Millers raise prices as competition for maize intensifies

Farmers dry their maize in Eldoret. NCPB has started buying a 90kg bag of maize at Sh3,000. Photo/FILE  NATION MEDIA GROUP

By GERALD ANDAE


IN SUMMARY
The government is buying a 90kg bag at Sh3,000 for the strategic grain reserve (SGR) as it seeks to boost stocks ahead of an anticipated shortage from the ongoing harvest
Millers have been paying farmers between Sh2,000 and Sh2,500 while traders have been offering as low as Sh1,800 for the 90 kilogramme bag
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Competition for maize in the market has intensified following the government’s release of Sh3 billion to buy the commodity through the National Cereals and Produce Board (NCPB).

The government is buying a 90kg bag at Sh3,000 for the strategic grain reserve (SGR) as it seeks to boost stocks ahead of an anticipated shortage from the ongoing harvest.

“We have money to pay farmers for their deliveries and we urge them to bring in their produce in order to enjoy the favourable prices,” said Jonah Marindich, the North Rift regional manager for NCPB.

Millers have been paying farmers between Sh2,000 and Sh2,500 while traders have been offering as low as Sh1,800 for the 90 kilogramme bag.

However, the government-set price has forced both the millers and the maize merchants to increase their price to Sh2,900 to attract farmers.

Millers have also been compelled to reduce the duration they have been taking to pay farmers from a week to 48 hours as they compete for supplies from farmers who are being attracted by the price offered by the grain handler.

Mr Marindich said that the move by the government to set the price is meant to stabilise maize prices in the market.

“When the government set a minimum price at which it will purchase maize, it is not doing so to distort the market but rather to save farmers from exploitation,” he said.

Some farmers opt to sell their maize to millers in order to avoid the long queues and stringent conditions they have to meet before delivering produce to the board.

NCPB only buys maize with a low moisture content of 13 per cent and rejects the crop that has a high number of diseased or broken grains.

Millers have in the past cried foul over the move by the State to intervene in pricing, saying this would create unfair competition.

“When government says that it will buy maize at Sh3,000 per 90-kilogramme bag, and millers are going by the market price of about Sh2,500, obviously this move will work at the advantage of the NCPB,” Diamond Lalji, chairman of the Kenya Millers Association said.

Lillian Kirimi, a senior research fellow at the Tegemeo Institute of Agricultural, Policy and Development, says by selling maize at Sh3,000, farmers make an “abnormal” profit given that the cost of production is far below the selling price.

“The cost of production in Nakuru is Sh1,400, Sh1,952 in Uasin Gishu and Sh1,741 in Trans-Nzoia. When you compare these amounts to the selling price, you will find out that the profit margin is huge and the consumers are the ones bearing the burden of the high prices,” says Dr Karimi.

NCPB has so far bought 306,000 bags of maize in the North Rift, but the process is being slowed by the ongoing rains that have so far delayed the supplies.