alexa Another scandal in the offing? How Kenya walked into a maize crisis - Daily Nation

Another scandal in the offing? How Kenya walked into a maize crisis

Wednesday July 17 2019

Agriculture CS Mwangi Kiunjuri

Agriculture CS Mwangi Kiunjuri addresses the press after inspecting maize at the National Cereals and Produce Board depot in Kisumu County on November 13, 2018. PHOTO | TONNY OMONDI | NATION MEDIA GROUP 

JOHN KAMAU
By JOHN KAMAU
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When President Uhuru Kenyatta visited Tanzania recently, part of the discussion with President Pombe Magufuli centred on importation of 1.2 million bags of maize into Kenya. After all, Tanzania is the only neighbour where the country could fetch maize for milling, and at a cheaper price.

DUTY-FREE

After a series of goofs, poor planning and politics, the country is once again staring at a maize crisis. But technocrats and politicians do not seem to agree on what to do. Some fear that another maize scandal seems to be cooking.

Agriculture Cabinet Secretary Mwangi Kiunjuri says the country is running low on maize stocks and must import as per the Cabinet’s directive. He has told off those saying there is enough maize. The national Strategic Food Reserve Trust Fund (SFRTF) chairman, Dr Noah Wekesa, says they are holding 760,000 bags of maize which remained after selling 1.2 million bags from the 1.7 million bags they put on sale in May.

This particular stock of 3.4 million bags was procured by former Principal Secretary Richard Lesiyampe. Although he was later charged in court with irregular purchase of maize at a cost of Sh5.6 billion, it is the same stock Kenya has turned to, to meet the shortfall.

Kenya consumes 60,000 bags of maize per day and requires between, 1.5 and 1.8 million bags per month. Although it requires 52 million bags of maize per year, the highest it has ever produced was 42 million bags in 2015/2016.

As a result, the country has always had a 10 million bag deficit, which was easier to fill with the Tanzania and Uganda imports. Already, the government has opened a three-month window for the duty-free importation of maize.

Dr Wekesa says the country only needs an extra two million bags – enough to cushion Kenyans before the next harvest in October. But the problem is much deeper than politicians are revealing.

20 BAGS

The collapse of maize farming and dwindling of produce has seen places such as Trans Nzoia harvest about 20 bags of maize per acre, down from 40 for small-scale farmers while large-scale farmers manage 30 bags per acre. The problem is associated with soils and the fertiliser used.

Insiders say Kenya will continue to face a staple food crisis as long as yesteryear problems are not addressed.

For years, it has been known that the National Cereals and Produce Board (NCPB) silos are archaic and can only hold 21 million bags — and not for more than six months. Given that the country still relies on rain-fed agriculture, maize production has continued to drop as the population grows.

The Galana-Kulalu white elephant maize project also stalled – and with it billions of shillings went under.

Inside the government, and within the Cabinet, it was known that the stocks procured in the last harvest would last up to June. But within the Ministry of Agriculture, there was fear any procurement might lead to another scandal.

“Nobody wanted to buy from farmers and nobody wanted to sell to millers. Actually, within the ministry, nobody wanted to make a decision touching on maize,” says an insider.

While this fear was partly traced to the prosecution of Mr Lesiyampe and six others, there is also the politicisation and cartel behaviour in the maize procurement.

YELLOW MAIZE

Over the weekend, Mr Kiunjuri took on politicians – including ODM leader Raila Odinga – who have insisted that there is enough maize in the country.

The problem with maize farming is that apart from Uasin Gishu and Trans Nzoia, all the other counties sell their produce as green maize –  for either boiling or roasting.

At the moment, a stock-out is likely. Pundits say it all boils down to lack of preparedness and unreliable data.

A report released last year under the Maize Subsidy Programme noted the data used by the country to manage the maize balance sheet “including data on production estimates, stocks, consumption and post-harvest losses were not reliable, timely and adequate”.

