18 May 2017

Kenya: Minister and PS Hard-Pressed to Explain Flour Pricing

Photo: Courtesy
A sample of a two-kilo packet of Pembe maize meal that will retail at Sh90 starting on May 17, 2017, according to Agriculture Cabinet Secretary Willy Bett.

Agriculture Cabinet Secretary Willy Bett and Principal Secretary Richard Lesiyampe were on Thursday hard-pressed to explain how they arrived at the subsidised prices for maize flour.

The government announced on Tuesday that it will cushion the price of maize imported by millers, enabling them to sell a 2-kg packet of flour for Sh90.

Mr Bett and PS Richard Lesiyampe appeared before the Agriculture Committee as details emerged of how millers were forced to adopt the subsidy scheme.

The MPs also wanted to know whether the millers were getting subsidies they do not deserve and why the price was not lower.

The committee refused to give the two officials a chance to explain the subsidy until they provide documents on the rationale by which millers got it and who imported the maize and how much each miller has received as subsidy.

Nyando Member of Parliament Fred Outa was particularly incensed by the revelation that millers were getting a subsidy. Other members of the committee also noted that the notice in TheKenya Gazette through which National Treasury Cabinet Secretary Henry Rotich allowed the duty-free importation of maize was open-ended as it did not state that it would stop at five million bags as claimed by Mr Bett.

Mr Outa said he has evidence that the millers are getting a very good deal by the government buying their maize at Sh4,300.

"Are you mopping up from the traders who are rich? How come that Wanjiku can't get an affordable price of unga?" he asked.

But some of the millers told the Nation they were opposed to the subsidy scheme but were coerced to adopt it.

Among the issues raised was how the government will pay them and compensation for old stock that had already been supplied to retail outlets.

Sources privy to the deal said there was a standoff between the millers and the government that led to the last-minute cancellation of a press conference which was to be addressed by Mr Bett on Monday.

The millers are said to have pressed for a firm contractual agreement from the government but only got what amounts to a political promise.

"We do not know how or when we shall be paid. We have been told the first instalment will come in a week," one miller said on Tuesday. He did not want to be named for fear of antagonising the government. Mr Bett confirmed that the government drove a hard bargain.

'MORE PATRIOTIC'

"This time we were hard as government and we actually prevailed upon millers to be more patriotic, especially at this point in time when we have this crisis. That is why they are complaining. It is because we were very hard. We told them 'it is time to sacrifice your profits. We talked to them in no uncertain terms. We told them that in difficult times like these, the people who are making you exist are the same consumers who are suffering now and it is time to sacrifice part of their profits," he said.

Under the programme, the price of maize has been capped at Sh3,600 per 90-kilogramme bag. Millers would then be sold the maize at Sh2,300 and the Sh1,300 difference between the Sh3,600 and the Sh2,300 then becomes the subsidy that the government pays.

Mr Bett and Mr Lesiyampe said the Sh3,600 price would be for "whatever is within the country and whatever is coming."

"Whatever is coming now, we can never buy it at more than Sh3,600. We are capping it there after negotiations and consultations because we realised that when we leave it, they will be asking for more," he said.

'FIVE MILLION'

"The whole thing will cost Sh6 billion because we are targeting five million bags," Mr Bett said.

Asked what would happen to the millers who brought in maize at prices of between Sh3,400 and Sh4,100 per 90-kilo bag, Mr Bett suggested they would have to foot the cost of anything above the Sh3,600 price arrived at by an inter-ministerial committee.

"We negotiated with them. In fact, we asked KRA (Kenya Revenue Authority) to help us to know how much it costs them, what are the costings all along such that we can get a fair price and the fair price that we arrived at is Sh3,600," he said.

With the price set at Sh3,600, the ministry is also hoping that the large-scale farmers and traders who are holding on to maize waiting for prices to go up will readily sell it to the government. Mr Bett said the decision to allow the duty-free imports was made after the realisation that the prices were headed to Sh5,000 a bag.

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