Maize farmers say flour subsidy to destabilise market (Kenya)


By Gerald Andae | Business Daily, Kenya September 26, 2017

Growers have criticised the extension of a government subsidy on maize flour, saying the decision is likely to destabilise the market.

The Cereal Growers Association (CGA) claimed the subsidy scheme has triggered a dip in farm-gate prices of the commodity to Sh2, 300 per 90-kilogrammes, providing a leeway for brokers to profiteer by mopping stocks for sale to National Cereal and Produce Board (NCPB) at higher prices yet farmers faced losses due to high cost of production.

“While activity at the port of Mombasa shows unabated maize importations, the current farm gate price is a discouraging Sh2,300 to 2,500 per bag, less than what farmers have earned over the last few seasons” the association said in a letter to Agriculture secretary Willy Bett.

“Given that the cost of production has gone up significantly over the same period, these farmers are crying out for an intervention that would afford them a more competitive price for their produce” they growers said.

Under the subsidy, a two-kilogramme packet retails at Sh90 while the one-kilogramme one sells for Sh47.

Mr Bett last week announced that subsidy programme would carry on beyond September as earlier planned following heavy rains that have affected harvesting in the main north Rift growing areas.

The new maize stocks from the North Rift region is now expected to enter the market at the end of October.

The farmers’ lobby however warned that the expected price instability due to an extension of subsidy scheme is likely to causes loses among growers who faced higher cost of production in the ending crop season.

“You will see from the calculation that at the average production of 14 bags per acre for commercial maize farmers, the break-even point for last year’s crop is Sh. 4,062. This has been a uniquely difficult year as a result of the recurrent drought and the devastating Fall Army Worm infestation” the association said in a letter to Agriculture Cabinet Secretary Willy Bett.

“This has placed added pressure on Kenyan cereal farmers to enhance their production efficiency in order to remain in business”.

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