Treasury’s 70pc maize budget cut signals food reserve deficit

The Treasury has cut the budget for buying maize for the Strategic Food Reserve (SFR) by Sh3 billion or 70 per cent, a reduction that will hurt replenishing of the grains reservoir next year.

The Division of Revenue Bill 2018 indicates that the Treasury will set aside Sh1.28 billion for maize purchases, down from the Sh4.29 billion for the current year, making it the lowest allocation in more than five years.

The reserve looks set to be depleted in coming months as the government releases three million 90 kilo bags to fight a biting food shortage that has left 3.4 million people staring at starvation.

The reserve, with 3.1 million bags, is about 1.5 million bags less than the amount required to cushion the country against food shortages. Kenyans consume about 3.1 million bags monthly.

The Sh1.28 billion will buy about 400,000 bags based on the government’s price of Sh3,200 per bag — maize enough to feed Kenyans for less than a week.

READ: Scarcity of maize bites as drought hits country

This means that the government will turn to maize imports for relief given the weakened position of reserves held at the National Cereals and Produce Board (NCPB).

A fortnight ago, the Red Cross launched a campaign to raise Sh1 billion to feed 3.4 million Kenyans who are staring at hunger.

Last year, the government released over two million bags of maize to millers to curb rising flour prices which had hit a record Sh153 per 2kg packet.

The strategic reserve was left with maize enough to feed Kenyans for a few days, forcing the government to turn to an expensive import subsidy scheme which cost taxpayers more than Sh7.2 billion.

READ: Agency says 28 million Africans in ten States face starvation

The subsidy lowered the price of a 90kg bag of maize to Sh2,300 from above Sh4,000 with the government offering importers a rebate or the difference of about Sh1,700.
The move cut the cost of the 2kg packet of flour to Sh90, but it has since risen to about Sh125.