We reaped losses in maize gamble

Farmers dry maize outside a silo. FILE PHOTO | JARED NYATAYA |

What you need to know:

  • Seven months ago, Chikofar group harvested maize and stored it in a rented silo, waiting for prices to rise, but this dream did not materialise.
  • A 90kg bag of maize is now going for Sh2,150 in Nakuru on average, down from Sh3,300 two months ago.

Seated in a circle near a water pan, a group of men and women speak animatedly about the crisis on their hands.

It is Thursday mid-morning and the Witima Chicken, Cows and Farming (Chikofar) group members are discussing the fate of their harvest.

The group from Witima Village of Molo Sub-county deals in what they call ‘cereal banking’, which entails harvesting maize grown individually, storing it in a silo and selling when prices rise.

Unlike in the past, however, the group is jittery about the fate of their close to 10,000kg of maize, which they ‘banked’ at a warehouse in Nakuru in February.

“There is a lot of imported maize around and many farmers have harvested. We may not find a market for this stock,” group treasurer Samuel Njoroge says.

Chikofar’s woes are worsened by the fact that they borrowed Sh209,000 last year to plant the maize, and the bank is now on their case.

They used the loan to prepare land, buy certified seeds and fertilisers and later ferried the crop (each member harvested some 10 bags from their one-acre plots) to the warehouse that charges Sh6 a bag per month.

The group hoped to sell a bag at Sh3,600 to recoup their expenditure and remain with something for the next season. This now seems a distant dream.

A 90kg bag of maize is now going for Sh2,150 in Nakuru on average, down from Sh3,300 two months ago.

This year seems the worst for Chikofar group, which started with 40 members, but has since dropped to 11 due to dwindling fortunes in maize.

“We have been doing well since we started in 2003, but what is hurting us most now are the maize imports. We cannot sell our maize at higher prices,” group chairman Dedan Kimathi said.

INTO CEREAL FARMING

But the group was not always dealing in maize. To start, each member contributed Sh20 per month, money they used to buy a hen for each other in turns.

“In 2004, we managed to buy a sheep for every member as we were determined to reap from our group and farming,” Kimathi says.

They went into cereal farming the following year. They jointly hired a five-acre plot on which they planted maize.

Poor farming practices that included failure to use certified seeds saw them harvest less than 80 bags, which they sold at Sh750.

Later, training from the Ministry of Agriculture made them double their production the following years.

A WONDERFUL YEAR

“In 2007, we planted maize and beans on 30 acres after getting Sh363,000 loan from the Agricultural Finance Cooperation. That was a wonderful year. We harvested 864 bags and earned Sh861,650.”

After repaying the loan, each member took home Sh13,000 in profit. The group has been making a tidy income from the joint venture over the years by storing the maize and selling when prices are higher.

“Things started taking a downturn last year. We have no choice but to sell our maize at a throw-away price so that we can get something out of it. It has stayed in the Lesiolo silo in Nakuru for long,” says Kimathi.

All is not lost for the group, though, as they have learnt from the downturn. One of the resolutions they came up with during the meeting was to start engaging in value addition.

“We have resolved to set up a posho mill. We want to mill our own flour to add value to our produce so that we can make more money. We have realised selling maize directly cannot pay off when prices are low like now,” Kimathi says.

Kenya Federation of Agricultural Producers Nakuru Chapter chairperson Samuel Gitonga faults the government for importing maize regularly at the expense of local farmers.

“The decision to import maize as produce sits in granaries hurts farmers. They cannot earn from what they have invested. This is one of the reasons many are abandoning maize farming.” 

Gitonga notes many farmers take loans thus if they fail to sell, they risk losing their property and trust from financial institutions.

“For now, farmers have no choice but to sell their produce at current prices since there is no guarantee that if they store it, they will get better prices.”

Fidel Juma, a financial consultant in Nakuru, acknowledges that by adopting the Warehouse Receipting System (WRS), the farmers had taken the right step, but adds that they should have monitored prices and sold their maize when the price per bag hit Sh3,300.

Introduced in Kenya four years ago, the system was hailed as the panacea to farmers’ woes arising from the poor prices at harvest time.

AWAIT BETTER PRICES

The system entails farmers taking their grain to the National Cereals and Produce Board silos or any other store where they are issued with receipts that they can use to secure loans to meet financial needs such as paying school fees and buying farm inputs as they await better prices.

“However, if farmers don’t use it judiciously, it can bring them more losses,” Juma warns.

“Farming is a business thus farmers should be knowledgeable on matters like pricing to ensure their money does not go down the drain,” he says.

The group, Juma says, should negotiate with their bank since financial institutions are now “more willing to give farmers flexible terms”.