CBK survey reveals decline in food prices, improved access to subsidised fertilizer

Conducted from March 11 to 15, 2024, the survey aimed to gather indicative information on recent trends and market expectations regarding prices and output of key agricultural commodities.

According to the survey findings, the decrease in prices of key food items in March compared to February 2024 is seen as a positive trend for consumers and may contribute to improved food affordability in the coming months.

“The decrease in prices of cereals and cereal products was mainly supported by the bumper harvest following favourable October-December 2023 rain season, with rainfall continuing into January 2024,” reads the report in part.

Most respondents expressed optimism regarding food prices, expecting them to continue declining in April 2024 and over the next three months. 

“This view has been influenced by the continued good performance of agriculture following favourable weather; reduction in pump prices even though still elevated relative to the same period last year; and the continued strengthening of the Kenya shilling,” the report further notes.

Additionally, the majority of respondents anticipate that inflation will either remain unchanged or decrease in the next one to three months, indicating a positive outlook for the overall economy.

However, the survey also highlighted ongoing challenges faced by the agricultural sector. Factors such as weather conditions, transport costs, and input expenses continue to impact both output and prices of key food items. 

Despite this, the proportion of farmers citing these challenges has moderated compared to previous surveys, suggesting some improvement in the overall situation.

A key notable finding from the survey is that approximately 70 percent of sampled farmers reported benefiting from subsidized fertilizer, a crucial input in crop production. 

“The proportion of respondents who reported to have accessed government subsidized fertilizer increased substantially to 67 percent in March 2024, from 53 percent in January 2024 survey.”

“As in the previous surveys, the reasons given for not being able to get the subsidised fertiliser were similar in the March 2024 survey. These included lack of information on availability of the subsidized fertilizer, challenges around the logistics of access, and demand outstripping supply,” the report highlights.

The survey also revealed that optimism about the expected performance of the economy remains high, attributed to factors such as the recent appreciation of the Kenya shilling against the US dollar, good performance of the agriculture sector, and downward adjustment in fuel prices.

However, farmers expressed concerns about the sustainability of the recent appreciation of the Kenya shilling, adequacy of the March-May 2024 long rains, and high interest rates, which undermine financing agricultural activities.

In light of these findings, the Central Bank of Kenya has reiterated key recommendations to support the agricultural sector. These include addressing high fuel prices, continuing to subsidize inputs, enhancing agricultural extension services, improving water infrastructure, and deepening access to affordable credit facilities.