Bringing onboard the Kenya National Trading Council (KNTC) as the procuring agency for subsidised fertiliser will hit the National Cereals and Produce Board (NCPB) revenue, which hardly receives budgetary support from the Treasury.
The government has settled on the KNTC to procure and sell fertiliser to farmers, a role that was previously played by NCPB, which then bills the Treasury for services rendered.
Under the scheme, KNTC will pay the NCPB Sh50 for the distribution of a single bag, way below the Sh150 that the grain handler normally earns for the same quantity when doing distribution for other agencies, including the government.
NCPB normally relies on services such as the distribution of fertiliser and the sale of grain under its Nafaka outlet to grow its revenue base.
The board also leases out its store and other property to grow its finances.
The agency also gets its revenue from the handling of maize for the government, however, the State has in the past three years not been purchasing maize under the strategic food reserve, piling financial pressure on the NCPB.
NCPB managing director Joseph Kimote said the discussions are still ongoing not only on payment but also on the other logistics involved in the distribution.
“We are still in discussion on all issues involving the distribution of the fertiliser,” said Mr Kimote in an interview with the Business Daily.
The government is targeting to distribute more than three million bags of fertiliser ahead of the long rains that start in March and Deputy President Rigathi Gachagua has been leading the exercise.
Speaking when he opened the workshop for the officers who will directly deal with the distribution at the Kenya School of Government, Mr Gachagua said they would ensure farmers get the fertiliser directly without going through cartels
He said the government has kicked off the training of national and county government administrations under the new subsidy programme targeting 12 priority counties ahead of the expected rains.
The officials included deputy county commissioners, cooperative officers, chief officers and county agriculture officers from the 12 devolved units.
“The distribution, which comes as farmers prepare for planting, is aimed at improving food security in the country,” said Mr Gachagua.