Pundit Explain this Inflation Story.

[Omollo]

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I missed it. My ipad malfunctioned due to change from one wifi node to another. Is The Ethnic Rag Media saying inflation is at a 57 month high? Or did I miss something?

How is that benefitting Kenyans? How does it fit in your narrative of Jubilee having delivered? If I recall they said they will bring inflation down to under three %. Why is it four times that?

Inflation record: April's 11.48% inflation a 57-month high, was 10.28% in March #NTVBusiness @LabanCliff pic.twitter.com/3seWcs64FE

— NTV Kenya (@ntvkenya) April 28, 2017

[RV Pundit]

We are in a midst of drought; this true for kenya as it true for tanzania, uganda and the region.

[Omollo]

Thanks to the internet these days it is hard to tell people Tanzania lost gravity and was sucked into mars and get away with it.

Tanzania:


Uganda

Kenya

[RV Pundit]

You should have read the "internet" for "explanation".

Consumer prices in Kenya surged 11.48 percent year-on-year in April of 2017, compared to a 10.28 percent rise in the previous month. The inflation rate remained the highest since May of 2012 mainly driven by rise in food prices as the country struggles with a drought. Inflation Rate in Kenya averaged 10.24 percent from 2005 until 2017, reaching an all time high of 31.50 percent in May of 2008 and a record low of 3.18 percent in October of 2010.

[Omollo]

Do you still believe Uhuru has slaughtered the Kibaki-Era inflation?

Eggs are selling @10bob. Petrol @83.Electricity down by 25%. Some fares have reduced.

Now companies are starting to reduce manufactured goods prices.

http://www.businessdailyafrica.com/Corporate-News/Bidco-cuts-cooking-oil-prices-on-low-energy-costs/-/539550/2641766/-/n3fakjz/-/index.html

If low global oil prices hold and investment in power sector comes fruition, the SGR come on board, and the 10,000 tarmac roads under annuity programme...we could be back to Moi era low inflation (except in 93-96).Consumer federation and activism need to demand price reduction in every good and service now.

Kibaki grew the economy but hyperinflation eroded any effect on mwananchi.

Let me cite the same paper you cited:

[Omollo]

I have not verified this:

[RV Pundit]

Once rain resume we will be fine

[Omollo]

Once rain resume we will be fine

We are left at the mercy of the elements! I thought we had a dynamic duo with solutions to everything! If running government is just waiting for the rain to drop why, any monkey can do it! We no duo, do we?

That is where NASA parts ways with you. Jubilee wasted 7 billion in Galana with nothing to show for. NASA will prioritize food security. There will be no fake fertilizer to farmers. All farmers will be equal before the state and questions about their indebtedness will be discussed and handled comprehensively.

[Omollo]

Uhuru and his banks trying to blackmail Kenyans to allow them to rob the poor.

As Kenyans celebrate Labour Day tomorrow, uncertainty over job security looms as more companies plan to reduce staff in the next six months, citing an unfavourable business environment.

Decline in credit extended to goods makers also points to lean times for the Kenyan worker. Lenders are citing the law putting a ceiling on interest rates as the reason they are opting for government paper (debt securities that are issued or guaranteed by State).
Financial, manufacturing, agriculture and transport sectors are expected to be hard hit due to disruptive technologies arising from advances in Information Technology (IT), completion of the Standard Gauge Railway (SGR) and harsh weather conditions.
With the new railway expected to drive a number of trucks off the roads, there are fears that a number of people will find themselves jobless.

Experts in financial and manufacturing sectors have also been criticising Parliament for passing the interest rate capping law.
However, Central Bank of Kenya (CBK) is currently conducting a study on the law and its impact on the economy with the outcome expected next month. shrank for the first time in five years by 4.6 per cent.The value of the approved projects reduced from Sh341 million in 2015 to Sh292.3 million last year.

The Industrial and Commercial Development Corporation (ICDC) approved loans and equity worth Sh495.6 million for four manufacturing projects.

The Kenya Investment Authority approved 43 manufacturing projects worth Sh11.1 billion last year, a reduction from 48 projects worth Sh8.8 billion approved in the previous year.

In the transport sector, KNBS data shows that registration of lorries/trucks declined by 30.1 per cent from 13,785new registration of buses and coaches decreased by 24.6 per cent from 2,342 units to 1,765 units during the review periodFew matatus
The number of newly registered trailers fell by 27.6 per cent to 2,829 units while those of other vehicles reduced by 35.8 per cent from 2,522 units to 1,618 units during the review period.

