Maize milling drops over Sh4 billion subsidy debt

Workers offload bales of maize flour from a lorry at a shop in Mukuru Kwa Njenga slums on June 23, 2022. PHOTO | FRANCIS NDERITU | NMG

Millers have scaled down purchasing maize amid a cash crisis in the wake of Sh4 billion that the government owes them.

The debt, argue the millers, has cut their working capital even as the cost of maize remains high amid diminishing demand for flour.

The processors argue that the consumers’ purchasing power has significantly declined, resulting in a slow movement of flour on the shelf.

“Maize remains costly on the market and our capital is tied at the Ministry of Agriculture, this means we do not have enough to purchase more stocks,” said Ken Nyagah, chairperson of the United Grain Millers.

The amount owed to millers results from the Sh8 billion subsidy that was introduced by former President Uhuru Kenyatta to tame the high cost of flour that had topped Sh250 for a two-kilo packet. The scheme lowered the cost of the staple to Sh100 before rising again to Sh200.

However, only Sh4 billion was deposited in the escrow account for payment of millers who participated in the subsidy programme.

Processors say they have been seeking audience with government officials over the pending payments in vain. “We have been told that the issue will be dealt with by the new administration,” said Rajan Shah, chief executive at Capwell Industries.

Mr Shah said he is buying small quantities to keep the mills running but not for stocking. Normally they stock huge quantities for milling in the future.

Farmers have started harvesting in North Rift and this has seen a marginal decline in the price of the produce at the farm.

A 90-kilo bag that had been going for Sh4,800 is now retailing at Sh4,500 at the farm gate, a cost considered to be high at this time of the year given that a new crop is on the market.

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