24 August 2017

Kenya: State Cuts Sale of Subsidised Maize Ahead of South Rift Harvest

The Agriculture ministry has begun to cut the volume of subsidised maize offered to millers to forestall price distortion after the programme ends on September 30.

Agriculture secretary Willy Bett said the government had reduced the quantity of maize to a two-day stock equivalent to ensure millers are not left with excess cereals in their premises upon withdrawal of the subsidy scheme.

The government has since May been supplying millers with huge stocks of heavily subsidised maize grain to enable them to produce flour at the retail price of Sh90 per two-kilogramme packet.

"Starting next week, we shall limit quantities of maize sold to millers to levels that can fully be milled in two days. We don't want to create a scenario where they will have stashed huge pile of cheap grain when the programme ends," said Mr Bett.

He said the move was to ensure millers do not take advantage of cheap government maize to distort market prices once the subsidy window closes.

Audit millers

The ministry, added Mr Bett, has also asked the Kenya Revenue Authority to audit all millers at the end of the scheme to ascertain grain stock at their premises.

He said millers found with excess stocks of cheap maize would have to reimburse the government the cost incurred on subsidy.

Through the subsidy period, the State has been buying imported maize at Sh3,600 per 90-kilogramme bag and selling it to millers at Sh2,300.

The millers who benefit from the scheme are then required to sell the flour at Sh90 for a two-kilogramme packet.

The ministry has since fixed a meeting with millers and farmers today to discuss its planned exit from the grains market.

Mr Bet said the onset of short crop harvest from South Rift would stabilise the market.

However, the country will not be out of the woods yet as production is projected to drop to an eight-year low this year as erratic weather and pests invasion on the crop is expected to affect the yields, setting the stage for yet another round of expensive flour next year.

Production is forecast to drop from 37 million bags that were realised last year to 28 million bags in this year's harvest, according to the government projection of 25 per cent losses on the current crop.

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