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Why experts see blackmail in millers maize ‘shortage’ story

As food prices continue rising steeply, the government and other agencies are now questioning the narrative by millers that farmers have refused to sell to them and thus should be allowed to import duty-free maize.

Value chain players are asking why millers are demanding duty-free  maize imports while they have not exhausted produce from local sources.

Farmers and traders, according to Ministry of Agriculture, have in their stores 16.3 million bags of maize.   It is also estimated that about Sh4 billion remains unutilised in government coffers as farmers and other traders refuse to sell maize to National Cereals and Produce Board (NCPB).

Food reserve

The government in 2018/19 allocated Sh5 billion to Strategic Food Reserve (SFR), which is the custodian of maize stored at the board to buy from farmers two million bags.

But by April 2, the board had only managed to buy from the farmers 417,000 bags at Sh2,500, price that had been increased from Sh2,300 after farmers rejected the offer.

NCPB acting managing director Albin Sang said the agency has reached out to large-scale farmers, who have some stocks, to sell to it at the government set price of Sh2,500 but they have declined.

“They are instead selling to traders and millers at more than Sh3,000 per bag,” he added. Tegemeo Institute of Agricultural Policy and Development says the increase in maize prices being witnessed currently is consistent with the trends observed in the past years.

However, the institute criticised millers and processors for spreading a tale that the country does not have enough maize stock and thus using the same to sharply increase flour prices. “Why are millers pressuring the government to allow duty free imports?  

“They are complaining that farmers are declining to sell maize to them. Key question is how much are the millers offering to the farmers and what is the latter quoting? “  

Severe drought

The institute recalled that at one point in 2017 during the severe drought, price of a 90kg bag reached Sh3,200, translating to Sh120 for a 2 kg maize flour packet. In 2017 cost of Unga reached Sh144 thus forcing the government to intervene by announcing a Sh6 billion maize subsidy.

The government subsided millers by selling to them maize at Sh2,300 translating to Sh90 for two kilogramme maize flour packet.

United Grains Millers Association through a note to Ministry of Agriculture argues that the government needs to waive tax on maize imports like in 2017. Millers have already increased flour prices to between Sh117 and Sh120 when a price of 90kg bag is trading at an average of Sh3,000 in various markets.

The research institute nevertheless attributes the current situation to a passive market.“The market is not working. Currently, it is characterised by high speculation, hoarding, loose prices and cartel behaviour,” Tegemeo said yesterday. Allowing importation of duty free maize, the institute warns, will be suicidal to farmers who still have stocks of maize but are hoarding waiting for prices to improve.  

Agriculture Cabinet Secretary Mwangi Kiunjuri two weeks ago said that the country has 21.3 million bags that are under the control of millers, farmers, traders and NCPB.

Although he said this quantity can run the country for another three months, millers and processors have continued to insist the supply is low, citing hoarding by farmers and traders.

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