I am in this FB group Farmers in Kenya and they are complaining about imports from Ug and Tz. Onions, fruits, eggs and vegetables naskia ndio zimejaa all major markets in Nairobi, Mombasa and Kisumu. Kenyan farmers are complaining that these imports are ruining their businesses and everyone is saying costs of produce in Tz/Ug are cheaper.
My question is how cheap is it kwani, for example onions, yaani hadi ukiongeza licenses, bribes za traffic police and fuel, it still arrives in Kenya at 45/kg while Kenyan onions are 80-90 per kg.
Nani amekwambia kila mtu ulipa all that?zinhine zinaingia na empty containers za msa ama other panya routes,hii ni kenya my fren,ata afadhali farm produce although we dont know why they are cheap,nilisikuwa magufoli akicomplain sukari ya kenya imeuwa viwanda zake,we import cheap expired products,hii kunukisha kitunguu sio sawa ,greed itatumliza wallahi
Cost of farming input in those countries are very low. I gave you an example how it was cheaper to buy fertilizers from Uganda than kenya for sugarcane. Yet that fertilizer is cleared in Mombasa, passes through kenyan roads to Uganda, then comes back to kenya, yet it’s 600 shillings cheaper than kenya. Iko shida mahali
We import toothpicks, tissue paper and even the art carvings and masai beads. Strangely all these imports are way cheaper than what’s produced locally. Buffing indeed
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These charts raise a question, if the two currencies have consistently lost ground to the KES in that time period, does it follow that the balance of payments is in Kenyas favour? Economists hebu tueleze
my sliblings and I were brought up and schooled on farm produce. if it were today where farmers have been tano tenad I would be a handcart pusher and others would be just about more or less.
It’s also the cost of distribution from farm to your plate. Farmer’s Saccos to be used to break the extensive distribution chain which is costly to the farmers.
Adam Smith’s theory of absolute advantage in free markets (international trade). If the cost of production in TZ and Uganda is lower than that in Kenya, then they both have an absolute advantage over Kenyan farmers. The trade will persist until that advantage is removed because consumers will always prefer the cheaper product. With regard to your question about the currency strength, just because the Kenyan shilling has gained relative to the TZ or Ug shilling does not mean that the balance of payments is in Kenya’s favor. The strength of the Kenyan shilling might be emanating from trade with other nations, not necessarily UG or TZ. So in the end, Kenya may be gaining more but not from trade with TZ or UG, but maybe the EU, China or US. You can study about Adam Smith’s theory of absolute advantage and throw in David Ricardo’s theory or comparative advantage online. They try to explain international trade.
If our currency is strong vis UG and TZ, the natural corollary is that it is with those that trade will intensify, not with any other random nation with exchange rates not in our favour.
You seem to understand the difference between the value of currencies and balance of trade. Most people equate value of currencies to performance of economies, which would suggest that we are equal or actually superior to japan in terms of economy, or rather suggest that we have an even balance of trade with japan. and your statement about currencies is also true. eg kenya might drop or rise against USD simply because of the relationship between USD and JPY or EUR which in turn have a strong relationship with KES. its a very complex and unpredictable structure.
You are assuming that trade happens only among the three nations, which is not the case. Kenya’s net balance of payment (with all nations) is undoubtedly better than that of UG or TZ which is reflected in the currency valuation. However, it doesnt mean that the trade with UG or TZ specifically is in our favor.
The cost of an avocado in the US can hit $3 but here in Kenya its $0.2.
What am I saying?
That a farmer in Uganda can survive with say Sh10k a month, while a farmer in Kenya cannot. The Kenyan must sell more expensively to pay other monthly bills.
In short, this is the price to pay for being a ‘middle income’ country surrounded by paupers.