The ever-fluctuating prices of maize flour have always pointed to a serious problem in the maize value chain. For instance, the last month has seen maize flour prices rise from an average of Sh112 for a 2kg packet to the current Sh136.
The price hike comes as a surprise to many considering we had a “glut” last season that saw farmers sell maize at a throw-away price of Sh800 for a 90kg bag to brokers. The National Cereals and Produce Board (NCPB) bought the commodity at Sh2,300, which was raised to Sh2,500 in January.
Whereas consumers are now having to pay substantially high prices to access the commodity, its primary producers have nothing to show for it. Every two kilograms of maize leaves the farm at about Sh56 based on NCPB’s highest buying price. The hundreds of thousands of bags that were sold at Sh800 would translate to Sh18 per 2kg of unga.
So, what happens in between? In local mills, the cost of milling maize is about Sh10 per 2kg; it costs only Sh10 extra to make it finer. What is packed and retailed in shops is Grade One flour milled by big millers enjoying economies of scale, which ideally should translate to even lower costs. I’m not convinced the cost of transporting the maize to millers and distributing the final product to retail shops can account for the difference.
Millers have many ways of accessing maize, including from NCPB stores across the country, direct purchases from farmers as well as imports—with the help of the government. Recently, the millers got a shot in the arm when President Uhuru Kenyatta appealed to his Tanzanian counterpart to help them access the product at favorable prices.
But why do we import? To understand this conundrum, we first need to analyse the production numbers. In 2018, Kenya produced a total of 46 million bags of maize—the highest amount ever produced despite the armyworms threat.
Agriculture ministry estimates annual maize consumption at around 55 million bags. This leaves a deficit of about 10 million bags, meaning we would only need to import 18 percent of the total maize consumed. This deficit cannot be used as an excuse to hike maize prices.
We have enough storage facilities owing to the NCPB declared capacity of 1.8 tonnes which translates to about 20 million 90kg bags.
The government should, therefore, focus on strengthening NCPB’s role in ensuring price stability and food security. Further, the Strategic Grain Reserves should solely exist to safeguard the needs of over 15 million Kenyans who are not able to meet their minimum dietary requirements. We cannot continue to have the misplaced idea by the NCPB of selling grains to animal feed manufacturers when some citizens have none to eat.
At the same time, the government needs to rethink its policy of subsidizing maize price for millers, because by so doing, it creates two opposing systems when it comes to maize trade and regulation. It makes absolutely no sense for the government to pay billions to millers in form of subsidies if in return, they cannot regulate the industry.
Lastly, there’s a need to re-assess our form of agriculture—the gains and pains of the industrial model of farming the country has heavily promoted and invested in for the last two decades.
Published at People Daily Kenya