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FM AMEMBASSY NAIROBI
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UNCLAS SECTION 01 OF 04 NAIROBI 000521 
 
SIPDIS 
 
STATE ALSO FOR AF/E AND AF/EPS 
STATE PLEASE PASS USTR BILL JACKSON AND USAID/EA 
TREASURY FOR VIRGINIA BRANDON 
COMMERCE FOR BECKY ERKUL AND USITC RALPH WATKINS 
STATE PLEASE PASS DEPARTMENT OF LABOR FOR BOB SHEPARD, SUDHA HALEY, 
AND MICHAEL MURPHY 
AGRICULTURE FOR USDA/FAS/OFSO FRANK LEE, USDA/FAS/OCBD PATRICIA 
SHEIKH, USDA/FAS/OCRA CHUCK ALEXANDER, AND USDA/FAA RON VERDONK 
LONDON, PARIS, ROME FOR AFRICA WATCHERS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ECON EAGR ETRD ELAB PGOV KE
SUBJECT:  BEEF, BREAD, AND BUTTER GETTING SCARCER AND PRICIER IN 
KENYA AS A RESULT OF POST-ELECTION VIOLENCE 
 
REFS: (A) NAIROBI 0405 (B) NAIROBI 0358 
      (C) NAIROBI 0353 (D) NAIROBI 0352 (NOTAL) 
      (E) NAIROBI 0336 (F) NAIROBI 0192 
 
NAIROBI 00000521  001.2 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY.  FOR 
INTERNAL USG DISTRIBUTION ONLY. 
 
¶1.  (U) Summary.  Agricultural analysts predict that Kenya may 
suffer food shortages by late 2008 if post-election violence does 
not stop.  Government stockpiles of corn will suffice for the next 
seven months, but observers note that many farmers in the upper Rift 
Valley have been unable to work their fields ahead of the late 
rains, which usually begin in mid-March.  Other farmers are unable 
to purchase higher priced fertilizers, herbicides, insecticides, and 
diesel fuel.  Consumers are confronted with higher prices for 
virtually everything off the farm.  End Summary. 
 
¶2.  (SBU) Adding to the woes cited in ref D, Kenyan agriculture is 
now faced with a bushel of problems making beef, bread, butter - 
virtually everything off the farm - less available and more 
expensive.  Illegal roadblocks set up by militant gangs continue to 
disrupt transportation, thus hindering movement of people, 
agricultural inputs, and farm products.  The roadblocks also add to 
the expense of bringing product to market as transport companies 
have had to hire extra security.  The new director of the Kenya Meat 
Commission (KMC), Vincent Nguarare, confided January 28 that the 
agency's abattoir outside Nairobi is slaughtering only 200 animals a 
day (in comparison to a normal number of 500 per day) because 
pastoralists either cannot get cattle to the KMC or find the 
transportation costs prohibitive.  According to the Livestock 
Marketing Society of Kenya (LTMSK), ranchers, pastoralists, and 
traders are suffering a daily loss of about KSh20 million 
($285,700). 
 
---------------------------------- 
"Foreign" Farmers Flee Their Farms 
---------------------------------- 
 
¶3.  (U) More ominously, inter-ethnic violence triggered by the 
disputed December 27 presidential election drove many Kikuyu farmers 
and their families off their land in the upper Rift Valley, which is 
Kenya's breadbasket and the epicenter of the crisis.  Marauders 
wantonly burned Kikuyu homes, farm equipment, and corn and wheat 
crops.  Kikuyus, many of whom had lived in the region since 
independence, were derided as "foreigners" and told to return to 
their ancestral lands in Central Province - or else.  Indigenous 
Kalenjin farmers and dairymen also suffered and are now confronted 
with markedly increased prices for diesel, fertilizer, herbicides, 
and insecticides.  The cost of land preparation by tractors has 
skyrocketed from $53/hectare to $103/hectare.  General insecurity is 
making farmers leery of working their fields or letting their 
harvested corn dry out.  Upwards to one million bags (90,000 tons) 
of corn are believed to be left on fields, inaccessible to farmers, 
buyers, and millers.  Another 300,000 tons of corn ready for 
harvesting went unpicked. 
 
