Maize prices increase on the back of heavy rainfall
Posted Friday, December 30 2011 at 00:00
Maize prices have been rising in the last one month on increased rainfall that farmers said was hampering delivery to the markets.
The price of one tonne of maize in Nairobi has increased to Sh34,694 a tonne in December from Sh27,888 in October, the lowest price since May 2011.
“The supply is hampered by the rain currently hitting most parts of the country,” said Regional Trade Intelligence Network (Ratin) in its December market report.
David Nyameino, the chief executive of Cereal Farmers Association of Kenya, said lack of all-weather roads in key maize growing regions had caused what he viewed as a temporary upswing in prices. The weathermen, however, said the prices could come down beginning January when the dry spell sets in.
Nick Hutchinson, the chief executive of Unga Group, said that he expects the prices of maize to start rising steadily from next month. “We are yet to increase prices but we will start responding to changes come next month,” he said.
Some farmers are holding out for higher returns with the National Cereals and Produce Board expected to raise the price per bag to Sh3,500 by February next year. Competition for maize between millers and the NCPB could also lead to further price increases once the impact of the bumper harvest fizzles out.
The NCPB has so far bought 345,000 bags of maize from farmers, bringing it Sh200 million closer to exhausting the budget so far disbursed for replenishing strategic reserves.
NCPB Managing Director Gideon Misoi said good weather had helped in the quick delivery of maize after heavy rains at the onset of the harvesting season subsided.
“Farmers should not panic that the board will fail to pay them. The government has undertaken to release more money once the Sh1.5 billion at our disposal is spent,” said Dr Misoi. The Board has paid out more than Sh752 million to farmers, buying a 90 kilogramme bag of maize at Sh3,000.
The MD said the government is planning to buy eight million bags of maize for the strategic grain reserve in the next two years. Farmers not keen to sell the grain immediately after harvest have the option to secure it under the house receipting system where the maize is stored in the board’s silos and coupons issued, which can be used to access credit pending sale.
Last week, the government waived drying charges to avoid the crop being infected by aflatoxin, a fungi that thrives in damp conditions.