Resolve Unga Price Puzzle Once and For All

The cyclical and fluctuating prices of unga in the country have always pointed to a serious problem in the maize value chain. The last one month has seen maize flour prices rise from an average of Sh112 per 2kg packet to the current Sh136 across the country.

This comes as a surprise to many considering we had a “glut” last season that saw farmers sell their maize at a throwaway price of Sh800 to brokers while the National Cereals and Produce Board (NCPB) bought the commodity at Sh2,300, which was raised to Sh2,500 by President Uhuru Kenyatta in January this year.

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 2 kg of flour.

So, what happens in between? In local mills, the cost of milling maize is about KSh10 per 2 Kg; it costs only Sh10 extra to make it finer. What is packed and retailed in shops is grade 1 flour milled by big millers enjoying economies of scale, which ideally should translate to even lower costs.

I am not convinced that 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 through the government-funded NCPB stores across the country, direct purchases from farmers, from other dealers as well as imports – with the help of the government. Recently, the millers got a shot in the arm when the president appealed to his counterpart in Tanzania to help them access the product at more favorable prices.

But why do we import? To understand this conundrum, we first need to analyze the production numbers. In 2018, Kenya produced a total of 46 million bags – the highest amount ever produced despite the threats of Fall Armyworms that had hit the country.

The Ministry of Agriculture estimates current maize consumption at around 55 million bags per year. This leaves a deficit of about 10 million bags of maize meaning we would only need to import 18 percent of the total maize consumed. This deficit cannot be used as an excuse to hike the 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.

Despite being shared amongst the different cereals produced in the country, it is nonetheless sufficient capacity given that the body is also allowed to outsource facilities from private entities.

What the country needs to focus on therefore is the strengthening of NCPB’s role in ensuring price stability and better access to grains country-wide.

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 therefore cannot continue to have the misplaced idea by NCPB of selling grains to animal feed manufacturers when some of our countrymen have none to eat.

At the same time, the government needs to rethink its policy of subsidizing maize 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 prices of the well-organized and united milling industry.

Lastly, there’s a need to reassess our form of agriculture- the gains and pains of the industrial model of farming that the country has heavily promoted and invested in for the last two decades. To ensure access to food at affordable prices for all Kenyans, we need to have a sober national discourse about whether the fertilizer subsidies work or if farmers are incentivized enough. Whether large-scale mono-cropping and heavily mechanized forms of farming are compatible with our context or whether the price mechanics are right.

These measures will put the country in good stead in fulfilling the Human Right to Food as enshrined in the Constitution of Kenya, 2010- Article 43 1(c) which unfortunately, the government is currently in contravention of.

Published by Business Daily Africa

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