The report also projected that unless Kenya maintained SFR stocks at four million bags and allowed importation of yellow maize to ease pressure on white maize, the flour prices would range between Sh120 and Sh150, against the government’s desire to price the 2kg packet at Sh115.

Unless a miracle happens, insiders say, the government will be forced to intervene by either urgently buying maize from local farmers – and subsidising it – or importing from Tanzania.

In 2016, after facing a similar crisis, the government was forced to take over the milling plants of all private companies, after which it allocated them white maize proportionate to their milling capacity. It also took over all maize supply contracts from the millers and compensated them for the losses in a multibillion-shilling exercise that was both political and strategic for the Jubilee government to win the election.

POOR HANDLING

In order to help stop Raila Odinga’s “Unga Revolution”, the 21 millers were asked to dedicate their milling plants to the subsidy programme and “flood the CBD” with flour, which was done in 22 branches of major supermarkets, according to official government documents.

Insiders say by May 2017, Kenya had zero bags of maize at NCPB stores and all eyes had turned to the principal secretary in charge of agriculture. In 2019, Kenya is facing a similar crisis.

The tragedy is that the SFRTF sits only two times: When buying or selling.

But unlike in 2017 when there was an election pending, the procurement this time is slow-motioned. In that year, Mr Odinga had taken advantage of the maize shortage and was using the crisis to win votes.

“The only way left to us then was to buy maize that was non-GMO”, says an insider involved in the eight-member subsidy task force.

There were three places Kenya could buy such maize from: Tanzania, Zambia and Ethiopia. While Kenya would have opted to buy from Uganda, its maize is never used for milling since it is usually discoloured due to poor handling during drying. Again, Uganda does not use fertiliser during planting and their grains are tiny and not suitable for milling.

In 2017, Tanzania had a good harvest but President Magufuli had closed the border and traders were not able to import maize. “We bought some maize from Zambia, but it was detained in Tanzania,” says a source.

NATIONALISED MILLING

As a result, Kenya’s only option was to ferry the maize to the Beira port and load it into a ship.

The other option was to transport it through Tazara, but the cargo trains were operating once in a week – and there were no wagons.

Ministry officials were worried about the cost and agreed that by the time a bag of maize reached Nairobi, it would have cost the government Sh4,000, which did not make business sense.

Importing from Ethiopia also turned to be problematic because Kenyan lorries could not go past Moyale due to axle and insurance problems. As a result, Ethiopian lorries would take maize up to the Moyale border and offload it onto Kenyan lorries.

Quietly, Kenya nationalised milling of maize – and that is how the Sh90 flour was introduced into the market.

After a Gazette notice gave green light to anyone to trade in maize, the ministry was shocked that nobody was buying and nobody was selling.

“President Kenyatta was angry that the Unga Revolution was going to deny him a second term,” says a senior government official.

In the high seas was a ship belonging to commodity traders and a few days after the Gazette notice, it sailed to Mombasa with maize cargo.

The Agriculture PS was advised to go and receive the cargo – although it belonged to a private miller. While the intention, according to insiders, was to play politics and show Kenyans the maize was finally here, it backfired badly on the government.

MONITOR FLOW

“When we were asked how the ship managed to sail from South America to Mombasa in such a short period, we had no answers,” says a senior official involved in the saga. “We then took all the maize that was entering the country and directed it to the millers through their (millers’) association. It was first put at the NCPB.”

From the third floor of Kilimo House, a small team would meet every day to monitor the flow of maize from a computerised system.

When President Kenyatta asked traders to bring maize and sell it to NCPB in 2017, traders took advantage of the high prices set at NCPB and bought maize from the region at a cost of Sh2,200.

The only problem was that the Sh3,200 figure was not determined by any market forces but by politicians. Treasury officials questioned why the government was buying maize at a premium price while it had subsidised the fertiliser.

In the confusion, agri-traders took advantage of the directive and mopped maize from farmers to sell to NCPB, creating a scandal that saw some government officials taken to court.

An audit team found maize had actually been delivered, but the small-scale farmers had been left out during the payment.

Once again, another import is pending; another story is developing