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Opinion & Analysis

EDITORIAL: Red tape to blame for swings in cereal prices

The government has set aside Sh7.1 billion to restock the NCPB’s strategic grain reserve. FILE PHOTO | NMG
The government has set aside Sh7.1 billion to restock the NCPB’s strategic grain reserve. FILE PHOTO | NMG 

Months after maize shortage raised flour prices to record highs and forced the country into an expensive taxpayer-funded subsidy programme, another harvesting season is here with us.

The harvest period which began in September in the food baskets of Western and parts of Rift Valley is, however, not expected to make positive impact on household budgets.

Market data shows maize prices are nowhere near the levels that normally obtain during harvest seasons. 

The Kenya National Bureau of Statistics (KNBS) data shows that a kilo of maize retailed at an average of Sh56.80 by end of October compared to Sh43.98 the same month last year. In short, the harvest season glut is not pulling down prices for the consumer this time round.

One can also bet that flour prices will rise to recent highs again at the lapse of the State’s five-month import subsidy. That’s too heavy a price to pay for official procrastination.

Had the government split the National Cereals and Produce Board (NCPB) into separate strategic reserve units and the commercial wing – as indicated after the 2008 food crisis - there would be no reason to worry about the seasonal price swings.

The NCPB’s commercial wing, with a strong financial muscle, can buy and stock adequate quantities during harvests to be sold back to millers and traders gradually over the production cycle, guaranteeing stable supply (and prices) through the cycle. 

And because Kenya lies in the same ecological zone as most of its maize source markets, an endowed NCPB can easily extend its procurement to other eastern Africa markets in cases where depressed rains and pests have suppressed domestic production.

Granted, the government has set aside Sh7.1 billion to restock the NCPB’s strategic grain reserve. At Sh3,200 per bag, that budget can only enable the national granary to stockpile some 2.2 million bags.

That is one quarter of the eight million bags that the NCPB needs to retain in its commercial unit silos to be able to play its price stabilisation role effectively in a market that consumes three million bags per month.

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