food markets was an important component of the economy-wide Structural Adjustment Programs (SAPs) adopted by developing countries (Minot and Goletto, 2000). The SAPs entailed the privatization and liberalization of staple grain marketing and pricing in over 20 counties in Africa (World Bank, 1994).
In the 1990’s, the SAPs were deepened by Kenya’s tariff reduction commitments at the multilateral trade negotiations that culminated in the creation of the World Trade Organization (WTO). The key multilateral rules affecting grain trade relate to the Uruguay Round’s Agreement on Agriculture (URAA), whose main pillars are improved market access, reduced domestic support and the elimination of export subsidies. Among the WTO modalities, the market access commitments have had the most important impacts on grain marketing in
“An Empirical Analysis of Market and Price Structure of Maize Sector in Kenya”
GILBERT KIMUTAI ARAP BOR
REG. NO. D.PHIL/046/07
MOI UNIVERSITY
SCHOOL OF BUSINESS & ECONOMICS
DEPARTMENT OF MARKETING AND MANAGEMENT SCIENCE
January 2010
CHAPTER ONE
1 Background to the study
Maize is the staple food for the majority of Kenyans, as it is to many low-income populations across the countries of Eastern and Southern Africa. According to the USAID policy synthesis, it accounts for 50% of the low-income household expenditure in Kenya. Argwings-Kodhek and Jayne (1997)indicate that since the full liberalization of the market for maize in December 1993, average maize meal prices have declined by 31%, 51% of this decline being attributable to a decline in milling margins and the remaining 49% being due to lower grain prices in 1995 in response to a favorable harvest.
Over the past two decades, Kenya like most other developing countries has implemented two major economic reforms in her staple grain markets. In the mid 1980’s, the reform of food markets was an important component of the economy-wide Structural Adjustment Programs (SAPs) adopted by developing countries (Minot and Goletto, 2000). The SAPs entailed the privatization and liberalization of staple grain marketing and pricing in over 20 counties in Africa (World Bank, 1994).
In the 1990’s, the SAPs were deepened by Kenya’s tariff reduction commitments at the multilateral trade negotiations that culminated in the creation of the World Trade Organization (WTO). The key multilateral rules affecting grain trade relate to the Uruguay Round’s Agreement on Agriculture (URAA), whose main pillars are improved market access, reduced domestic support and the elimination of export subsidies. Among the WTO modalities, the market access commitments have had the most important impacts on grain marketing in
References: Dixit. D. and Grossman. G. (2005). The Limits of Free Trade”. Journal of Economic Perspectives 19(3): 241-45 Gordon, Henry and Neil Spooner: (1992) Jayne. T.S., and Kodhek-Argwings, G. (1997). “Consumer Response to Maize Marketing Liberalization in Urban Kenya.” Food Policy 22(5): 447-58. Mckitrick, R., (1998). The Econometric Critique Of General Equilibrium Modeling: The Role of Functional Forms. Economic Modeling 15 (January) 543-573 Mghenyi, W.E.(2006): Welfare Effects of Maize Pricing Policy on Rural Households in Kenya Minto, N., and Goletto, F., (2000). Rice Market Liberalization and Poverty in Viet Nam. Research Report 114, IFPRI, Washington, DC. Owuor, B (2009): Maize, the Troubled Subsector: Is Our Path Worthwhile? http://www.hbfha.com/downloads/Maize- The_Troubled_Subsector_by_Booker_Owuor_Oct.pdf World Bank (1994). Adjustments in Africa: Reform, Results and the Road Ahead. Oxford University Press, New York • Maize prices exhibit substantial intra-year seasonality