------------------ 
Corn Crop Collapse 
------------------ 
 
¶4.  (U) Agricultural analysts and the Kenya National Federation of 
Agricultural Producers (KENFAP), an umbrella organization for 1.4 
million farmers, are concerned that Kenya may suffer a food shortage 
 
NAIROBI 00000521  002.2 OF 004 
 
 
in 2009.  Supply, particularly from Western Province, where an 
estimated 40% of farmers have been displaced, has been interrupted, 
resulting in shortages and spiraling prices for milk, maize flour, 
and vegetables.  Because so many farmers have fled, observers 
predict a significant shortfall in this year's corn harvest.  In 
their estimation, government stockpiles of maize held by the 
National Cereals and Produce Board (NCPB) and expected 2007-2008 
production of three million tons are sufficient to meet domestic 
demand for much of 2008 - at least for the next seven months.  But 
they worry that the insecurity will prevent farmers from planting 
before the long rains which usually begin in mid-March (ref D), a 
scenario which would imperil food security for many Kenyans in 2009. 
 Because of the instability, 100,000 hectares might not be 
cultivated before the rains begin. 
 
¶5.  (U) According to the most recent "Kenya Food Security Update," 
Kenyan maize production will likely decline by 15% in 2008-2009 
because of the unrest and below average rainfall in some areas of 
Kenya.  The Regional Agricultural Trade and Intelligence Network 
(RATIN) predicts Kenya will become a net importer of maize in 2009. 
The most recent survey by the Food and Agricultural Organization 
(FAO) shows that prices of cereals such as maize have been 
increasing mainly due to inadequate rains and displacement of 
farmers in key growing areas of Kenya following the recent violence. 
 The survey reported that the price of a ton of maize maintained a 
relatively stable price between $199 and $202 within the period of 
May to September 2007 but began to rise gradually between 
October-December to an average of $211.  There was a further rise to 
$219 a ton in January. 
 
----------------------------- 
Bleak Food Security Situation 
----------------------------- 
 
¶6.  (SBU) Analysts with USAID's "Famine Early Warning System 
Information Network" (FEWS NET) and the "Arid Lands Resource 
Management Project" (ALRMP) during a February 12 Kenya Food Security 
Meeting reported a "bleak food security situation throughout the 
country," especially in the Maasai rangelands.  Only the eastern 
pastoralists' area is in good shape.  Conversely, there is evidence 
of high malnutrition in the northwest pastoralists' area.  In what 
was their most worrisome appraisal, the analysts estimate that less 
than 10% of the land in Kenya's grain basket, the Rift Valley, has 
been prepared for planting.  By now, 60% of the land would have 
normally been tilled.  With respect to conditions in northern and 
northeastern Kenya, they blame severe water shortages for rapid loss 
of pasture.  In the coastal and southeastern lowlands, they 
calculate that 60% of the maize crop has been lost with food 
insecurity exacerbated by rising food and commodities prices.  In 
the Lake Victoria city of Kisumu, where the worst looting and 
destruction took place and where roads remain barricaded, prices for 
eggs, potatoes, onions, and other staple foods have doubled or even 
tripled since the election. 
 
------------------ 
Dairy in the Dumps 
------------------ 
 
¶7.  (SBU) Dairy farmers, too, have suffered.  Last winter, Kenya's 
dairy industry appeared on the verge of becoming a significant 
foreign exchange earner, with prospects of lucrative sales of 
powdered milk and other dairy products to South Africa, Egypt, the 
Arab Gulf states, and Malaysia in the offing.  In 2007 Kenya 
 
NAIROBI 00000521  003.2 OF 004 
 
 
exported 13.9 million liters of milk, mostly to neighboring Uganda 
and Tanzania.  Now, officials from Land O'Lakes, Brookside Dairy, 
Spin Knit Dairy, New Kenya Cooperative Creameries (KCC), and other 
milk producers bemoan the loss of Rift Valley dairy farms and 
creameries, destroyed by looters. 
 
