Farmers left to middlemen as NCPB runs out of money
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The board said it had bought maize worth Sh865 million by Sunday, mainly from farmers in the North Rift and western Kenya, and was expected to use the remaining Sh255 million to settle farmers’ dues for produce delivered this week.
The cash crunch could once again expose farmers to middlemen who recently raised the price to Sh1,800 per bag following the entry of NCPB in the market late last month.
Delays in releasing cash will leave farmers with two options. First, deliver their produce to the board and wait for payment. Secondly, they can sell their produce to middlemen who are expected to reduce prices now that farmers will not have an alternative buyer.
National Cereals and Produce Board (NCPB) has almost exhausted the initial Sh1.12 billion offered for maize buying, leaving the majority of farmers at the mercy of middlemen who pay far much less than it does.
The board said it had bought maize worth Sh865 million by Sunday, mainly from farmers in the North Rift and western Kenya, and was expected to use the remaining Sh255 million to settle farmers’ dues for produce delivered this week.
The cash was part of the Sh2.7 billion the Treasury had set aside for purchase of maize in the current financial year to cushion a small group of farmers against middlemen who pulled down prices for the majority to a low of Sh1,200 for a 90 kilogramme bag in November from Sh3,800 in May.
The cash crunch could once again expose farmers to middlemen who recently raised the price to Sh1,800 per bag following the entry of NCPB in the market late last month.
Agriculture secretary Felix Koskei Tuesday said that the Treasury will release the remaining cash soon.
“We have enough money hence Exchequer transfer is just an administrative issue,” said Mr Koskei.
This comes at a time when the Treasury is seeking parliamentary approval for an additional Sh57 billion in a mini budget that came six months into the current financial year.
The board is paying farmers Sh2,300 and a Sh500 rebate per 90kg bag of maize and Sh1,275 and Sh278 rebate for a 50kg bag respectively. The rebate will be paid later.
“We had purchased 557,474 bags of 50 kilogramme package at Sh865, 757,122 as of January 4,” said NCPB managing director Newton Terer.
This is equivalent to 309,708 90kg bags which is less than half the one million bags targeted for replenishing the strategic grain reserve that was depleted last year.
Delays in releasing cash will leave farmers with two options. First, deliver their produce to the board and wait for payment. Secondly, they can sell their produce to middlemen who are expected to reduce prices now that farmers will not have an alternative buyer.
The presence of NCPB in the market helps to regulate prices and reduces the influence of brokers.
“Prices have started going up and middlemen are offering about Sh1,800 per bag since NCPB started the buying exercise,” said Anthony Kioko, the CEO of the Cereal Growers Association.
“There is a high likelihood of prices dropping once NCPB exhausts the money given by the State.”
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