What you need to know:
- The government targets the importation of 150,000 tonnes of rice, 125,000 tonnes of cooking oil, 200,000 tonnes of sugar, 50,000 tonnes of wheat and 80,000 tonnes of beans through the Kenya National Trading Corporation (KNTC).
- Maize millers turned down the government’s offer to import under the duty-free programme indicating that a condition to import a 90kg bag of maize at Sh4,200 was impractical.
- All the 23 members of the Cereal Millers Association (CMA), who had applied to participate, pulled out following the disagreement on landed prices.
A pricing dispute on the importation of cheap food could see households continue to endure high costs as government plans to lower commodity prices through duty-free importation shows early signs of the making of a scandal.
The duty-free imports of maize, rice, sugar and cooking oil expected to last for a year from January 20 are intended to help reduce local retail prices of the commodities, but wrangling over profit margins has overshadowed the programme.
The government targets the importation of 150,000 tonnes of rice, 125,000 tonnes of cooking oil, 200,000 tonnes of sugar, 50,000 tonnes of wheat and 80,000 tonnes of beans through the Kenya National Trading Corporation (KNTC).
A further 900,000 tonnes of duty-free maize importation had been scheduled starting February 1 by the Ministry of Agriculture. The maize imports programme has been held hostage by pricing wars, with millers boycotting the bids that have been snapped up by unnamed traders.
As Kenyans wait for a break from the high prices of food commodities, the row simmers among players in various industries and faceless traders who have clinched the deals to import the products. There are also no vessels scheduled to dock at the port of Mombasa with maize, according to the Kenya Ports Authority’s ship list.
In the list of vessels expected in the country until March 1, the Port of Mombasa is expected to receive a total of 27 vessels in the next 14 days – 15 container cargo vessels, three car carriers, eight conventional vessels and an oil tanker.
This raises fears of a looming crisis, even as millers hold their ground not to import under conditions set by the government.
State offer turned down
The maize millers turned down the government’s offer to import under the duty-free programme indicating that a condition to import a 90kg bag of maize at Sh4,200 was impractical.
They said high international market prices and shortage of the commodity could push up the cost to Sh6, 000. But some have questioned the millers’ sincerity, given past cases where maize was speedily shipped in from neighbouring countries despite initial reports it was to be ferried from as far as Mexico.
By yesterday, the government and millers had not agreed on key issues surrounding the importation, dimming the chances of households getting cheap maize flour any time soon.
This is even as the price of a 2kg packet of maize flour, which was expected to come down considerably, continues to retail at Sh190 in most shops.
Sources have intimated to the Nation that some brokers who have been issued with licenses to import cheap maize have been unable to do so and have unsuccessfully resorted to asking millers to import on their behalf.
“Some politically connected persons who were issued with the licenses to import are now approaching millers quietly with offers to allow them to import with the licenses, but millers are reluctant because of the condition on prices,” a source said
Agriculture Principal Secretary Harsama Kellow said the traders who were issued licenses to import indicated they would provide the product at Sh4,200 for a 90kg bag.
“The aim of these imports is to lower the cost of flour and we cannot allow millers to import maize at any price that they want as this will not meet the government’s objective,” said the PS.
He added: “We expect the duty-free maize to arrive in the country early next month. The delay is due to several logistical challenges, including approval of traders to bring in the produce.”
All the 23 members of the Cereal Millers Association (CMA), who had applied to participate, pulled out following the disagreement on landed prices.
“To the best of our knowledge, we have not seen a list of gazetted importers and none of our members has been issued a permit to import. At the moment, the cost of a 90-kilo bag of maize grain will vary depending on the source, but would be in the range of Sh5,500 to Sh5,600,” said CMA Chief Executive Officer Paloma Fernandes.
“Normally, procurement of grain abroad can take between 30 and 60 days and is subject to availability of grain. We can only estimate the time once any of our millers get their permits,” Ms Fernandes added.
“Within a week, you will see maize flour prices rising again and it could cross Sh200 since maize prices have risen from about Sh4,800 to Sh6,000 for a 90kg bag locally after farmers realised no cheap imports are coming in as was expected,” a miller said.
“The produce is currently going at between Sh4,800 and Sh5,200 per 90kg bag at the farm gate level, but the stocks are not sufficient to sustain our crushing capacity for the next month,” said Mr David Maina, a miller in Eldoret.
Most farmers in the North Rift region, the country’s food basket, have sold out their maize after the government issued notice to import duty-free maize.
“The attractive prices of above Sh4,600 per 90kg bag motivated most farmers to dispose their produce and most of them, including large-scale ones, have no surplus to release to the market,” said Kenya Farmers Association director Kipkorir Menjo.
Mr Ken Nyaga, chairman of the United Grain Millers Association, said the cost of maize on the international market is high because of a shortage resulting from the Russia-Ukraine war that has disrupted the supply of grains. This, he said, makes it very difficult to get maize that will land in Kenya at the price that the government wants.
“There is a very serious shortage of grain in the market and the cheapest bag of maize that will land at the Port of Mombasa in the coming weeks will be at Sh5,600 for a 90-kilo bag,” said Mr Nyaga.
No more "ugali saucer"
And customers are unlikely to continue getting the usual “ugali saucer” after restaurants put up an array of cost-cutting measures.
“Ugali saucer has been suspended until further notice due to biting maize shortage that has impacted negatively on our operation,” read a notice in one of the food kiosks in Eldoret Town.
Should the government’s programme targeted at arresting the spiralling cost of living households continue to endure failure, it will add to the number of similar programmes that were messed up from the onset and ended up not benefiting Kenyans as business cartels pocketed hundreds of millions of shillings.
A three-week maize flour subsidy between July and August last year, for instance, failed to lower prices despite gobbling up over Sh4 billion, with Kenyans continuing to buy the product at Sh220 and above.
A similar maize subsidy in 2017 saw the country treated to a bizarre drama where some brokers pocketed hundreds of millions of shillings pretending to import 70,000 tonnes of maize from Mexico, while a good chunk of the product came from neighbouring Ethiopia.
While cooking oil manufacturers recently complained that the planned importation through KNTC was unfair for engaging other traders, the Ministry of Trade remains bullish on its decision.
“Importing edible oil in containers and repackaging the same in 20-litre jerry cans does not meet the threshold of value addition and manufacturing,” Trade Cabinet Secretary Moses Kuria said.
On the other hand, rice farmers indicate that they currently have enough produce and that high prices have been caused by high input prices such as fertilisers.
“At this time, we have enough rice, there is no need for the importation of cheap rice as it will negatively affect farmers. But from May, when our produce will have gone down, the government can import as it wishes,” said Mr Ndege Muriuki, a representative of rice growers in Mwea.
The farmers expect produce this year to be about 80 per cent of the average annual production, due to the short rains witnessed last year.
One of KNTC’s mandates is to partner with other players to avail products for the agricultural sector, but the latest audit report faulted it for lack of proper internal controls and risk management measures, including a fraud prevention framework.
“The Cabinet, through the Executive Office of the President, approved the positioning of KNTC Limited as an anchor agency for the state initiatives to create price stabilisation for essential household food items in the face of prolonged drought affecting Kenyans,” Kenya Revenue Authority said in a February 14 circular.
But some players doubt the agency’s capacity to undertake the programme and have an impact on lowering food prices.
It is not only KNTC that has been unable to step in and perform its legal mandate to stabilise market prices on behalf of the government, with others like the National Oil Corporation of Kenya (Nock) also unable to stabilise market prices when fuel costs are high.
Additional reporting by Barnabas Bii