Unga price hits Sh124 amid imports stalemate

Maize millers and major supermarkets have started reporting supply shortages as a Cabinet impasse over imports of the Kenyan staple put the country on the brink of a food crisis.

The Strategic Food Reserve (SFR) has less than one million bags of maize in stock, which is hardly enough to last the country for more than two weeks.

With the Cabinet still hesitant to make a decision on the lifting of taxes to allow for duty-free maize imports, the country is staring at the possibility of running out of maize in a matter of weeks.

Agriculture Secretary Mwangi Kiunjuri, who in April announced that maize stocks in the country would only last until the end of June, said in an interview that the country is facing a severe shortage.

"The state of maize in the country is just as I said in April, nothing has changed. I have played my role by giving necessary advisory to the Cabinet," said Mr Kiunjuri on Friday.

Mr Kiunjuri had in May said the decision on how much, where from and when to import duty-free maize would require the approval of a full Cabinet to avoid falling into the trap of cartels that take advantage of the window to flood the local market with cheap imports.

It can take up to one month, sometimes more, to ship maize from a source country to the port of Mombasa.

The National Cereals and Produce Board (NCPB) had stocks of four million bags as of last month, of which three million is being released to millers to supplement their limited stocks.

Besides relying on supplies by formal retail channels, a vast number of Kenyan households get supply of maize flour from local posho mills, which could help to soften the looming shortage.

In an interview, Unga Limited chief executive officer Nick Hutchinson said millers are already suffering a supply shortage, even after increasing their offtake price to Sh3,200 for a 90 kilo bag.

"There could be a serious shortage that may lead to higher prices of flour in the market if there is no quick intervention," said Mr Hutchinson.

The Unga boss said the supply of the grain to millers has been so tight that they are not meeting the demand of their customers.

Naivas Supermarkets chief operating officer Willy Kimani said the supply of unga from processors has been getting thin in recent days.

"Supply is tightening," said Mr Kimani.

All the brands of maize flour have so far crossed the Sh120 per two-kilo packet mark, as the shelf price reflects tightening supply of the raw material in the market.

Jogoo was until last week the only brand of flour that had risen above Sh120 as it retailed at Sh121 for a two-kilo packet. Pembe is currently selling for Sh124, Jimbi Sh120 and Soko at Sh122 in Nairobi.

Millers have had several discussions with the Ministry of Agriculture on availability of maize in the country, with the government noting that there was still some stocks of grain in neighbouring Tanzania, that can supplement local produce.

Mr Kiunjuri had earlier said the government is conducting a survey to establish the available stocks in the hands of farmers.

In an earlier estimate, Mr Kiunjuri had said that the government was going to import 12 million bags of maize, of which two million would be for animal feeds.

In a news briefing at Parliament Buildings shortly after presenting this year’s budget, Treasury Secretary Henry Rotich said he was aware that the current stocks of maize would be exhausted by July and that the Cabinet would make a collective decision on imports.

"This matter is being reviewed by Cabinet. There are indications that we may not have enough maize going forward," said Mr Rotich.

The government had projected that the available stocks would be depleted at the end of this month and was banking on imports to bridge the deficit.

Kenya’s maize consumption has been going up over the years with the current rate standing at 4.2 million bags a month, up from three million previously.

Maize imports have been so controversial in the past, that farmers have always faulted the government whenever the window is opened.

The government had said only registered large-scale millers would be allowed to import maize to cover the supply deficit in a bid to address the farmers’ concerns.

The Cereal Growers Association says the government should not waive duty on imports at the moment, to avoid impacting negatively on prices.

"The government should not allow importation of grain in the country at a time when the crop from South Rift will be ready for harvesting in July, this is a move to sabotage farmers," said Farnie Kruger, chairperson of the Cereal Growers Association.