Stingy officers, higher prices abroad caused unga shortage

Wednesday May 24 2017

Workers shell maize at a farm in Kabobo village, Uasin Gishu County, last December 31.

Workers shell maize at a farm in Kabobo village, Uasin Gishu County, on December 31, 2016. As the NCPB stuck to the price of Sh3,000 for a 90kg bag, traders raised the cost to Sh3,600 and exported the maize. FILE PHOTO | NATION MEDIA GROUP 

By BERNARD NAMUNANE
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Two blunders by the government — the first leading to the second — are behind a biting maize shortage in the country that has caused the escalation of prices of basic food commodities.

To make matters worse, contrary to its earlier promise that it would import maize from Mexico to address the acute shortage, the government has left the task to private firms and millers to ship in the staple from the North American nation.

On Tuesday, Agriculture Principal Secretary Richard Lesiyampe told the Nation that the government knew it was short of maize stocks in its strategic food reserves as early as February this year but refused to increase the producer price from Sh3,000 to Sh3,600 per 90-kilogramme bag to attract sales from farmers.

Farmers and middlemen, in turn, chose to seek other lucrative markets, which they easily found in the war-ravaged South Sudan through Uganda.

Middlemen bought the maize at the Sh3,600 per bag that the government could not afford.

MARKET PRICES

“The challenge is that we could not attract maize at Sh3,000 because market prices were higher,” said Dr Lesiyampe. “We could not increase the price because that ran the risk of rallying up food prices.

“If you put the price of a staple food above the marker price, you create a calamity.”

But now, in hindsight at the way the food situation has morphed, Dr Lesiyampe said the decision “was our (the government’s) Waterloo”.

The government’s decision not to increase producer prices for farmers has roundly been singled out as one of the reasons that led to the failure by the National Cereals and Produce Board (NCPB) to buy more than two million bags of maize for the strategic food reserve, which stood at 1.3 million bags in February against a population of three million in need of food relief.

FEARED PROTESTS

Dr Lesiyampe said the second mistake was the decision by the government not to import maize immediately after it became aware of the impending shortage.

This, he said, was based on fear of protests from farmers and criticism by the ruling Jubilee Party’s political rivals in an election year.

“Had we imported maize in February, farmers would have protested that we were flooding the market with cheap imports,” said Dr Lesiyampe in an interview at his Kilimo House office in Nairobi.

“Questions would also have arisen that the Jubilee government was bringing in maize to fund political campaigns.”

The PS said the government found itself in a dilemma since whichever decision it took was going to affect the ordinary Kenyan.

“We were in a Catch-22 situation,” said Dr Lesiyampe. “Whether we imported or not, we were damned…and it has come to pass.”

CHECK HIGH PRICES

The PS spoke a week after the government attempted to check the high basic commodity prices by subsidising two-kilogramme packets of maize flour to Sh90, down from as high as Sh182, by giving a tax waiver on maize imports.

Agriculture and Livestock Cabinet Secretary Willy Bett, who announced the move, was three days later at the Mombasa port to receive 30,000 tonnes of maize that had been imported by Kitui Flour Mills, Pembe Flour Mills and Hydrey (P) Limited.

Holbud (K) Ltd shipped the maize into the country from Durban, South Africa. On Tuesday, Dr Lesiyampe explained that Mr Bett was in Mombasa to receive the private industry imports because, apart from his being in the region at the time, the government wanted to avoid a situation where a few millers would have received the maize, milled it and sold flour at high prices.

IMPORT MAIZE

“Millers do not import maize,” said Dr Lesiyampe. “Companies such as Holbud Limited imported the maize on being sub-contracted by Kitui Flours, Pembe Flours and Kifaru.

“In spite of the waiver, we knew that the prices would have gone up to Sh4,500 per bag; so, we stepped in to collect the maize, negotiate with the millers, agree on the prices and distribute the maize to other millers as well.”

An inter-ministerial committee, drawing membership from the Office of the President and the Agriculture, Treasury and Interior ministries as well as the Attorney-General’s chambers and the Kenya Revenue Authority was constituted to negotiate with the millers.

REFUTED REPORTS

The PS, however, rejected reports that the government compelled millers to accept its subsidised maize plan, saying they only called on them to be “patriotic” in the face of the adversities the country faced.

“Those saying that millers were compelled to give in to our plan are wrong,” said Dr Lesiyampe. “However, we told millers that this was payback period; they had to be patriotic and support the government’s cause.”

The top ministry technocrat also disclosed that the government bought the 30,000 tonnes of maize at Sh3,600 per bag but was selling it to all millers, including small-scale operators, at Sh2,300.

“We have done our calculations and that is why we settled on Sh90 for a 2kg packet,” said Dr Lesiyampe. “If any miller sells beyond this price, we will have to go back on our offer of Sh2,300.”

ABUSING SUBSIDY

While assuring the public that more maize was being shipped in, the PS explained that the government had asked its officers — including those from the National Intelligence Services (NIS) and Kenya Police Service — to deal with people abusing the subsidy, which he said would soon reach all parts of the country.

Defending the government against accusations of failing to plan ahead, Dr Lesiyampe argued that the change in trade regulations by the Tanzanian authorities, coupled with the high demand in South Sudan, where prices clocked Sh5,500 per 90kg bag of maize, were to blame.

This, he said, was compounded by the late start of the long rains that were expected beginning in March.

He said the government sold the old stock of maize early last year since it had been in stores for more than eight years in anticipation of replenishing it, only to manage to buy only 1.3 million bags earlier this year.

He said the government was reviewing the structure of the NCPB to make it responsive to public demands, improve its silos and transfer the function of buying maize to private millers.