alexa Maize cartels set to make a fortune from looming food crisis - Daily Nation

Maize cartels set to make a fortune from looming food crisis

Wednesday April 17 2019

maize

Women buying maize flour at a Nairobi supermarket. Consumers now need an additional Sh658 to buy a basket of goods that last year cost Sh10,000. PHOTO | FILE | NATION MEDIA GROUP 

PAUL WAFULA
By PAUL WAFULA
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The stage appears all set for profiteers to make a killing from a looming food crisis, as a war of words on whether the country has enough maize to feed itself erupts between government officials and tenderpreneurs.

Agriculture minister Mwangi Kiunjuri insists the country has more than enough maize in its stores, but millers, crafty government bureaucrats and some businessmen say the stock is far much less than claimed.

And thus unfolds a script that has become an annual ritual, and which shadowy figures use to mint billions of shillings overnight at the expense of starving Kenyans.

On Tuesday, in a rather dramatic twist to the food story, acting Kenya Meteorological Department Deputy Director Bernard Chanzu said there will be no rains this season, a forecast that paints a grim picture of what awaits tens of millions of Kenyans in the coming months.

CARTELS

The March-April-May long rains form the basis of subsistence agriculture in many parts of the country, and the prediction that they will be dismal means that, other than a biting food shortage, Kenyans will face a host of economic and security challenges tied to the water resource.

But it is in the food sector where the pain is likely to be worst, and where the country’s rapacious maize cartels are likely to be angling to make a killing.

Mr Kiunjuri told the Nation that a rapid food situation assessment report commissioned by his ministry found that the country had about 21.3 million, 90-kilogramme bags of maize, or 1.9 billion kilogrammes of the staple.

Small-scale farmers are holding the bulk of this maize — about 13 million bags — while traders have about 3.3 million bags.

The National Cereals and Produce Board (NCPB) has another 4.3 million bags and is currently buying an additional two million from farmers in a new purchase season expected to cost the taxpayer Sh5 billion.

QUESTIONABLE DATA

But the millers doubt the figures, saying they have increased their payouts for a bag of maize by Sh1,000 above what the government is paying farmers but still cannot get enough stocks.

“We want an urgent meeting so that we can reach a consensus on the way forward in dealing with the situation,” Mr Peter Kuguru, chairman of the United Grain Millers Association, told the Nation over the weekend.

Dr Timothy Njagi, a research fellow at Tegemeo Institute of Agricultural Policy and Development, says what millers are asking for is a validation of the numbers provided by the ministry, which he also thinks are not accurate.

“They were way too high,” Mr Njagi said. “Several things have happened, including the fact that the short rains were not as good as expected.”

He said the institute is also interrogating those numbers and would give its findings later this week.

But the ministry has stuck to the narrative of enough maize, raising concerns that, as has happened before, it will change its tune when it is too late and then embark on the next phase of the scam — hurried and expensive imports deals.

MAIZE PRICES

Last year, the government refused to pay farmers more than Sh2,300 for a 90kg bag of maize, but went ahead to buy the same from Mexico for Sh4,000 a bag when another maize crisis hit the nation.

Millers have already positioned themselves for the kill as they wait for the shortage to kick in and distort the market.

Already, the price of a two-kilogramme packet of maize meal has gone up by close to Sh20 between March and April this year.

In a petition to the head of public service Joseph Kinyua, the millers, among them Cereal Millers Association (CMA), Grain Mill Owners Association (GMOA), Grain Belt Millers Association (GBMA) and Association of Kenya Feed Manufacturers (AKEFEMA), say they only have about one to two weeks of supply.

When millers start squirming over supplies, farmers and traders hoard their stocks, creating an artificial shortage that eventually distorts the market in their favour.

The national cereals board, which is currently buying two million bags of maize, says farmers have stopped selling to it.

It says only 417,000 bags of maize have been delivered to its stores, way lower than its target.

“We are still buying at Sh2,500 per bag but farmers are no longer bringing the maize to our stores. They seem to be taking it elsewhere,” NCPB’s spokesperson Titus Maiyo told the Nation on phone on Tuesday.

SUBSIDY

This is the agitated, if not weary, environment that cartels want the country to be wallowing in before they pounce.

And the government, which should be better prepared given its access to data and institutions funded by the taxpayer to prepare for days of shortages, runs the risk of being caught flat-footed, again.

Last year during a similar stage-managed process, the government rushed into a poorly structured subsidy programme that saw taxpayers indirectly subsidise millers’ production costs at the farmer’s expense.

When the import subsidy window was opened, importers who were waiting for the policy shift flooded the market with cheap maize from Mexico and South Africa.

By the time the window was shut, more than 10 million bags of maize had been brought into the country. Much of it was left to rot away, rendering it unfit for human consumption.

The country’s food storage management system is so inefficient that the Senate’s Agriculture Committee last year found thousands of bags of beans that had been lying in a store for more than 10 years.

NCPB CAPTURE

A forensic audit also found that the government imported an extra four million bags above the six million bags that had been approved by an inter-ministerial committee.

In October 2016, the Strategic Food Reserves Oversight Board entered into an agency agreement with NCPB for the purchase of two million bags of maize for a period of two years on a budget of Sh6 billion.

However, the NCPB went ahead and spent Sh11 billion on the scheme, way above the budget set for strategic maize reserves, revealing what sector experts called “NCPB capture” by traders and the politically influential maize millers lobby.

The NCPB says the country bought 3.6 million bags of maize in 2017/18, making it one of the biggest purchases in the past five years.

Tegemeo Institute of Agricultural Policy and Development, in a recent report, estimated that the country produced about 46.1 million bags in 2018, up from 35.4 million bags in 2017, mainly due to above-normal rainfall and minimal pests and diseases.