Editorials

Audit grain supply chain to protect consumers

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The National Cereals and Produce Board, Nakuru depot. FILE PHOTO | NMG

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Summary

  • Grain prices in this country have in recent years become highly unpredictable amid all manner of endless excuses by some players, especially at the retail level.
  • Curiously, the traders have been quick to raise consumer prices of maize on claims of shortages due to diverse factors but slow to make adjustments even when the market conditions pointed to lower pricing.

As the harvesting season gets underway in the main maize-producing areas of the country, it is a chance to review the opportunistic behaviour of some millers and traders.

Grain prices in this country have in recent years become highly unpredictable amid all manner of endless excuses by some players, especially at the retail level.

Curiously, the traders have been quick to raise consumer prices of maize on claims of shortages due to diverse factors but slow to make adjustments even when the market conditions pointed to lower pricing.

This is suspect because the fundamental economic principle holds that commodity prices should track the fundamentals of demand and supply if a market is truly efficient. There is an inverse relationship between the supply and prices of goods and services when demand is unchanged.

For example, when supply exceeds demand for a good or service, the expectation is that prices would fall. When demand exceeds supply, prices tend to rise. Unfortunately, there has been a serious disconnect between farm gate and retail prices of commodities in this country that should be addressed.

Whilst some may argue that there are add-on costs between the farm and shop shelves, the prices should at least reflect the shifts in supply at the farm level.

Right now, reports show that maize prices at the farm gate have dropped by 26 percent as the harvesting season begins at the country’s breadbasket.

The price of a 90-kilo bag of maize has dropped from Sh2, 700 to Sh2,000 in the main producing areas of Trans-Nzoia and Uasin Gishu counties. However, millers claim that they are buying maize delivered in Nairobi at Sh2,500.

Something is not adding up here and an urgent audit of the grain supply and retail chain would suffice to help safeguard consumer rights.

We cannot have a market system where consumer prices of maize tend to climb more but fall less even when all factors point otherwise.

An efficient market should display more responsive pricing to demand and supply because maize remains the main staple among households in this country. Consumers should fully benefit from a free market.