In addition, newly registered mini buses/matatus dropped by 10.7 per cent from 581 units in 2015 to 519 units last year.
From the above, indications are that less and less jobs are going to be created going forward.

[hk]

 Compared to other african countries kenya seems to weathering the storm that's the drought better than most countries.  https://www.wsj.com/articles/economics-and-bad-weather-amplify-africas-food-crisis-1493636401

[Omollo]

Compared to other african countries kenya seems to weathering the storm that's the drought better than most countries.  https://www.wsj.com/articles/economics-and-bad-weather-amplify-africas-food-crisis-1493636401

This equivalence defence is now too worn out.

The question is should Kenya be in that class comparing herself to the countries you allude to? What is the shortfall in maize production? Assuming the Galana project had actually been completed and money not stolen calculate how many bags we would get from 1.2 million acres if one acre were to produce the 40 - 50 bags planned? 48 - 60 M bags. This year alone the government expected 32 million bags! You can just see how small this problem is.

Kenya has no grain problem. The problems arise from the inability of the state to stop its supporters from engaging in the Grain Shortage Business.

[hk]

Compared to other african countries kenya seems to weathering the storm that's the drought better than most countries.  https://www.wsj.com/articles/economics-and-bad-weather-amplify-africas-food-crisis-1493636401

This equivalence defence is now too worn out.

The question is should Kenya be in that class comparing herself to the countries you allude to? What is the shortfall in maize production? Assuming the Galana project had actually been completed and money not stolen calculate how many bags we would get from 1.2 million acres if one acre were to produce the 40 - 50 bags planned? 48 - 60 M bags. This year alone the government expected 32 million bags! You can just see how small this problem is.

Kenya has no grain problem. The problems arise from the inability of the state to stop its supporters from engaging in the Grain Shortage Business.

How much of the funds in Galana project have been used for infrastructure i.e dams, roads etc and how much has gone to food production? I agree kenya has no grain problem but the problem is lack of open market where maize locally is more expensive than world market due to price controls by National cereals board. Bottomline whether is milk or cereals we need increased productivity to lower prices of those commodities. A dairy farmer today who had invested in fodder is making a killing, price of raw milk is ksh.45.

[RV Pundit]

HK as always you hit the nail on the head. Ultimately we are in a fix because majority of our people 70% depend on low productivity farming - and if we let free market reign - which would see us enjoying rock bottom prices for maize or rice or wheat like say somalis - our farmers would then suffers.

Me think we just need to bite the bullet. Zero rate food importation and exportation. Let the chips fall wherever.

[Omollo]

HK

It was my assumption that you knew a little bit about Project management. The Galana- Kulalu is a project whose super objective is increased food production leading to self sufficiency in grain (to paraphrase generally).

All tenets of the project - be it infrastructure, dams, (roads are part of infrastructure) etc must geared towards meeting the objective of the project. Thus a road being constructed as part of the project is not an aside, if you will. It is part and parcel of the project as designed and budgeted for. At completion, the project was supposed to produce 40 - 50 plus bags per acre at the minimum to be clear - using the infrastructure, including roads and dams! In other words and so we are clear, all the billions allocated for the project were meant for food production.

That has NOT happened. Yet Uhuru Kenyatta calls it a success and lists it among the achievements of Jubilee in his portal of LIES.
 
I have no idea where you got the idea that maize is price controlled. Price controls are only found on petroleum - nothing else. You can sell maize at any price you wish.

About the open market, there is such a huge market for the maize that the price is gone through the roof.

The NCPB buys maize from farmers. It competes with many millers and retail traders freely. The price dynamics work quite well. If the NCPB pays peanuts, farmers sell to millers, private retailers or simply store izt and wait for price improvements. That is not a proper role for NCPB. It has unlimited storage capacity around the country which it has leased to private maize buyers and even hardware owners. The reason for building that capacity was so it could buy maize when the price was low and get rid of old stocks the same way the central bank releases cash in the market to stabilize the currency.

Instead the NCPB receives directives from the President and Ruto to raise prices so that they can benefit from high prices. It runs out money and grain having sold it at the wrong time. The corruption in it is such that it sometimes pays for maize NOT delivered.

Productivity cannot be increased unless the government takes action to tame cartels and end corruption. Those who benefit from importing maize like Ruto's son, have no interest in increased local production and can therefore import fake fertilizer to dampen production so they can create shortfalls that allow them to sell their cheap imports.

