The extension of the maize subsidy that was supposed to end last month is obviously good news for the common man who will enjoy maize flour at Sh90 for a two-kilo packet, from an average of Sh120 before the subsidies kicked off.
On the face of it, this is something worth celebrating—for consumers, bureaucrats and perhaps millers—but a deeper look tells you this could pose future problems especially for maize production.
The subsidy has so far cost taxpayers Sh8 billion. The extension means the Treasury will spend more billions.
The logic for extension at a time maize from North Rift is entering the market seems somewhat justifiable. The government says farmers are not supplying it, partly because of the rain disruption. Consequently, it has opted to release more subsidised maize.
We urge caution in the medium term. It will be recalled billions of shillings have been sunk into the Galana-Kulalu irrigation scheme, which has consumed Sh7.2 billion so far with little to show for it.
The auditor-general has already pointed out the contractual inflation involved in leasing land besides other infractions. The investment added to the current subsidy comes to a hefty Sh15.2 billion of taxpayers’ money.
The cost of the subsidy programme—triggered by drought—is prohibitive. It is a continuation of ad hoc interventions in the maize sector that has seen the government buy maize at prices that completely distort the market.
Indeed, there is virtually no maize market due to unplanned subsidies ranging from the price of fertiliser to the final produce.
The government must get serious on large-scale irrigation to sort out the maize supply shortages and, while at it stop the rent seeking.
If the price of large-scale maize produce dislodges small farmers, so be it. They should only engage in gainful farming. At the same time the State should encourage production and use of other food staples.
Failure to make strategically sound decisions will get the country stuck with the unsustainably expensive maize subsidies.
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