Why maize pricing is a headache

Maize has always been a political crop, especially in the vote-rich Rift Valley. FILE PHOTO | NMG

What you need to know:

  • Maize has always been a political crop, especially in the vote-rich Rift Valley.
  • Besides the political angle, setting the prices has been an act of delicate balance between the interests of consumers and that of the farmers.
  • Whereas research has shown that the cost of production in Kenya is about Sh2,000, farmers have always demanded far much higher price, hurting consumers.

The ghost of maize prices is once again hounding the government as farmers and the State engage in a tough war over the right prices for purchasing the commodity this year.

Maize has always been a political crop, especially in the vote-rich Rift Valley.

Besides the political angle, setting the prices has been an act of delicate balance between the interests of consumers and that of the farmers.

Whereas research has shown that the cost of production in Kenya is about Sh2,000, farmers have always demanded far much higher price, hurting consumers.

The Egerton-based Tegemeo Institute of Research and Policy has always faulted the government’s move in setting the purchase price.

“Farming should be profitable and consumers should be able to find products affordable. But the challenge we have is government intervention,” said Timothy Njagi, a fellow at the institute.

High production costs

Farmers in Kenya are still grappling with high cost of production that has seen them lose out against cheap regional grain.

Whereas a bag of 90 kilogramme maize in Uganda costs about Sh1,200 to produce, a farmer in Kenya incurs about Sh2,000 on average for the same, according to studies by Tegemeo.

Eastern Africa Grain Council chief executive Gerald Masila says the issue of cost of production must be addressed.

“The focus should not be on price but rather on the high cost of production,” said Mr Masila in an interview with Smart Compnay.

“Whereas we appreciate the need for farmers to get good prices, their interest should not override that of consumers,” he added.

Maize flour prices have started increasing after the government announced the buying price of the commodity. This is expected to push up the cost of living for households as maize is a staple.

Millers say consumers should expect high prices as the cost of procuring maize from farmers and traders has gone up from Sh1,800 per 90 kilogramme bag last month to Sh2,100 currently.

The Cereal Millers Association chairman Mohamed Islam said there have been “movement” of prices for both maize and flour.

“At the current price that we are buying maize, obviously the prices have to go up. This is what we have witnessed since the government announced the new buying price,” said Mr Islam.

Cost of living

Maize is one of the items in the food basket used in calculating the cost of living, accounting for 36 per cent. Therefore, high cost of flour exerts pressure on inflation.

The Kenya National Bureau of Statistics (KNBS) data indicates that prices of nearly all basic food items including maize flour, sugar and vegetables fell in October, easing pressure on inflation.

Drop in food prices marginally cut Kenya's inflation to 5.53 per cent in October. Inflation rose to its highest rate in nearly a year in September to 5.7 percent.

Maize has since last year faced serious challenges including drought, insect infestation and lack of market access.

A good number of farmers were unable to sell their maize to the National Cereals and Produce Board (NCPB) last year after the silos were filled up with cheap maize from traders, locking out the genuine growers from enjoying good government price.

The government has projected a surplus (over 40 million bags) crop in the ongoing harvesting and already the prices of maize have plummeted on account of a flooded market.

The government is offering Sh2,300 per 90 kilogramme bag this year compared with Sh3,200 that was issued last year.

Kenya’s food situation is worsening despite much intervention by the government, with lack of extension officers to train farmers on good agronomical practices and declining soil fertility blamed for poor production.

Analysts say this trend in production casts doubt on President Uhuru Kenyatta’s Big Four agenda on making Kenya a self-reliant country.

At 26 per cent, agriculture contributes more than a quarter of the country’s Gross Domestic Product (GDP).
However, farmers have been left on their own with the budgetary allocation in the sector remaining meagre.

Agriculture has been receiving less than two per cent of the total budget, way below the 10 per cent that was agreed by African presidents over a decade ago during Maputo declaration.