¶8.  (SBU) As a result of their mayhem and thievery, milk production 
is down over 20%, according to the Kenya Dairy Board (KDB).  A 
January 21-24 assessment conducted by the World Food Program (WFP), 
Food and Agriculture Organization (FAO), and Ministry of Agriculture 
suggested as many as 52,500 farm families in the Rift Valley have 
been displaced.  Two major milk processors have closed.  Unable to 
get their raw milk processed, farmers have had to dump milk.  The 
industry lost an estimated KSh1 billion ($14.3 million) in January 
2008, when production fell from 36.4 million liters in December 2007 
to 28.4 million liters.  KCC Chairman Matu Wamae reports his company 
faces a deficit of over 200,000 liters per day and is unable to meet 
both local and international demand.  Kipkorir Menjo, one of the KCC 
directors, acknowledged February 13 that low milk deliveries 
"threaten the future of external markets for our products."  (Note: 
according to the KDB, Kenya has 34 active milk processing plants 
with an installed processing capacity of 2.9 million liters per day. 
 Annual production in 2007 was 3.74 billion liters, up from 3.59 
billion liters in 2006 and 2.8 billion liters in 2004.  Because of 
the violence, the daily milk intake in the formal sector has shrunk 
from 1.2 million liters in December 2007 to 850,000 liters in 
January 2008, a drop of over 29%, amounting to a loss of over KSh1 
billion ($14.3 million) in revenue for processors.  There are an 
estimated one million smallholder dairy farmers in Kenya.  The dairy 
cattle industry accounts for about 4% of GDP, with an estimated 
cattle population of 3.5 million head.  End Note.) 
 
¶9.  (SBU) Wamae said that the KCC has appealed to the government to 
beef up security because "transporters still fear that their 
vehicles might be attacked and burned."  Beyond the hardships raised 
by the illegal roadblocks which prevent milk producers from 
delivering to creameries, KDB Chairman Reuben Cheshire commented to 
the press in early February that the violence had even interfered 
with breeding programs and access to animal feeds, which could 
result in a long-term decline of milk production.  He said 
protracted violence would jeopardize the livelihoods of close to one 
million dairy farmers.  Even if a political resolution is soon 
achieved, an official with Land O'Lakes foresees a long-term 
reduction in milk production because of the number of dairy cattle 
stolen or slaughtered and because of disruptions in the provision of 
artificial insemination services.  Wamae openly lamented the 
likelihood that most farmers will default on their loans since they 
are unable to deliver their milk.  If calm is not soon restored, he 
predicted dairy farmers may elect to start slaughtering their cattle 
to raise money. 
 
------------------------------------- 
All Agricultural Sub-sectors Affected 
------------------------------------- 
 
¶10.  (SBU) In mid-February, KENFAP declared that Kenya's food 
security is set to worsen.  Fifty-seven members from various 
agricultural sub-sectors from the country's eight provinces warned 
in an advertisement that food prices are soaring because of the 
political impasse.  Expressing their concerns according to regions, 
the agricultural reps said Nairobi is experiencing spiraling milk, 
maize flour and vegetable prices, which have increased 50% to 100%. 
Those from Western Province complained about the displacement of 
 
NAIROBI 00000521  004.2 OF 004 
 
 
about 40% of farmers from their farms and the burning of food in 
stores.  Nyanza Province's major problem, they said, remains blocked 
roads and destroyed bridges, leaving it cut off from the rest of the 
country.  In Rift Valley Province, farmers are faced with high costs 
in production inputs.  Coast Province is dealing with hotel closures 
and the lack of horticultural produce due to supply interruptions. 
Eastern and Northeastern Provinces are confronted with decreasing 
food stocks; there are fears that the two provinces might not 
receive enough rainfall, threatening the fragile food security which 
characterizes both.  Livestock marketing has been hampered by 
insecurity and high transportation costs. 
 
¶11.  (U) Comment.  As the country's staple food, maize is a telling 
barometer for food security and affordability.  Before the crisis, a 
two-kilogram bag of milled maize flour cost KSh50.  In Nairobi, it 
now goes for KSh80 - nearly $1.15; in Kisumu and other western 
cities it costs KSh120 or $1.70.  A 500-gram packet of milk has 
jumped from KSh15 to KSh40 in western Kenya.  When one contemplates 
that nearly 50% of the Kenyan people live on less than $1/day 
(KSh70), it is abundantly clear that putting bread and butter on the 
table will be increasingly difficult for most Kenyans.  End 
Comment. 
 
Ranneberger