CONSUMER RESPONSE TO MAIZE MARKET LIBERALIZATION IN URBAN KENYA

The elimination of consumer food subsidies associated with structural adjustment in Africa has been widely thought to exacerbate food insecu rity for low-income consumers, This article determines how urban maize consumption and expenditure patterns have responded to the liberaliza tion of the maize and maize meal markets in Kenya, The article decompo ses changes in maize meal prices attributable to changes in maize grai n prices and maize milling margins, Results are obtained through two r andom household surveys in Nairobi, the first having been conducted be fore and the second after liberalization, The main finding of the stud y is that maize market liberalization has conferred substantial benefi ts to urban consumers, The combined saving to Nairobi consumers from l ower maize milling costs has been roughly US$10.1 million each year, a bout the same amount that the Government of Kenya allocates annually t o agricultural research, Results also indicate that the former consume r subsidies conferred through the official marketing channel were unta rgeted and actually inversely related to household income, The subsidi es on sifted meal also served to entrench a non-competitive market str ucture that inhibited the development of a lower-cost informal milling system, These findings are consistent with research results from othe r eastern and southern African countries showing that the negative eff ects of eliminating food subsidies in the state marketing system have been largely compensated by relaxing controls on private grain trade, which has increased consumers' access to less expensive grain products distributed through informal markets, (C) 1998 Elsevier Science Ltd. All rights reserved.