State pledges to pay Sh4bn cereals debt

The government has promised to settle the nearly Sh4 billion that it owes the cereals board in instalments. The debt arose from the purchase of maize for strategic reserves and subsidised fertiliser.

The parliamentary committee on Agriculture chairman Adan Noor said the government is considering paying Sh500,000 every year to clear the Sh3.9 billion.

“In this financial year, the board received Sh1.6 billion towards the strategic food reserve. We are considering payment of the debt in instalments of Sh500,000 annually,” said Mr Noor, who is the Mandera North MP. He led his team on a two-day tour of the North Rift last week.

The board had sought assistance from Parliament to help it recover the debt saying its operations had been hampered by lack of funds.

The National Cereals and Produce Board Managing Director Newton Terer, said although the government has not paid old debts, it is servicing fresh ones.

READ: State told to clear NCPB debt to spur reforms

“We have no problem with the current debts as they are being serviced on time,” Mr Terer told Smart Company by phone.

The board also wants the government to set aside more funds for purchase of maize dryers to cushion farmers against post-harvest losses.

Cereal farmers in the North Rift a while ago petitioned the parliamentary team on the problems facing the sub-sector. They want the government to allocate additional funds to NCPB to buy cereals and put in place measures to stabilise operations of financially-troubled agricultural bodies set up to assist farmers obtain inputs at affordable prices.

Insolvency

The Auditor-General Edward Ouko said last month that the board’s debt hit Sh8 billion in the year to June 2015, pushing it into insolvency.
Mr Ouko said NCPB, which is the custodian of the country’s strategic grain reserves, posted a Sh95 million loss in the year to June 2015, raising its cumulative revenue resource deficit to Sh7.95 billion.

Uasin Gishu Governor Jackson Mandago and other leaders from North Rift want the government to provide more money to the parastatal.
“Even if the fertiliser bought is excess, it will be used in the next planting season. We don’t want delays in delivery,” Mr Mandago said.   

The country’s food basket produced about 16 million bags of maize last year compared to about 21 million the previous season.

NCPB usually buys a 90 kilogramme bag of maize for Sh2,300 while some millers are buying the same quantity at Sh1,800 while middlemen purchase it at as low as Sh1,200.

The country’s grains reserve was allocated Sh3.4 billion in 2014/2015, Sh2.7 billion in 2015/2016 while in the current financial year it has received Sh1.6 billion to buy over 1 million 90kg bags.

Kenya consumes about three million bags of maize monthly, an indication that the reserve is holding less than optimum stocks required.