The termination of the the six month Ksh 90 maize flour subsidy programme is likely to see consumers experience high prices similar to the ones characterised early in the year.
Even though the programme was closed mid-last month by the National Treasury, maize imports to the tune of 1.1 million bags docked at Mombasa port in the last week of October with flour expected to land in the shops in the second week of November.
Government thus is in a situation where it is contending with restocking the countries granaries and also ensuring market stability three weeks after the end of the Ksh 6 billion subsidy programme.
Agriculture Cabinet Secretary Willy Bett has assured that government will be vigilant even after ending the programme to ensure there is market stability.
Last week, owners of major supermarkets confirmed last week that stocks have started dwindling since the end of the programme and are likely to resort to high prices from mid-November.
There are fears that some millers could be hoarding the cheaper flour, hoping to cash in on the higher market price when the subsidy comes to a close.
But Bett said government will continue monitoring the situation and even deploy auditors to millers to ascertain whether the flour they are producing tallies with maize they received under the programme.
“Even as market forces prevail we will continue checking to ensure consumers are not subjected to high prices by value chain players,” Bett said.
But with announcement of the end of the programme, a spot check by KNA shows that there has been panic buying in the last one week as consumers fear price increase in the midst of reduced purchasing power owing to dismal cash flow in the economy.
Recently in an interview, Bett said the government has a duty to protect the consumers against unattainable prices in the market.
“We are currently restocking the country granaries and hope that we will receive enough stocks to sustain the market,” he assured.
As at end of last week, National Cereals and Produce Board (NCPB) management confirmed that it had only managed to buy 140,000 bags of maize from farmers but assured that more maize is expected in the coming days though the exercise is being affected by the ongoing rainfall.
Government is buying a bag of maize from farmers at Sh 3, 200 with millers expected to buy the same from NCPB at Ksh 3, 400. This according to value chain players will lead to price increase of between Sh 110 and Sh 120 for a 2kg packet.
Naivas supermarket managing director Kimani Mukuha confirmed that before the October 26 repeat presidential elections, there was panic buying and equally the stock have dwindled in the recent past.
“Consumers rushed to stock their home shelves ahead of the October 26 repeat presidential polls. Even though the situation has normalised supplies from millers have also decreased. We expect to go back to previous prices soon,” said Mukuha.
Researchers with Tegemeo Institute of Agricultural Policy and Development say that despite the slow sale by farmers being interrupted by ongoing rains, high prices in some region market segments could have an effect.
Timothy Njagi, a senior research fellow, warns that the government is in a tight situation as it struggles to replenish the country’s grannies and at the same time guarantee market stability.
He maintained that owing to factors that played against production during the year namely prolonged drought, erratic rainfall and fall army worm infestation; the annual production will drop to 32 million bags from 37 million harvested in 2016.
“The impact of the fall army worm for example resulted to reduced area under maize by 5.1% from 1.8 million ha to 1.5 million ha in the grain basket regions”, he explained.
Since the introduction of the subsidy programme on May 16 this year, consumers have been buying two-kilogramme packet maize flour at Ksh 90.
Early last month, President Uhuru Kenyatta also announced that Government has set aside Ksh 6 billion to buy all maize in the 2017-2018 season under the Government’s Strategic Food Reserve programme to boost food security and sustain affordable prices for maize flour.