The ongoing rains and higher prices of maize offered by millers have slowed purchase of grains by the National Cereals and Produce Board (NCPB), putting at risk the strategic grain reserve (SGR).
The board is buying maize at Sh2,300 per bag while millers are offering between Sh2,400 and Sh2,600 with prompt payment by the private investors enticing farmers.
The NCPB had spent less than S50 million out of the available Sh2 billion on maize purchase despite having released more than two million bags from the reserves.
Maize in the SGR had fallen to about 1.5 million 90-kg bags, half of the three million bags needed to cushion the country from food shortages.
“The flow of maize in our depots has been low because of the interruptions caused by rains and the market prices that are above what we are paying for a bag,” said Newton Terer, managing director at NCPB. Mr Terer said the rains had affected maize drying, hampering delivery at the depots.
Cereal Millers Association chairman Nick Hutchinson said millers are offering more than what the State is paying to farmers. “We have not dropped our prices to below Sh2,400,” he said.
READ: Maize farmers reject State’s Sh2,300 price offer
Mr Hutchinson faulted the state for fixing the price of the commodity, adding it has led to higher flour prices.
“We have always urged the government to desist from setting maize prices and leave this to be determined by market forces,” he said.
NCPB sold old grains from the strategic reserves to raise cash to buy the current crop following delays in the release of Sh2.7 billion from the Treasury. The board raised Sh2 billion from the grain sales.
The board is targeting to buy about 800,000 bags using the cash from the sales, which is way below the more than two million bags NCPB bought last year.
The price of most maize flour brands has come down below Sh100 a packet as the market responds to increased supply of the raw material following the onset of harvesting in the North Rift that has pushed the cost of maize to below Sh2,800 a bag.
The declining cost of the staple comes as a relief to most households who were grappling with high prices as late as last month when the cost of a two-kilogramme packet retailed at an average of Sh112.
SOURCE: BUSINESS DAILY