There are anti-trust laws in Kenya which should have prevented one company from developing a monopoly over milk. I need not name it, do I?

There is no provision for long term storage of milk beyond the usual 15 days (forget the lie about 3 months). As an interested party Uhuru cannot regulate milk companies.

How much of the funds in Galana project have been used for infrastructure i.e dams, roads etc and how much has gone to food production? I agree kenya has no grain problem but the problem is lack of open market where maize locally is more expensive than world market due to price controls by National cereals board.

Bottomline whether is milk or cereals we need increased productivity to lower prices of those commodities. A dairy farmer today who had invested in fodder is making a killing, price of raw milk is ksh.45.

[hk]

HK

It was my assumption that you knew a little bit about Project management. The Galana- Kulalu is a project whose super objective is increased food production leading to self sufficiency in grain (to paraphrase generally).

All tenets of the project - be it infrastructure, dams, (roads are part of infrastructure) etc must geared towards meeting the objective of the project. Thus a road being constructed as part of the project is not an aside, if you will. It is part and parcel of the project as designed and budgeted for. At completion, the project was supposed to produce 40 - 50 plus bags per acre at the minimum to be clear - using the infrastructure, including roads and dams! In other words and so we are clear, all the billions allocated for the project were meant for food production.

That has NOT happened. Yet Uhuru Kenyatta calls it a success and lists it among the achievements of Jubilee in his portal of LIES.
 
I have no idea where you got the idea that maize is price controlled. Price controls are only found on petroleum - nothing else. You can sell maize at any price you wish.

About the open market, there is such a huge market for the maize that the price is gone through the roof.

The NCPB buys maize from farmers. It competes with many millers and retail traders freely. The price dynamics work quite well. If the NCPB pays peanuts, farmers sell to millers, private retailers or simply store izt and wait for price improvements. That is not a proper role for NCPB. It has unlimited storage capacity around the country which it has leased to private maize buyers and even hardware owners. The reason for building that capacity was so it could buy maize when the price was low and get rid of old stocks the same way the central bank releases cash in the market to stabilize the currency.

Instead the NCPB receives directives from the President and Ruto to raise prices so that they can benefit from high prices. It runs out money and grain having sold it at the wrong time. The corruption in it is such that it sometimes pays for maize NOT delivered.

Productivity cannot be increased unless the government takes action to tame cartels and end corruption. Those who benefit from importing maize like Ruto's son, have no interest in increased local production and can therefore import fake fertilizer to dampen production so they can create shortfalls that allow them to sell their cheap imports.

There are anti-trust laws in Kenya which should have prevented one company from developing a monopoly over milk. I need not name it, do I?

There is no provision for long term storage of milk beyond the usual 15 days (forget the lie about 3 months). As an interested party Uhuru cannot regulate milk companies.

How much of the funds in Galana project have been used for infrastructure i.e dams, roads etc and how much has gone to food production? I agree kenya has no grain problem but the problem is lack of open market where maize locally is more expensive than world market due to price controls by National cereals board.

Bottomline whether is milk or cereals we need increased productivity to lower prices of those commodities. A dairy farmer today who had invested in fodder is making a killing, price of raw milk is ksh.45.

NCPB sets the price of maize i.e create an artificial floor of the price of maize. The price of maize is always high compared to other comesa producers like zambia . By setting an artificially high price it enables inefficient producers to keep operating. I think a farmer Trans nzoia now produces 8bags an acre and going down. This farmers have no incentive to increase productivity cause the NCPB will buy at artificially high price and they make money. This is where arbitrage play of importing cheap maize from world market and selling it at high price in kenya comes in. That also applies to sugar.
Milk industry is fully liberalized and kenya isn't producing enough milk. Already we import powder milk (check local supermarkets). In the dry season milk production goes down by about 40% to 50%. This is because our farmers don't invest in fodder or embrace modern dairy farming techniques.
Galana, most of the work has been done is the infrastructure. Later government will lease out the land to private sector to produce maize etc. 

[patel]

HK

It was my assumption that you knew a little bit about Project management. The Galana- Kulalu is a project whose super objective is increased food production leading to self sufficiency in grain (to paraphrase generally).

All tenets of the project - be it infrastructure, dams, (roads are part of infrastructure) etc must geared towards meeting the objective of the project. Thus a road being constructed as part of the project is not an aside, if you will. It is part and parcel of the project as designed and budgeted for. At completion, the project was supposed to produce 40 - 50 plus bags per acre at the minimum to be clear - using the infrastructure, including roads and dams! In other words and so we are clear, all the billions allocated for the project were meant for food production.

