Kenya Authorizes Duty-Free Importation of Grade 1 White Milled Rice: Implications for Tanzania

Nairobi, Kenya – May 31, 2024 –

To address the country’s rice shortage, the Kenyan government has announced the duty-free importation of 500,000 metric tons of Grade 1 white-milled rice. This decision, published in a special issue of The Kenya Gazette, is authorized under the East African Community Customs Management Act, 2004, and aims to ensure a steady rice supply amid logistical challenges that have affected the market.

The directive, issued by the Cabinet Secretary for the National Treasury and Economic Planning, Njuguna Ndung’u, states that the rice must be imported on or before November 30, 2024. Additionally, the government has cleared 34,614.5 metric tons of delayed rice imports, verified at the port of Mombasa, to enter the market duty-free.

To comply with the importation guidelines, the rice must meet international and Kenyan food standards and be accompanied by a Certificate of Conformity issued by the Kenyan Bureau of Standards.

Despite efforts to boost local production, Kenya still relies heavily on rice imports to meet demand. The USDA recently revised its forecast for Kenya’s rice imports, increasing it by 42% to 850,000 metric tons for the 2023/2024 season. This increase is partly driven by a duty-free policy to cushion consumers against high food prices. However, Kenya has also initiated a five-year plan to increase the acreage under rice cultivation by at least 100,000 acres, aiming for self-sufficiency in rice production.​

Regional Impact and Implications for Tanzania

Kenya’s recent policy shift to allow duty-free rice importation has several implications for neighboring Tanzania, a key player in the East African agricultural sector.

Increased Market Competition

The influx of duty-free rice into Kenya is expected to intensify competition within the regional rice market. Tanzanian rice exporters might face stiffer competition, potentially impacting their market share and pricing strategies in Kenya. This scenario could challenge Tanzanian producers to innovate and improve their competitiveness to maintain their presence in the Kenyan market.

Trade Opportunities

Conversely, this development could present new opportunities for Tanzanian rice producers and exporters. By ensuring that their rice meets international and Kenyan standards, Tanzanian businesses can use the duty-free window to increase exports to Kenya. This move could enhance trade relations between the two countries and offer Tanzanian producers a valuable market for their rice.

Agricultural Policy Considerations

Tanzania may need to reassess its agricultural policies to support local producers and maintain competitiveness in the regional market. Implementing measures to enhance the quality and standards of Tanzanian rice could help mitigate any negative impacts from Kenya’s policy and boost the country’s agricultural exports. This could include investing in modern farming techniques, improving infrastructure, and providing better access to high-quality seeds and fertilizers.

Regional Trade Dynamics

Kenya’s decision underscores the importance of the East African Community’s trade policies and the need for member states to align with regional standards. For Tanzania, staying competitive means ensuring that its agricultural products meet these standards, facilitating smoother trade within the community. This alignment can help maintain a balanced and cooperative regional trade environment.

Recent Developments in Tanzania’s Rice Sector

Tanzania’s rice sector has been experiencing significant changes and challenges recently. As the country’s second most important food and commercial crop, rice is crucial to Tanzania’s economy, providing employment, income, and food security for millions of households. Here are the key recent developments in the sector:

New Projects and Initiatives

Drought-Tolerant Rice Project: In January 2024, the Tanzania Agricultural Research Institute (TARI) and the International Rice Research Institute (IRRI) launched a five-year project to promote drought-tolerant rice varieties. This project targets the southern highlands, which are crucial for the country’s rice production, contributing over 40% of the total output. The initiative focuses on modern farming technologies and aims to enhance knowledge among extension officers and farmers through demonstration farms​​.

National Rice Development Strategy (NRDS) Phase II: Tanzania continues implementing the NRDS Phase II (2019-2030), which aims to transform the rice sub-sector into a commercially viable production system. This strategy is expected to improve productivity, ensure the country’s rice self-sufficiency, and enhance its competitiveness in regional markets​​.

SAGCOT’s rice value chain initiatives are pivotal in increasing rice production in key regions such as Morogoro and Kilombero. These efforts aim to support smallholder farmers by providing access to improved seeds, advanced irrigation schemes, and modern farming techniques.

Challenges and Opportunities

Agricultural Performance: The agricultural sector, including rice production, experienced a downturn in the third quarter of 2023, with GDP from agriculture decreasing from the previous quarter. Despite this short-term setback, long-term projections indicate a positive trend, with expectations of growth in the sector’s GDP in the coming years​​.

Obstacles in the Sector: According to a report by Rice Today, several obstacles hinder the development of Tanzania’s agricultural sector, including limited access to extension services, slow implementation of irrigation systems, and low use of fertilizers and improved seeds. Addressing these issues is critical for enhancing productivity and ensuring the sustainability of the rice sector​​.

Policy and Investment

Government and International Support: The Tanzanian government, along with international partners like FAO, IRRI, and the Bill and Melinda Gates Foundation, is actively working to support the rice sector. Efforts include capacity building, research and development, and promoting modern rice varieties suited to local conditions. These initiatives aim to boost production, improve market access, and enhance the overall competitiveness of Tanzanian rice​​​​.

Economic Growth through Agriculture: Long-term projections for the agricultural sector show a steady increase in GDP, highlighting the importance of continuous investment in infrastructure, research, and market development. Policies supporting smallholder farmers, improving access to finance, and promoting sustainable practices are essential for the sector’s growth and resilience​​.

Recent developments in Tanzania’s rice sector underscore the country’s challenges and opportunities. With ongoing projects and supportive policies, there is potential for significant growth and improvement in productivity. The collaboration between the government and international organizations will be crucial in achieving these goals and ensuring the rice sector’s contribution to Tanzania’s economic development and food security. By adapting to changing market dynamics and maintaining high standards, Tanzania can play a vital role in the East African agricultural landscape, fostering stronger regional trade ties and supporting its local producers.