Farmers in a tight corner as maize price hits Sh1300 a bag
What you need to know:
- Reports indicated that the price of a 90 kilogramme bag of maize had dropped to Sh1,300 in parts of North Rift from Sh1,500 two weeks ago and Sh2,800 in May.
- This came even as the National Cereals and Produce Board (NCPB) faced logistical nightmares in its plan to move about 1.5 million bags of maize from the North Rift depots to create room for purchase of new grains from the current harvesting season.
A planned meeting of the Strategic Grain Reserve (SGR) trustees failed to take place yesterday even as maize prices in the grain basket of the North Rift continued to slide for the fourth week in a row, eating away farmers’ profits.
Reports indicated that the price of a 90 kilogramme bag of maize had dropped to Sh1,300 in parts of North Rift from Sh1,500 two weeks ago and Sh2,800 in May as uncertainty remained over the government’s release of the Sh2.7 billion that had been set aside to buy grains for SGR in the current financial year.
Sources within Kilimo House, where the trustees were to meet, told the Business Daily that the meeting was postponed after the principal secretaries for Interior and the Treasury failed to show up. The two PSs (Interior and Treasury) together with their Devolution and Agriculture counterparts form the team of SGR trustees.
“The meeting has been pushed to Thursday as some of the trustees did not show up today,” said the source who requested anonymity.
This came even as the National Cereals and Produce Board (NCPB) faced logistical nightmares in its plan to move about 1.5 million bags of maize from the North Rift depots to create room for purchase of new grains from the current harvesting season.
The board requires up to Sh200 million to move the old stock from Eldoret, Moi’s Bridge and Kitale depots to deficit areas like Turkana and Eastern Kenya silos.
URGENCY TO SELL
As confusion reigns, farmers have been left at the mercy of middlemen, who are capitalising on the absence of NCPB and poor weather conditions to exploit growers.
Western Kenya is experiencing heavy rains that have hindered drying of grains, forcing growers to hurriedly sell their crop to avoid post-harvest losses.
That urgency to sell has opened the room for traders to offer low prices arguing that they incur additional cost in handling the grain with high moisture content.
NCPB accepts maize with a moisture content of up to 13.5 per cent and subjects any produce exceeding this limit to dryers at a cost of Sh28 per every drop of water content in a bag.
Kenya loses up to 30 per cent of the annual maize output to poor post-harvest handling of the crop because a lot of farmers lack proper storage facilities.
The government has indicated that it might not buy maize at Sh3,000 it paid for a 90 kilogramme bag in the past two years, noting that the cost of production fell significantly with the drop in fertilizer prices.
President Uhuru Kenyatta in April reduced the price of a 50 kilogramme bag of planting fertiliser from Sh2,500 to Sh2,000, offering much needed relief to growers.
Kenya Farmers Association has, however, warned the government against reducing the buying price below Sh3,000, arguing that the move would subject farmers to losses.
“Even with the reduction in the price of fertiliser, the cost of production remains high and it would be unwise for the government to buy maize from farmers at less than what has been spent growing it,” said Kipkorir Menjo, a KFA director.
Egerton University-based think tank-Tegemeo Institute, in one of its findings last year, said it would cost a farmer Sh1,741 to produce a bag of maize in Trans Nzoia, while a grower in Uasin Gishu spent Sh1,400 to produce a similar quantity of maize. A fortnight ago, farmers protested in Eldoret, asking the government to open NCPB and purchase maize at Sh3,800 per bag.
Last year, the government released Sh3 billion in September and by the third week of October NCPB had already commenced the buying exercise.
Harvesting in the North Rift, the country’s bread basket, started this month and traders reckon maize prices could fall further.
The falling maize prices have come as a reprieve to households that have been enjoying a drop in price of flour that has in the past three months dropped by Sh12, a move that helped in easing inflation last month to 6.6 from 8.36 in August.
The article first appeared in The Business Daily.
