Bumper harvest, imports drive maize prices down

Posted on August, 10, 2018 at 10:18 am

Musa Radoli

It is projected this year’s production will go up by 44pc to 46 million bags

Maize prices are on a downward spiral following an over supply of the commodity in the market thanks to a bumper harvest across the country.

The situation has been aggravated by legal and illicit imports from neighbouring countries even as farmers in the country’s bread basket start to harvest their long rains season crop planted in February/March.

With the glut threatening to spiral out of control, prices are sliding to new lows with the worst hit regions being the Rift Valley and western Kenya.

Some farmers are now caught between a rock and hard place because they have stockpiles from last year’s harvest after failing to sell it to National Cereals and Produce Board (NCPB).

Statistics from the Kenya National Bureau of Statistics indicate that since January, Kenyan traders have imported 77,500 tonnes of the cereal worth $31 million (Sh 3 billion) from Tanzania, Uganda and Zambia.

However, statistics of smuggled maize is not documented.

The Agriculture ministry projects a 44 per cent increase in production from 32 million bags recorded in 2017 to 46 million bags this year driven by sufficient rains and reduced impact of the fall army worm.

“The country consumes at least three million bags every month,” said Agriculture Cabinet secretary Mwangi Kiunjuri.

NCPB is currently buying a 90-kg bag of dry maize for Sh3,200 while open market prices are far below.

Commodity market prices data from Agriculture Food and Fisheries Authority indicate the same quantity of maize in Nairobi is selling at Sh2,500; Mombasa (Sh2,000); Kisumu (Sh2,600); Nakuru (Sh2,000) and Eldoret (Sh1,800).

The price differential may explain why brokers and traders are importing maize cheaply and selling it to NCPB.

“Unscrupulous traders have taken advantage of the higher prices paid by the NCPB to exploit the situation. The government will deal firmly with those involved in the scam,” said Kiunjuri.

Also reaping from depressed prices are millers buying the cereal cheaply while the consumer has to bear with prices that have prevailed for the better part of the year — hovering between Sh100 and Sh120 for a two-kg packet.

Ironically, the country is experiencing a maize oversupply when last year the government imported more than 100,000 tonnes to curb an acute deficit for milling and packing into two-kg bags retailing at a subsidised price of Sh90.

Even as the country is assured of sufficient maize stocks, the Government is yet to explain if NCPB silos will absorb the excess produce or it has sufficient funds to retain the current Sh3,200 per 90-kg sack.

Last year, NCPB bought 3.8 million bags mainly from the North Rift region at Sh3,200 up from Sh3,000 the previous year.

Source: MediaMax Network