KENYA – The Competition Authority of Kenya (CAK) has said that it has opened an investigation into an alleged cartel among animal feed manufacturing companies to limit competition for livestock feed.
According to the watchdog, the objective of the probe is to assess “the market interactions, market structures, market outcomes, and other factors that may be affecting competition in markets along the animal feed value chains.”
Adano Wario Roba, CAK acting Director General in a public notice published in the Kenya Gazette noted that the specific objectives are to assess—the prices, costs, and quantities produced, supplied and purchased at different levels from inputs supply to production and sale of different animal feed products.
In addition, he said the probe will look into the market shares, concentration, ownership relationships, joint ventures, and marketing agreements for the different products and services related to animal feed and its inputs (and) different terms and conditions of supply for feed producers of different sizes.
The probe comes at a time when Kenyan farmers are grappling with the high cost of animal feeds.
The prices of animal feeds have skyrocketed, hitting farmers hard and leading some farmers to abandon farming or pass on the higher input prices to their customers.
Price fixing and output restriction are illegal under the Kenyan Competition Act – the law that guides market conduct in the country – since they hinder competition in the market.
Competitive markets allow consumers to benefit through lower prices, increased choice, and quality of goods and services.
Some manufacturers have also closed shop amid low demand from farmers due to high prices while some wholesalers have opted to diversify their sourcing from neighboring countries to mitigate the high cost.
The CAK probe will also look into barriers to entry and growth of smaller feed producers, information availability and any information exchange practices by companies, associations, and other formal or informal groupings relating to animal feed and its inputs.
CAK will also investigate arrangements, including licensing and other supply terms, which may affect the sourcing and supply of animal feed including breeding stock and animal feed as well as trade flows of feed constituents, including maize, soybeans, and derived products.
“In conducting the study, the Competition Authority of Kenya shall hold such number of meetings and key informant interviews in such places at such times as it may consider necessary for the proper discharge of its functions; and may receive views from all stakeholders through oral and, or written submissions from any person with relevant information,” it said.
It added, that members of the public with relevant information are invited to submit oral or written submissions to the watchdog within 21 days from September 29.
Kenya to import duty-free yellow maize
Meanwhile, President William Ruto has announced that the government is planning to start importing duty-free yellow maize in a bid to alleviate the soaring cost of animal feeds
The president was speaking during the United Democratic Alliance (UDA) National Governing Council meeting at the Bomas of Kenya on Friday, September 29.
Ruto expressed the government’s commitment to reduce the high cost of living faced by citizens, adding that the move to import duty-free yellow maize for livestock feed is expected to have a cascading effect on various sectors of the economy.
He stated that the government had already allocated funds through the Treasury for the importation of yellow maize. However, specific details of the importation deal were not provided during his address.
This is not the first time the government has intervened in the skyrocketing costs of animal feeds.
In December 2021, the government, for instance, exempted import duty on yellow maize, soya bean, soya bean meal, cottonseed cake, sunflower seed cake, white sorghum, and fish meal until the end of October 2022.
According to Egerton University’s Tegemeo Institute of Agricultural Policy and Development, poor animal husbandry, mainly because of poor feeding practices, has led to low livestock productivity.
“In part, the high costs of commercial livestock feed, the unfriendly business environment for trade in livestock feed, and the weak regulatory environment have affected the availability, affordability, and utilization of quality commercial feeds to grow the livestock value chains,” said the thinktank in a recent study.
“This has resulted in increased competition from imports for livestock products and animal feed from neighboring countries.”