Industry Analysis

Market access, which is strongly influenced by transport infrastructure, plays a key role in promoting food security through productivity gains, income changes, food prices levels, and changes in dietary diversity and quality. Market access plays a key role in determining food access and food price stability. As such, market access impacts on key developmental priorities, given that food scarcity and the high prices that follow continue to be a source of suffering and poverty in the country and world at large. The realization of the wide differences in development of rural roads, and in turn market access, coupled with differences in food poverty across the country leads to this paper’s assessment of the effects of rural transport costs on local maize prices, a key staple food in Kenya. The results highlight the presence of geographical dynamics of market integration, though it is highly concentrated in areas of high agricultural land potential and better road infrastructure. While there is co-movement of prices among some markets, the individual price trends of some markets indicate that indeed some markets are not integrated. Food poverty is also depicted to be more severe in areas with less clustering of food markets. Results from empirical estimations indicate that improved rural road infrastructure is associated with lower maize prices in retail markets. The study also finds presence of spatial dependence in maize prices between one county and neighbouring counties. Spatial dependence shows the propensity for nearby locations or counties to influence each other and possess similar attributes and can be strengthened through transport networks between markets. The findings highlight the instrumental role of strengthening the link between markets, which would promote local market integration and thereby smoothen commodity prices by improving rural road infrastructure to enhance food access and food price stability in Kenya.