KENYA – Simmering tension between small-scale maize millers and their large counterparts came to the open Thursday as the government was forced to raise their allocation of the subsidised grain, which is intended to lower the cost of flour to a maximum of Sh90 per two-kilogramme packet.
The small millers have complained of favouritism in the subsidy plan, which will see the government pay them up to Sh1,700 per bag to keep the cost of the staple at the controlled price.
A lack of supply to the small millers could defeat the government’s price control in the rural areas, where they dominate.
Maize dealers are set to reap big from the subsidy plan, which explains the tension between the millers.
The Treasury will spend an estimated Sh6 billion on the maize millers and traders in the next three months.
United Grain Millers Association, which is an umbrella body of the small millers, had complained that the government allocated them only 100,000 bags compared to their rivals’ allocation of 400,000, despite the fact that they control a larger market share across the country.
The millers’ allocation was doubled on Thursday.
They are also to be given priority on allocation of imports expected from Ethiopia over the weekend.
Agriculture principal secretary Richard Lesiyampe Thursday directed the National Cereals and Produce Board (NCPB) to allocate 200,000 bags of maize to the members starting Friday.
“We appreciate the important role that you play in the country and we shall ensure that we double your allocation to 200,000 bags of cheap maize from NCPB,” said Dr Lesiyampe.
Peter Kuguru, the association’s chairman, said the increased allocation would ease the tension that was building between the two associations.
“The government has always been giving priority to large-scale players at the expense of our members, who supply flour to more than half of the country,” said Mr Kuguru.
He added that the increased allocation will ensure supply of flour to consumers at the government recommended prices.
Under the subsidy plan, millers will process, package and distribute the maize flour from this subsidy programme in packets clearly and boldly marked ‘‘GoK Food Subsidy.’’
The government inked the deal with millers on Monday.
The maize processors will access maize at Sh2,300 per 90-kilogramme bag, down from the market rate of Sh4,500.
The shortage of maize had pushed the cost of the staple to a high of Sh144 per 2kg packet.
About 30,000 tonnes of maize have so far been imported from Mexico to address the shortage, with an additional consignment expected in a fortnight.
An additional five million bags will be imported between now and the end of July to maintain the lower prices.
Last month the government removed VAT on maize flour and bread and waived duty on yellow maize for animal feeds.
The waiver of duty on Yellow maize was intended to eliminate competition with maize flour for human consumption.
May 19, 2017: BusinessDay