That has NOT happened. Yet Uhuru Kenyatta calls it a success and lists it among the achievements of Jubilee in his portal of LIES.
 
I have no idea where you got the idea that maize is price controlled. Price controls are only found on petroleum - nothing else. You can sell maize at any price you wish.

About the open market, there is such a huge market for the maize that the price is gone through the roof.

The NCPB buys maize from farmers. It competes with many millers and retail traders freely. The price dynamics work quite well. If the NCPB pays peanuts, farmers sell to millers, private retailers or simply store izt and wait for price improvements. That is not a proper role for NCPB. It has unlimited storage capacity around the country which it has leased to private maize buyers and even hardware owners. The reason for building that capacity was so it could buy maize when the price was low and get rid of old stocks the same way the central bank releases cash in the market to stabilize the currency.

Instead the NCPB receives directives from the President and Ruto to raise prices so that they can benefit from high prices. It runs out money and grain having sold it at the wrong time. The corruption in it is such that it sometimes pays for maize NOT delivered.

Productivity cannot be increased unless the government takes action to tame cartels and end corruption. Those who benefit from importing maize like Ruto's son, have no interest in increased local production and can therefore import fake fertilizer to dampen production so they can create shortfalls that allow them to sell their cheap imports.

There are anti-trust laws in Kenya which should have prevented one company from developing a monopoly over milk. I need not name it, do I?

There is no provision for long term storage of milk beyond the usual 15 days (forget the lie about 3 months). As an interested party Uhuru cannot regulate milk companies.

How much of the funds in Galana project have been used for infrastructure i.e dams, roads etc and how much has gone to food production? I agree kenya has no grain problem but the problem is lack of open market where maize locally is more expensive than world market due to price controls by National cereals board.

Bottomline whether is milk or cereals we need increased productivity to lower prices of those commodities. A dairy farmer today who had invested in fodder is making a killing, price of raw milk is ksh.45.

NCPB sets the price of maize i.e create an artificial floor of the price of maize. The price of maize is always high compared to other comesa producers like zambia . By setting an artificially high price it enables inefficient producers to keep operating. I think a farmer Trans nzoia now produces 8bags an acre and going down. This farmers have no incentive to increase productivity cause the NCPB will buy at artificially high price and they make money. This is where arbitrage play of importing cheap maize from world market and selling it at high price in kenya comes in. That also applies to sugar.
Milk industry is fully liberalized and kenya isn't producing enough milk. Already we import powder milk (check local supermarkets). In the dry season milk production goes down by about 40% to 50%. This is because our farmers don't invest in fodder or embrace modern dairy farming techniques.
Galana, most of the work has been done is the infrastructure. Later government will lease out the land to private sector to produce maize etc. 

1. Doesn't  NCPB consider demand and supply or which factors do they consider to determine the price?
2. What is the cost of production in Zambia and what is the cost of living in Zambia?
3. What do you mean Farmers have no incentive to increase productivity? wouldn't the farmer make more profit if they produce more bags????

[Omollo]

HK

Like I said, the NCPB is not living up to its mandate nor latent abilities. I partially agree that the NCPB sets too high prices at times when they are low. This invariably comes from the Executive (see story below). To be fair Ruto is following a well-beaten path which started after independence with Ngei etc.

The NCPB should simply buy maize at the market price and buy when the price is lowest. It should stop buying once it reaches its targets - or crudely when all it stores are full. The reason Kenya sought aid to build these stores was to set up and maintain a Strategic Grain Reserve. The required capacity is supposed to be reviewed every year in line with population projections and consumer idiosyncrasies. I believe all that has been abandoned as political leaders of the ministries gang up with civil servants to make a quick back on the Grain Shortage Market.

Now Pundit can blame NASA and defend Jubilee but there is no escaping of culpability for the executive on this. Uhuru should have sent signals that grain is a matter of national security not subject to money making schemes of any kind. Moi sent Njonjo packing when he found his hand in the shortage of the 80s that led to yellow maize. It did nit recur until his own sons started making cash from maize.
 
That said, the prices set by the NCPB remain "high" for just a short while. After a few weeks no farmer would be caught selling his maize for those peanuts to the NCPB. Private millers take over and compete with speculators. My Kalenjin wife has been involved in that although I found for me it was more of an outing to see the farms and drink good tea on farms and eat a lot of Amandasi I paid the farmers what I thought was a fair price which my wife thought was eating in to the "profits"!!!

