Maize farmers will earn Sh2,200 per bag of the produce this year and receive, for the first time, a rebate of Sh500 per every 90-kilogramme bag delivered at the National Cereals and Produce board (NCPB).
The offer price announced Wednesday by Agriculture secretary Felix Koskei, though lower than the Sh3,000 that farmers expected, is set to jolt the market currently grappling with harvest-time glut that has pulled down the commodity’s price to Sh1,200.
Mr Koskei said the offer price was arrived at after factoring in the cost of production, consumers’ interest and farmers’ profit margin per bag.
“Arriving at a price of Sh2,200 was as a result of many factors that had to be put in consideration. The cost of production as well as the cost of flour,” he said.
But in a move aimed at calming farmers in maize producing regions who have been complaining of losses resulting from depressed market prices since late October, the ministry has announced a Sh500 per bag rebate.
The minister said the one-off rebate payment was decided upon after considering the challenges that farmers encountered this year including delayed rains and a viral maize disease that affected production.
This is the first time that State plans to directly compensate farmers for such losses since it scrapped the minimum price guarantees for agricultural commodities in 1980s.
Mr Koskei said by setting the price, the government had also factored in the current market price and came up with an average figure that would set a benchmark for traders and millers who will start buying the grain competitively.
The market prices had fallen by over 50 per cent on the absence of the NCPB, with brokers buying a bag of maize currently at Sh1,200 and millers offering Sh2,200 from a high of Sh3,800 in May.