State House in crisis meeting as maize price hits 5-year high
Cattle graze on a maize crop destroyed by drought at Mwitoti village, Mumias, on January 7. PHOTO | ISAAC WALE | NATION MEDIA GROUP
What you need to know:
Millers said the rapid rise in the price of maize flour was being driven by the fact that a 90kg bag of maize is now selling at Sh3,400 compared to Sh2,800 last year.
Kenya was last hit by a maize flour crisis in 2011 when a 2kg packet retailed at Sh140 in the wake of a serious shortage of maize.
Tanzania, one of the countries that supplements Kenya’s maize stocks, has restricted export of grains, while Uganda did not have a good crop in the last season to cover up for deficit in Kenya.
President Uhuru Kenyatta Wednesday met his top advisers to discuss a rapid response plan for the drought that is ravaging parts Kenya even as the price of maize flour — the country’s staple — hit a five-year high with the sharp drop in grain supply countrywide.
Cabinet secretaries in charge of Treasury, Devolution and Agriculture alongside top bureaucrats in the three ministries met the President at State House, Nairobi to brief him on the response plan they are said to have crafted during a late night meeting on Tuesday.
State House said Mr Kenyatta had received a preliminary report on the famine situation and agreed to meet the team again on January 27 when it is expected to submit a detailed report on the unfolding crisis.
“The national government will realign its budget to address the situation and county governments should also come up with measures aimed at curtailing the situation,” said the statement from State House.
Millers said the rapid rise in the price of maize flour was being driven by the fact that a 90kg bag of maize is now selling at Sh3,400 compared to Sh2,800 last year.
“This is the highest price in the last five years and the cost will continue to rise due to a tightening supply of maize in the market,” said Nick Hutchinson, the chairman of the Cereal Millers Association.
Treasury secretary Henry Rotich, his Devolution counterpart, Mwangi Kiunjuri, and Willy Bett (Agriculture) on Tuesday met at the Treasury in a sitting that lasted up to midnight to craft a response to the rising cost of maize and are expected to issue a comprehensive statement today.
Highest price
A 2kg packet of maize flour is now retailing at more than Sh113 in Nairobi, with the highest price of Sh121 recorded at Nakumatt supermarkets. A similar packet of maize retailed at Sh90 in January last year.
The maize flour price inflation crisis is underlined by the fact that as late as last month a 2kg packet retailed at an average of Sh97.
Kenya was last hit by a maize flour crisis in 2011 when a 2kg packet retailed at Sh140 in the wake of a serious shortage of maize. This was the highest maize flour price to have been registered in a decade.
On Wednesday the authorities insisted that the country has enough maize to last up to June, pointing to the fact that farmers in the country’s grain basket North Rift region harvested its crop in October and sold most of it to the National Cereals and Produce Board (NCPB).
Millers, however, maintained that there is an acute maize shortage in the local market.
The NCPB bought a 90kg bag of maize from farmers at Sh3,000, forcing millers to increase buying prices in order to attract stocks from farmers and traders.
But even as farmers and traders reap from the price wars between the NCPB and the millers, consumers are the ones bearing the brunt of the increased cost of flour by more than 20 per cent since last October.
Tegemeo Institute, a research wing of Egerton University, had warned last year that consumers would bear the consequences of the government’s decision to increase the price of maize from Sh2,300 to Sh3,000 a bag.
James Githuku, a senior research associate at Tegemeo, said the price increase was ill-advised as it would impact negatively on consumers.
“It will distort the market by forcing other players such as millers to increase purchase price in order to attract buyers — a move that will ultimately affect the cost of flour,” he said.
Last October Tegemeo released a report indicating that the cost of producing a bag of maize is Sh1,300 for large-scale farmers and Sh1,700 for small holders, implying that at Sh3,200 per bag farmers earned up to 100 per cent profit on their produce.
The findings also warned that Kenya would suffer a shortage of nine million bags by May, as the La Niña (drought) phenomenon that started in October impacted negatively on the short rain crop that is planted in August.
Millers argue that that the current situation is unlikely to ease any time soon following Tanzania’s decision to restrict grain exports.
Supplement maize stocks
Tanzania, one of the countries that supplements Kenya’s maize stocks, has restricted export of grains, while Uganda did not have a good crop in the last season to cover up for deficit in Kenya.
“We are not getting any maize from Tanzania as they have restricted export of grains to other countries,” said Mr Hutchinson, who is also the chief executive officer of Unga Limited.
In September, the Tanzanian government introduced stringent maize export rules requiring traders to seek fresh permits for rice and maize.
The Tanzanian government also introduced quotas to limit the export quantities.
