Stern warning to millers on $60 million unga subsidy scheme (Kenya)

By Wycliff Kipsang | Business Daily, Kenya September 25, 2017

Millers who fiddle with the Sh6 billion unga subsidy programme will face heavy penalties once a nationwide audit is done.

Agriculture Cabinet Secretary Willy Bett said firms found with excess stocks of cheap maize would reimburse the government the costs incurred on the subsidy.

“The ministry has asked the Kenya Revenue Authority (KRA) to audit all millers at the end of the scheme to ascertain grain stock at their premises.

The government has started to reduce the volume of subsidised maize offered to millers to forestall price distortions as the subsidy programme comes to a close.

“The government has reduced the maize stock to ensure millers are not left with excess quantities upon withdrawal of the subsidy scheme,” Mr Bett told the Sunday Nation.

The move, he said, was informed by the approaching short rains planting season in the North Rift, with parts of the South Rift harvesting this season’s crop.

Since May, the government has been supplying millers with huge stocks of heavily subsidised maize to enable them to produce flour at the retail price of Sh90 per 2kg packet.

“Starting next week, we shall limit the quantities of maize sold to millers. We don’t want to create a scenario where they will have stashed huge piles of cheap grain when the programme ends,” said Mr Bett.

He said the move is meant to ensure millers do not take advantage of the cheap government maize to distort market prices.

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

This followed public outcry that the staple was out of reach to many households, with a 2kg packet of maize flour hitting Sh180 at some point.

According to Mr Bett, the government has put in place measures to ensure farmers get a ready market for their produce.

He said Strategic Food Reserve Board officials would meet soon to agree on a price offer for the upcoming harvest. “We want to ensure that as the main harvest season starts, farmers and consumers are protected,” said Mr Bett.

The ministry forecasts a 20 per cent reduction in this year’s maize harvest, initially projected at 40 million 90kg bags. It says the harvest will be 5.1 million bags less than last year’s 37.1 million.

The expected drop is attributed to the dry spell which ravaged many parts of the North Rift, resulting in the wilting of more than 40,000 acres of maize in Uasin Gishu County alone.

Some farmers in parts of the South Rift have started harvesting, with the produce expected in the market by October. The North Rift grain basket is expected to bring its maize produce to the market in the next one month.

Mr Bett said that when the window of importation ends, the government will start rationing the amount of maize supplied to millers to prevent hoarding.

“The problem is that currently, there is no restriction on the allocation of maize to millers. They are allocated according to their milling capacity,” said Mr Bett.

“Soon the situation will change during the closure of the importation window and we will cut the supply to last for only two to three milling days,” added the CS.

Farmers who spoke to the Sunday Nation said they grapple with high costs of inputs and fuel prices during the planting season, adding that these increase the cost of farming.

They want a 90kg bag of maize to be bought at Sh3,500, up from the current Sh3,000.

The price of a 2kg packet of maize flour jumped by nearly half to Sh150 in April, from a similar period last year, prompting the introduction of the Sh6 billion subsidy that lowered the cost to Sh90.

The government is now planning to wind up the maize subsidy programme with the harvest of this season’s crop.

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