Tradeoffs Between Maize Importation and Reliance on Local Production: A Case of Commercial Maize Millers in Kenya

Abstract

The supply of maize in Kenya has often fallen short of the demand resulting to an influx of cheap maize imports from neighboring countries. Tradeoffs thus arise among commercial maize milling firms whether to import or use locally produced maize in their operations and which alternative maximizes their income. This study aimed to determine the effect of tradeoffs between maize importation and reliance on local production on the income of commercial maize milling firms in Kenya. Data was collected from 106 commercial maize milling firms that produced packaged maize flour. A census of the entire population was employed and a semi-structured questionnaire used to guide personal interviews and online surveys with the respondents. Data was analyzed using descriptive analysis, gross margins and two-stage least square regression. Results indicate that firms that used locally produced maize only were majorly micro to medium-scale, had relatively low-skilled employees, lower production capacity and employed relatively less sophisticated technology. Firms that used locally produced maize only in their operations realized higher incomes and lower cost of procuring maize monthly compared to firms that used both locally produced and imported maize. Additionally, the determinants of firm’s income were the miller’s decision on maize source, total number of employees, total cost of maize, mean monthly sales and mean production costs. Therefore, government policies should be geared towards lowering the cost of procuring maize from both local and import sources. These include reviewing import duties on food grain, streamlining cess collection across counties and improving road infrastructure.