Ugali to cost more as cartels hold sway

Kenyans will have to dig deeper into their pockets to put ugali on the table this festive season.

The price of maize flour is likely to shoot up after cereal millers caved in to pressure from the market to increase the buying price of a 90kg bag of maize by Sh500 to Sh2,800 amid a biting shortage. 

The prices had fallen to Sh1,800 for the 90kg bag three months ago, a price that farmers protested against, arguing that it would make maize farming a loss-making venture. 

And while the farmers have been pushing for higher prices for a 90kg bag, the higher prices are coming long after many of them sold all their produce at much lower figures. 

A 2kg packet of maize is retailing at more than Sh100, up from just Sh80 two months ago. Experts, however, warn that the price of unga may be much higher heading into the Christmas season. 

“Consumers should be prepared to pay more for flour as the cost of maize keeps on rising. The current price of Sh2,800 per 90kg bag means a 2kg packet will go for more than Sh120 in the next two months," said Mr Kipngetich Mutai, who chairs the Grain Belt Millers Association (GBMA).

The rising prices have been attributed to the invasion of the maize supply chain by cartels after the sector was liberalised.

Artificial shortage

The cartels are suspected to have bought the bulk of the produce from farmers at a price that was slightly higher than what the strategic grain reserve agency was offering during the harvesting period.

These cartels then hoarded the maize stocks they had in order to create an artificial shortage.

This, according to experts, is now making it hard and costly for millers to get cereals, forcing them to offer even higher prices that benefit the cartels and not the farmers. 

“We are staring at a disaster in the next six months as maize supply in the market deteriorates after most farmers sold out the grains during the harvest period at throwaway prices. Most of the grains have been sold to millers and other traders after the government expressed unwillingness to buy the produce and instead introduced the Warehouse Receipt System where farmers would have to  wait for long before receiving payment,” said Mr Ezekiel Kosgei, an Eldoret-based private land economist.

In the North Rift, the country’s bread basket, the millers have opened buying centres in Eldoret and are offering between Sh2,800 and Sh2,900 per 90kg bag and making payment on delivery as others purchase the produce at the farm-gate level in a rush to stockpile ahead of a looming shortage of the staple.

“The attractive prices being offered by millers and other traders come as a relief to the farmers who still have some maize to sell, as they need the money for personal needs including Christmas festivities, school fees and to invest in the next crop,” said Ms Leah Cheptoo from Moiben, Uasin Gishu County.

Maize prices in Kitale, Trans Nzoia County, have increased from Sh2,200 to Sh2,800 per 90 Kg bag and Sh2,900 in Kisumu, to the relief of the few farmers who may still have some produce to sell.

Threat to food security

“We expect the prices to improve further as more millers express willingness to buy the produce,” said Mr Hezron Kebenei from Trans-Nzoia County.

Agriculture experts and millers now warn that the upsurge in maize prices will hurt ugali consumers.

They further warn that the situation may be worsened by lower yields this season in the Rift Valley, the country’s food basket, after farmers reduced acreage under the crop production due to a prolonged drought, invasion by desert locusts and post-harvest losses.

Most farmers in Trans Nzoia are exporting the produce to Uganda and South Sudan, where a 90kg bag is fetching between Sh2,900 and Sh3,100.

“Unlike last season when there was a lot of maize from Uganda, there is high demand of the grains in parts of Uganda and South Sudan,” said Mr David Maina, a trader in Eldoret town.

The millers and agricultural researchers are also concerned over the high levels of aflatoxin in maize, which poses a serious threat to the country’s food security.

“The government will have to relax rules on aflatoxin considering that the scheme involves lengthy storage of the grains,” said Mr Mutai of the Grain Millers Association. 

Quality of maize flour

The association, which brings together more than 35 small-scale millers, petitioned the government to review acceptable aflatoxin level from 10 to 20 parts per billion.

“A majority of the milling firms risk closure after the Kenya Bureau of Standards (Kebs) introduced stringent measures to check aflatoxin contamination,” Mr Mutai explained.

The millers, he said, have invested more than Sh1 million in machinery for testing aflatoxin as part of conditions set by Kebs to guarantee high quality of maize flour.

The National Cereals and Produce Board (NCPB) found it difficult to buy maize as most farmers opted to sell their harvest to private millers and traders. The latter offer better prices and prompt payment.

Whereas the board is offering Sh1,305 for a 50kg bag and prompt payment, millers have hiked the prices to sh2,400 per 90kg bag and are buying the produce at the farm-gate level in a cut-throat competition occasioned by anticipated shortage in the market.

The board is seeking a market for 700,000 of maize worth Sh1.2 billion to raise capital to purchase this season crop.

It is selling the produce at Sh1,715 per 50-kilogram bag as it struggles to recover Sh12.7 billion debts by various government ministries and agencies to purchase emergence food stocks worth Sh10.3 billion.

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