Millers have rejected Sh2.7 billion bags of maize the government offered in exchange for the Sh2.3 billion debt owed processors on claims they were given a grade lower than that is suitable for consumption.
The processors argue that the 1.7 million bags the government wants to give them does not meet the required standard for milling, saying they expected first or second grade maize.
President Uhuru Kenyatta in January directed the National Cereals and Produce Board (NCPB) to release 1.7 million bags to the market at Sh1,600 per 90-kilo bag.
“Millers were only interested if offered the grade one or two quality, which is not what we were offered. So we even declined to take it after seeing what was being offered,” said an official of the Cereal Millers Association (CMA).
The move followed talks between the government and the millers in November last year on the possibility of the State using the maize at Strategic Food Reserve as compensation for the debt.
The government had announced that of the 1.7 million bags, 300,000 bags that were unfit for human consumption but suitable for animal feeds would be sold to millers at Sh1,400 for 90-kilo bag.
It is not clear at what point millers changed their mind as they had welcomed the compensation deal when government made the announcement. They had said the State's move showed commitment to repay the debt.
“We are happy of the government decision to reduce the debt that it owes millers,” said a CMA official in February.
The State owes about nine millers Sh2.3 billion arising from the maize imported and sold to the government in 2017 under the subsidy programme.
Under the subsidy deal, millers bought imported maize at above Sh4,000 and were expected to receive a rebate of about Sh1,700 per bag to allow them sell the staple at Sh90 per two-kilo packet.