Food Security Crisis Deepens as Maize Stocks Run Low

Business Daily (Nairobi)

Zeddy Sambu

30 May 2011

Kenya’s food security crisis is deepening following the depletion of maize and fewer options in the import market as players in the cereals sector exchange accusations of hoarding and unfair trade practices.

The maize shortage has pushed prices by 100 per cent since last year, and a 50 per cent surge in the cost of flour from Sh75 to Sh110 for a two-kilogramme bag.

The prices are the highest since the record 2008 prices that forced the government to introduce subsidised flour in the market to stem rising public anger.

The price of maize in the grain basket of Eldoret has doubled to Sh3,600 per 90-kilogramme bag, but millers say they still cannot access the grain, pouring cold water on official assertions that farmers were holding the cereals for higher prices. “Experience shows that no farmer holds stock to the end of May. By now, they have depleted their stocks to improve their working capital. That is why prices go up at this time,” said Dr. James Nyoro, agriculture policy analyst said in a telephone conversation with the Business Daily.

“We cannot be holding maize at a time when prices are good. We have never witnessed prices above Sh3 000 per bag in many years,” said Ms Grace Mwangi, an official of the Kitale Traders Association.

The Cereals Growers Association (CGA) – the umbrella body for large and medium-sized farmers, however, said some farmers were holding stocks for their own use. “If any maize is still left out there, it is with the traders and millers,” said David Nyameino, CGA’s chief executive.

Presently, the National Cereals and Produce Board (NCPB), is holding just 2.7 million bags of strategic reserves and famine relief stocks. Last week, it sold some 400,000 bags to the World Food Programme. The Ministry of Agriculture contends the stock level is at 16 million bags; 11 million bags with farmers, 2.4 million bags with traders, 520,000 bags with millers plus what NCPB’s is holding.

However, Agriculture permanent secretary Romano Kiome is optimistic supply will improve in two months time when harvests stream in from parts of the South Rift. Dr Nyoro said the shortage could be real because of last year’s below normal rains for the main season and failure by the short rains crop to yield the six million bags that was needed to bridge the shortfall.

“The 2010 long rains were below normal. The short rains crop of about six million bags required to bridge gap for a poor crop last year did not come through as there were no harvests in Eastern because of La Nina,” said Dr Nyoro. In January, studies by Tegemeo Research Institute showed that there were 24 million bags of maize, enough to last until August going by the national consumption rate of 3.5 million bags per month.

However, there has been speculation that farmers could have sold some of the maize in neighbouring countries especially after NCPB adopted the warehouse receipt system which, instead of paying farmers immediately, gives promissory notes until the maize is sold.

Cannot meet demand

At the time NCPB was offering farmers Sh1,800 per bag against Sh2,200 per bag that middlemen were paying, creating an incentive for sale to markets in Sudan, Tanzania, Malawi and Congo. Commodity traders said South Africa does not have the capacity to meet Kenya’s demand of six million bags while there was no white maize left in the USA. South Africa is presently serving orders from Korea, Mexico and Italy for GMO maize.

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