How past blunders have led to increasingly high cost of flour

Mismanagement of maize stock at the National Cereals and Produce Board (NCPB), a series of botched agricultural programmes and greedy grain cartels are responsible for the rising cost of maize flour.

Analysts say the country’s agriculture potential is sufficient to cushion Kenyans from perennial maize shortages, with spikes such as the current one blamed on mismanagement.

The NCPB, the custodian of strategic maize reserves on behalf of the ministry, has on many occasions failed to control simple pests such as weevils, which cause massive damage to stored grain. Now Kenya is struggling to import maize from as far away as Mexico.

For instance, the Auditor General’s report on the Ministry of Agriculture for 2014/2015 says about one million bags of maize went to waste following NCPB’s laxity in tackling an insect attack.

“A review of quality assurance reports revealed that Celphos, the board’s preferred fumigation chemical, has failed to kill the weevils and is therefore no longer effective.

Information available further indicates that although most stations (depots) had requested for a change of the chemical, the board has not come up with an alternative.

Consequently, 754,015 bags of maize, valued at Sh1.8 billion that were found to have been damaged beyond the 2.5 per cent acceptable limit, are not fit for human consumption,” the auditor wrote.

In 2013, maize worth Sh6.6 billion was reported rotting in NCPB stores after infestation by pests for lack of fumigants.

The NCPB could not afford pesticides because its assets, including bank accounts, had been attached over a Sh550 million court award to a supplier.

The same audit faulted the expenditures of various interventions by the government, including Sh2.1 billion paid to NCPB as subsidy for purchase of fertiliser to be sold to farmers.

No verifiable documents were available to confirm the actual quantity of fertiliser bought and receipted by NCPB, the quantity sold to farmers and the purchase and selling prices.

Multiple expenses

The government’s strategic reserve fund, which is what the country should ideally use to solve the current crisis, had also accumulated a deficit of Sh13 billion as at June 30, 2015 due to multiple expenses.

These include acquisition of maize and gunny bags, and storage and fumigation charged by NCPB as management fees on behalf of the ministry over the years.

Although Agriculture Principal Secretary Richard Lesiyampe did not respond to our queries on what the government was doing to redress perennial maize shortages and NCPB’s past blunders on maize storage, analysts believe the situation is avoidable through proper planning and spending.

Dr Paul Gachanja, chairman of the Department of Economic Theory at Kenyatta University, told Sunday Nation that the government had not given agriculture and maize the seriousness it deserves, while leaving cartels to control sale of maize and to hold the country to ransom.

He said maize shortages are artificially engineered, in most cases through collusion with senior ministry officials who are able to project the situation and profit from the high demand.

“As much as we have had drought for a while, we also had flooding not too long ago. Also, we have not seriously thought about liberating ourselves from rain-fed agriculture.

"There are many cartels in the maize business. Even now, maize is there but it is neither in the hands of farmers nor at NCPB — the brokers are holding it.

That is why the President has not declared it a national disaster because it is not that we have none,” Dr Gachanja said.

Price war

A price war between millers and NCPB is currently being blamed for stifling the country’s efforts to build enough reserves — now at 1.3 million bags (less than half the target three million bags).

Agriculture Cabinet Secretary Willy Bett had warned those hoarding maize that they would lose massively after Kenya imports maize from Mexico.

Efforts to reduce over-reliance on maize have also failed to bear fruit. In 2015, for instance, Sh30 million was advanced to the Kenya Agricultural and Livestock Research Organisation (Kalro) to boost production of traditionally high-value crops including cassava, sweet potatoes, cow peas, sorghum, finger millet and beans, hence reducing over-reliance on maize.

The crops were to be distributed for cultivation in arid and semi-arid lands (Asal) such as Baringo, Makueni, Machakos, Tharaka Nithi, Kirinyaga, Kisumu, Homa Bay, Busia, Kwale and Taita Taveta counties. The auditor general found the money misappropriated.

“Although Sh30 million was released to Kalro to undertake the project, no evidence has been adduced to confirm that the project was carried out, completed and crops distributed to the intended areas.

"The Sh30 million was, therefore, not accounted for. Consequently, the intended objective was not met and the government did not get value for money.”

Even donor projects meant to help Kenya attain food security have experienced avoidable losses.

The Agricultural Sector Development Support Programme, for example, lost various ICT items valued at Sh4.9 million through theft in several county offices in 2014, noted the auditor general.

Another grant under the Kenya Cereal Enhancement Programme is said to have been absorbed too slowly, with only Sh26.2 million of the Sh198.5 million utilised, 15 months after inception of the programme as at June 2015.

“No explanation has been provided for the low absorption and utilisation of funds, which raises doubts on whether these activities will be completed by December 31, 2017, the programme’s completion date,” the auditor wrote.

A World Bank survey released last year shows that agriculture, which contributes about 25 per cent of Kenya’s GDP, has stagnated in the past decade. 

The survey called for cheaper fertilisers for farmers and other incentives to create large scale farming as well as provision of storage solutions to reduce post-harvest losses.

It found that liberalising the sugar and maize markets — mainly through removal of market restrictions — could help reduce poverty by about 20 per cent.

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