Expectations that there will be a general decline in prices of most food items in June 2024 remain high according to a survey on the agricultural sector undertaken by the Central Bank of Kenya(CBK).
This May 2024 Agricultural Sector Survey says there are expectations for a modest decline in prices of fresh vegetables, and substantial declines in prices of loose maize grain, loose maize flour, sifted maize flour, and fortified maize flour in June 2024.
The CBK report indicates that the market supply of foodstuff will continue to improve supported by favorable weather conditions experienced over the past few months.
However, the Survey findings show that the price of rice will rise in June 2024, reflecting the adverse impact of excess rainfall and or flooding on domestic production.
The price of bread is also expected to remain sticky as the tax proposals contained in the 2024/25 Financial Bill, which has proposed a 16% VAT on the product, take effect.
In June 2024, households will benefit from lower prices for some vegetables, milk, and sugar.
Whereas the CBK survey shows an expected decline in sugar prices, the magnitude of the decline would be much lower in June as sugar prices had already declined from historically high levels and were likely to stabilize.
Prices of onions were expected to remain elevated, despite the favorable weather conditions. However, some farmers believe that the prevailing high prices of onions will incentivize farmers to produce more onions, leading to a price decline.
The CBK Survey shows that the number of farmers interviewed who reported having accessed the subsidized fertilizer increased significantly in May 2024 compared to the March 2024 survey.
Over 70 percent of the sampled farmers reported to have benefitted from the subsidized fertilizer.
Similar to the findings in the March 2024 survey, banks, Savings and Credit Cooperative Societies (SACCOs), friends/family, and digital loans continued to be the main sources of credit for farmers.
The funds were used mainly to finance farm implements, inputs (seeds, fertilizer, pesticides), and labour.
Optimism about economic performance in the next three months and one year ahead was relatively higher in May 2024 compared to outcomes in March 2024.
The optimism was mainly driven by the above-average rainfall in the March-May 2024 long rain season despite some episodes of flooding in some parts of the country, easing international oil prices and stability of the Kenya Shilling now exchanging at KSh 128 against the US Dollar and increased supply of maize to the market following favourable rainfall in 2023.
 In May, retail prices of tomatoes, cabbages, traditional vegetables, spinach, kales/sukuma wiki, and peas edged up following excess rainfall in key source regions, notably Narok, Nyandarua, and Laikipia.
CBK expects a general decline in food prices as well as in overall inflation in the next three months. This view was supported by expectations of increased food supply following above-average rainfall in the March-May 2024 long rain season in most parts of the country; relatively lower pump prices following downward adjustment by the Energy and Petroleum Regulatory Authority (EPRA) and the expectation that the Kenya Shilling exchange rate stability will continue.
However, there are growing concerns about the proposed tax measures in the Finance Bill 2024/25.
Most farmers interviewed by CBK say they plan to increase the acreage and output of select crops in the next harvest. Vegetables such as kales/sukuma wiki, spinach, traditional vegetables, cabbages, and tomatoes, are expected to record increased acreage and output on account of continued favourable weather conditions.
