Debate rages on over second grain handler

• Firm’s monopoly in checking out cereals from port blamed for food shortage

“With the near collapse of the railway, which is the best placed mode of transporting grain, transporters are overwhelmed, leading to the terminal being used as a storage facility,” said Mr Shivji, adding that more than 60,000 tonnes of wheat meant for millers had been lying at the terminal.

He said the National Cereals and Produce Board (NCPB) has not been involving grain interveners whenever major imports were scheduled, so that logistics could be put in place to minimise the stress that comes with bulk importation.

“For instance, we are learning from the media that there are 10 million bags of maize to be imported in the next few months,” Mr Shivji said.

“Unplanned imports have led to bunching arrivals hence overstretching the grain terminal and delaying vessels.”

Currently, there is a standoff between the Government and millers over importation of three million bags of maize.

Millers have demanded a government guarantee that it will waive any charges arising as a result of vessels waiting to discharge grain.

“We are at the moment not interested in a second grain facility, which can take up to four years to instal. Another conveyor belt, which can be used to offload grain whenever there is a crisis as we recently experienced, could be a solution,” said Mr Thabit.

Millers have been pushing for the licensing of a second grain handler since early last year, arguing that Sh16 per tonne that Grain Bulk Handlers Ltd charges as handling fees was too high compared to what other countries in the region were charging.

However, the grain handler says handling prices which were set by KPA have not changed since the company signed a memorandum of understanding with the Authority in 2004.

Industry players have argued that granting a license to millers to operate a second grain handling facility will shift the monopoly from GBHL to the new outfit without improving efficiency.

“With over 70 per cent of the country’s wheat requirement being imports, the milling companies will monopolise the entire chain of grain handling in the country,” said Mr Shivji, adding that allowing one player to control vital food stuff such as grains was risky.

Mombasa Maize Millers, Pembe Group and Premier Flour Mills command 59 per cent of the market share, with a milling capacity of 2,540 tonnes a day.

Eight-year monopoly

Estimates from a KPA master plan with the current grain handler show that the volume of grain being handled in the country is set to grow from 754,000 tonnes to 870,000 tonnes by 2010; 1,276,000 tonnes by 2020 and 1,508,000 tonnes by 2028.

GBHL was to operate as a monopoly for eight years to recover the cost of the massive investment in the project. At the end of the monopoly last February, attempts by GBHL to have it extended to 2028 were rejected by the KPA board that July, arguing that KPA was losing up to 20 per cent of revenue due to the monopoly.