Markets & Finance

Maize prices fall to Sh1,500 on absence of NCPB


Drying maize. Harvests in the North Rift started this month and traders reckon maize prices could fall further without the entry of NCPB into the market. PHOTO | FILE

Maize prices in Western Kenya have fallen by a quarter to Sh1,500 since the start of the month, pulled down by harvests and brokers taking advantage of the absence of the National Cereals and Produce Board (NCPB) in the market.

The 90kg bag of maize has dropped from Sh2,000 early this month and Sh3,200 in May, offering millers room to cut flour prices by the biggest margin this year.

Harvests in the North Rift – Kenya’s food basket – started this month and traders reckon maize prices could fall further without the entry of NCPB into the market.

The cereals board is yet to be allocated the budgeted Sh2.7 billion to buy maize.

While the lower prices are a boon to consumers, they look set to hurt farmers who fret they will not be able to recover production costs.

“I would have loved to hold my grain for a little bit longer and wait for a good price in future but the fact that I do not have a good storage system, I am forced to sell it out to avoid losses,” said Fredrick Muhorela, a farmer in Trans Nzoia.

Western Kenya is experiencing heavy rains that have hindered the drying of grains on open fields, paving way for brokers to buy the maize at rock-bottom prices.

ALSO READ: NCPB cuts cost of maize to tame rising flour prices

NCPB has driers and charges farmers a fee for maize with moisture content below 13.5 per cent.

Newton Terer, the managing director of the board, on Friday said Treasury is yet to disburse the Sh2.7 billion that was allocated for the strategic grain reserves.

“We are currently waiting for funds and instruction on the price before we start the activity,” Mr Terer said in a phone interview.

The Business Daily failed to get a comment from the ministry of Agriculture after Cabinet secretary Felix Koskei failed to respond to our phone calls and text messages.

The government allocated Sh3.4 billion last season to NCPB to buy more than one million bags of maize at Sh3,000 a bag.

“The NCPB sets market benchmarks by offering competitive prices and delay to allocate it funds is exposing us to exploitation by middlemen,” said Willy Lagat, a farmer from Chepkumia, Nandi County.

Retailers have this month cut the price of the two-kilogramme packet of maize flour to a low of Sh104 from Sh118 in May, offering relief to households currently enjoying cheaper electricity and fuel.

Maize prices have a big effect on inflation in Kenya where the commodity is the staple food and accounts for a significant share of poor households’ budget.

The inflation rate fell to 6.6 per cent last month from 8.36 per cent in August on falling food prices.