KENYA – A price war between millers and the National Cereals and Produce Board (NCPB) is hindering attempts by the State to build up much-need food reserves.
Millers are currently buying a 90-kilogramme bag of maize at Sh3,500 ($33.65) as the government through the board pays producers Sh3,000 (28.85) for the same quantity, a move that has hampered delivery of the produce to the State agency.
The NCPB said it had by Thursday managed to purchase 987,844 bags of maize against a target of six million bags that the Agriculture ministry had projected this year.
The National Strategic Food Reserve currently has 1.3 million bags of maize, some 400,000 from the previous season, against the required three million bags.
The reserve should at any given time have the three million bags that can sustain the country for a month in case of an emergency.
Last week, Treasury secretary Henry Rotich told the Business Daily in an interview that the board had money that could buy the minimum statutory reserves it had last year before the government released the stocks to millers.
“The NCPB has the cash that can replenish the National Strategic Food Reserve to the previous levels. However, they are not getting stocks from farmers,” said Mr. Rotich.
The NCPB has reported reduced deliveries from maize farmers as millers offer better prices.
“The purchases have gone down in our depots across the country. We are hardly getting stocks,” said NCPB managing director Newton Terer.
The National Strategic Food Reserve stocks are normally used for relief purposes in times of hunger or sold to the millers at low price when there is a shortage of maize in the market to stabilize the prices.
Last year, the State released more than two million bags from the reserves to curb the rising cost of maize flour after millers complained of tight supply in the market that had pushed the prices to a two-year high.
Since the beginning of the year, millers have complained of the reduced supply that has further pushed the cost of flour to a five-year high with all the brands retailing at more than Sh115 ($1.11) per two-kilogramme packet.
Maize, which is the raw material in the processing of flour, accounts for 80 per cent of the total cost of production.
The government plans to import maize from Mexico anytime from now to curb further rise in the price of the commodity.
Kenya usually imports grain from Uganda and Tanzania to bridge the deficit in production.
Tanzania has now restricted export of maize while Uganda did not register a good crop in the last season, with the little available finding its way to South Sudan where it is sold at a premium.
Apart from the two East African nations, the other alternative for Kenya maize imports is Malawi and Zambia.
However, these two countries have registered a poor crop too in the last two seasons owing to poor weather resulting from La Niña effect (drought) last year.
January 27, 2017; http://www.nation.co.ke/business/996-3789108-j482igz/index.html