KENYAN FOOD IMPORTS TO RISE.

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Kenyas demand for food products is rising faster than production and that is making the country increasingly dependent on food imports. Rapid population growth in rural areas is leading farmers to divide land into smaller parcels and is undermining the cost competitiveness of locally produced foods.

One factor that has swayed Kenyan consumers toward imported goods is lower price. Because of its lower price, corn from Malawi and Uganda is displacing local production. Although the government is attempting to crack down on undocumented food trade, Kenyas lengthy and porous borders invite smuggling. That, in turn, is undermining the local farm economy.

Kenyas agricultural sector is extremely undercapitalized and that is undermining demand for supplies and equipment. Sales of agricultural hand tools should show modest growth of 3 to 5 percent during 2004 but orders for farm equipment will be stagnant. Most of Kenyas rural residents have irregular access at best to formal channels of consumption. Real household income in rural areas has deteriorated in recent years and...

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