Cereal Millers Association: Maize Shortage - The Facts

Yes, there is a maize shortage in the country. Millers are unable to procure enough maize either from the farmers or the National Cereals and Produce Board (NCPB) to utilize their milling capacity of approx. 1.5 million bags per month and are milling between 30-40% of their capacities.

Reason for maize shortage

Post election violence which resulted in the displacement of maize farmers and the destruction of maize crops affecting maize production.

Delayed decision to import and subsequent delays in effecting importation of maize grain.

Export of significant quantities of Kenyan maize grain to more lucrative destinations prior to the export ban being placed.

dverse weather conditions at harvest have caused the quality and quantity of maize to be affected.

Some farmers are holding their stocks due to their reluctance to sell to NCPB (lower prices and delayed payments) and speculation in anticipation of higher prices.

Reason for price increase

  • Initially NCPB was unable to allocate adequate maize to the millers at a subsidized price of Kshs 1750/1830 per bag which was intended to stabilize maize prices.
  • Recently NCPB's inability to allocate any maize to millers, due to building up their strategic reserves, has resulted in millers buying maize directly from farmers at higher prices ranging between Kshs 2200 to Kshs 2300 at farm gate per bag, or buy from brokers who were availing NCPB maize and offering it to the millers at between Kshs 2200 to Kshs 2500.
  • Building of strategic reserves at a time when thevcountry is in dire need of maize is hard to comprehend.
  • Increased production costs have added to the price of maize flour.
  • Increased electricity and fuel costs have impacted tremendously on the cost of production and transportation.
  • Inability by millers to procure adequate maize stocks has resulted in them running at below 40% of their rated capacities, resulting in increased production costs per bag.
  • Given current international prices and the current stock in the country, prevailing prices are not expected to change noticeably until thesupply of maize normalizes.
Short Term Recommendation.
  • That the NCPB immediately begins allocation of maize to registered maize millers at the stipulated price of Kshs 1750/1830 per bag. This process of allocation should be based on rated capacities and should be managed in an equitable and transparent way by a multi stakeholder committee. This recommendation has already been communicated to NCPB.
  • That farmers make their produce available to the millers or NCPB to purchase. Millers are committed to purchasing local maize grain, however are not able to procure adequate quantities from the farmers.
  • That the duty on imported maize grain (50%) be waived for a specified period of time to allow stocks to be replenished, thereby, reducing market speculation. At current prices, duty free maize would land into Nairobi at similar prices to those being paid to the farmers today.
  • Long Term Recommendations
  • Over the last 40 years, we have gone through a maize crisis approximately every 5 years. There is a need therefore to undertake structural reform in the maize sub sector as follows:
  • Q Government support for input subsidies for maize farmers as has been done in Malawi, this will encourage them to produce more maize to sustain local requirements.
  • Farmers need to improve their ability to produce maize efficiently and competitively and market their produce
  • at a fair price to the consumers and export surplus maize. This will aid in maintaining price stability. Q Reduce food manufacturing and distribution costs, specifically those associated with fuel, electricity, packaging and handling at the Port of
We recommend that a multi stakeholder maize task force be established to support the implementation of these recommendations and to devise policies to enable liberalization of the grain subsector.
Diamond Laji
Chairman - Cereal Millers Association
26 November 2008

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