This frenzy goes on for a very brief period before all the people vanish to another location - say Narok, Londiani etc. Thus it makes no sense to fix the price based on one location which when the maize is harvested in another area, becomes laughable!

My point is that NCPB should be allowed to return to its core functions and be protected from vested interests. I see no reason why we would import any maize ever!

On the Galana project, I think you are struggling to defend Jubilee. Galana is a monumental failure that has made Eugene Wamalwa a billionaire. There is a lot of goalpost shifting and I would be surprised if leasing to well connected individuals is now the mantra which as we know will lead to "squatters" and resettlement and so on.

NCPB sets the price of maize i.e create an artificial floor of the price of maize. The price of maize is always high compared to other comesa producers like zambia . By setting an artificially high price it enables inefficient producers to keep operating.

I think a farmer Trans nzoia now produces 8bags an acre and going down. This farmers have no incentive to increase productivity cause the NCPB will buy at artificially high price and they make money. This is where arbitrage play of importing cheap maize from world market and selling it at high price in kenya comes in. That also applies to sugar.

Milk industry is fully liberalized and kenya isn't producing enough milk. Already we import powder milk (check local supermarkets). In the dry season milk production goes down by about 40% to 50%. This is because our farmers don't invest in fodder or embrace modern dairy farming techniques.

Galana, most of the work has been done is the infrastructure. Later government will lease out the land to private sector to produce maize etc. 

[hk]

HK

Like I said, the NCPB is not living up to its mandate nor latent abilities. I partially agree that the NCPB sets too high prices at times when they are low. This invariably comes from the Executive (see story below). To be fair Ruto is following a well-beaten path which started after independence with Ngei etc.

The NCPB should simply buy maize at the market price and buy when the price is lowest. It should stop buying once it reaches its targets - or crudely when all it stores are full. The reason Kenya sought aid to build these stores was to set up and maintain a Strategic Grain Reserve. The required capacity is supposed to be reviewed every year in line with population projections and consumer idiosyncrasies. I believe all that has been abandoned as political leaders of the ministries gang up with civil servants to make a quick back on the Grain Shortage Market.

Now Pundit can blame NASA and defend Jubilee but there is no escaping of culpability for the executive on this. Uhuru should have sent signals that grain is a matter of national security not subject to money making schemes of any kind. Moi sent Njonjo packing when he found his hand in the shortage of the 80s that led to yellow maize. It did nit recur until his own sons started making cash from maize.
 
That said, the prices set by the NCPB remain "high" for just a short while. After a few weeks no farmer would be caught selling his maize for those peanuts to the NCPB. Private millers take over and compete with speculators. My Kalenjin wife has been involved in that although I found for me it was more of an outing to see the farms and drink good tea on farms and eat a lot of Amandasi I paid the farmers what I thought was a fair price which my wife thought was eating in to the "profits"!!!

This frenzy goes on for a very brief period before all the people vanish to another location - say Narok, Londiani etc. Thus it makes no sense to fix the price based on one location which when the maize is harvested in another area, becomes laughable!

My point is that NCPB should be allowed to return to its core functions and be protected from vested interests. I see no reason why we would import any maize ever!

On the Galana project, I think you are struggling to defend Jubilee. Galana is a monumental failure that has made Eugene Wamalwa a billionaire. There is a lot of goalpost shifting and I would be surprised if leasing to well connected individuals is now the mantra which as we know will lead to "squatters" and resettlement and so on.

There's something we can agree on NCPB, it should be just be a strategic reserve  it shouldn't be interfering with the market. Our production per acre has to go up, so that not only to produce enough maize for human consumption but for livestock. If its not economically viable kenya should open the market and farmers can shift to other crops.  Galana, surely you're not suggesting that the government be involved in actual farming? There's a very good irrigation scheme in mwea that's working. NIB put up the scheme, the farmers pay NIB for water used. The rice production, milling, marketing and packaging is fully liberalized.

[Georgesoros]

Once rain resume we will be fine

Using rains as a scapegoat is criminal at its best.
After 55yrs why cant govt prepare for drought?

[Georgesoros]

Comparison is good if only done correctly. It could have been best if the writer showed diversification of agri products

Compared to other african countries kenya seems to weathering the storm that's the drought better than most countries.  https://www.wsj.com/articles/economics-and-bad-weather-amplify-africas-food-crisis-1493636401

Once rain resume we will be fine

Using rains as a scapegoat is criminal at its best.
After 55yrs why cant govt prepare for drought?