Cereals millers can now import duty-free maize

Millers can now import maize without paying duty for a six-month period.

This would be done in accordance with the provisions of the fifth schedule of the East African Community Customs Management Act, 2005, said Deputy Prime Minister Uhuru Kenyatta in a gazette notice.

“Any maize imported into the country between June 10, 2011 and December 31, 2011 shall be cleared through customs without payment of duty,” Mr Kenyatta, who is also the Finance minister, stated in the notice.

There have been concerns that importers could take advantage of the directive to make a kill.

But Agriculture permanent secretary Romano Kiome defended the Finance minister’s proposal, arguing international prices were about the same as the local ones.

‘Good move’

Describing it as a “good” move, Dr Kiome said that farmers were holding onto millions of bags of maize hoping that the prices would rise further before releasing their grains to the market.

“You can’t tell them to sell when they are not sure where to get another supply,” he said.

As at May 31, farmers had 7.5 million bags of maize, traders were holding 2.2 million, millers 389,000 and the National Cereals and Produce Board had about 2.9 million bags.

Notwithstanding that stock, the government was out to increase supply to push prices down, said the permanent secretary.

“At any given time, we need in the country about 25 million bags when people know the stocks are low and exaggerate prices.”

Some people argue that the government ought to make farmers sell their grains at reasonable prices since it subsidises the cost of fertiliser and seeds.

“That is practically impossible. The move to assist farmers is meant to increase supply of cereals in the country. If we go that direction we will cause more havoc,” said Dr Kiome.

He stated that the government would not want to interfere with market forces as that would be counter-productive. “Some people would be disadvantaged. It would also sound draconian,” he said.

Sections 18 of the Customs Act lists maize among restricted goods and therefore prohibits its importation into the country.

Legal conditions

However, section 19(2) gives room for importation in certain circumstances:

“The council may, by order published in the Gazette provide that the importation into a Partner State, or any area thereof, of any goods, or class of goods, shall be prohibited or shall be prohibited save in accordance with such conditions as may be specified in such order.”

The “shortage” of maize in the country has seen the price of a 90kg bag of maize shoot from Sh3,000 a few weeks ago to almost Sh4,500 in most parts of the country.

The high price is expected to continue into next year as shortfall is likely to persist due to poor harvest occasioned by erratic rains this year, said the Cereal Growers Association of Kenya last week.

Consumers are buying a 2kg packet of maize flour at Sh130, compared to Sh102 some weeks ago.

Last week, millers said “a delay” in publishing a legal notice for the imports would see the untaxed grains arrive in the country from August against an earlier official projection of early July.