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Why I think NCPB has outlived its usefulness

The National Cereals and Produce Board (NCPB) was principally created by an Act of Parliament to regulate agricultural commodity trade and grain management in Kenya. It has, however, outlived its usefulness.

Although the NCPB procures, stores and maintains a Strategic Grain Reserve (SGR) on behalf of the government to be used for food security, it has never prevented cyclical food shortages that often force the government to seek help elsewhere. In times of a glut, it does not have the mechanisms to find new markets. Its grain pricing often interferes with market dynamics. As a result, grain farmers suffer from the fixing of prices.

NCPB prides itself as offering services like drying, warehousing and grain cleaning, to name just a few that help farmers minimise losses, but post-harvest losses, estimated at 40 per cent, are still unacceptably high, particularly for a country that is seeking to ensure food security as well as fight poverty.

Most of these services are outside the board’s mandate and perhaps contribute to the managerial confusion in which they find themselves. The board’s definition of grain, as stated in their website, does not conveniently include wheat, perhaps because wheat is largely produced by large-scale, wealthy commercial producers and importers.

Since the board rarely interferes with pricing of the wheat, the market dynamics have made the commodity affordable.

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Research from Tegemeo Institute of Egerton University, which specialises in agricultural economics, shows that consumption of wheat has increased to the extent that it is now arguably the staple food of Kenya.

There are lessons to learn from wheat farming. The first is that it is a fallacy that NCPB will one day help subsistence farmers come out of poverty. In effect, it has put the farmers into a perpetual dependence on subsidy both on inputs as well as the outputs without measurable progress. It has also created a fertile ground for politicisation of maize production.

Farmers, especially in the North Rift, stand a better chance to grow if markets determine the pricing of their output.

Too much government into any form of business stifles innovation, impoverishes producers and undermines entrepreneurship. This perhaps explains why most subsistence farmers have remained poor despite the fact that there are fertiliser subsidies every season.

There is no clarity as to when the farmers would graduate from this vicious circle of poverty. Only a bold move to cut loose the dependence syndrome and inculcate the ethos of independence of thought can salvage farmers from the forces that perpetuate the status quo.

NCPB’s expansion into certified seed and fertiliser marketing oversteps its mandate into a territory that it has no expertise in.

It is a strategy that undermines other institutions such as Kenya Seed Company and several local fertiliser manufacturers.

It will do more for Kenya if it remains a regulator that encourages development of a commodities exchange market and facilitates inspection of agricultural outputs throughout the country. If this were to happen, it would spur the growth of e-commerce throughout the country and create jobs in virtually every corner of the country.

NCPB’s commercial role constitutes commercial grain trading, which is what it considers as its core business but undermines grain markets. This is a contradiction in terms, and a major case on why the NCPB Act needs to be revised.

A regulator does not compete with private players and retain its core mandate of regulation. As it stands today, there is hardly any regulatory framework on commercial grain trading.

It is why NCPB abhors any competition from neighbouring countries, leading to a protectionist mentality even at times when logic dictates that we buy from elsewhere. If it were to deregulate the sector and allow markets to determine the prices, just as the country did to the oil or the banking sectors, there would be tremendous growth.

In the past, government-owned banks dominated the industry and it can be recalled that credit at the time was meant for well-connected people but as soon as the sector was liberalised, innovation took the centre stage providing credit to the poor.

The importance of agriculture cannot be understated. If Kenya wants to grow the sector, there is greater need now than ever before to discourage subsistence farming at all times, create better institutional arrangements that foster greater economic expansion, less dependence on government and better prospects for growth.

Former US president Theodore Roosevelt once said: ‘‘In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.’’
Leaving NCPB in its current state is perhaps the worst decision on food security we shall ever make.

The writer is an associate professor at University of Nairobi’s School of Business

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