Small-scale millers say State has locked them out of subsidy scheme

Ramm Millers Limited's David Maritim. Ramm closed shop four months ago following the high cost of maize for processing. [Christopher Kipsang, Standard]

The maize flour crisis does not look like it will abate anytime soon after small-scale millers claimed the government had set ‘unattainable’ conditions towards implementation of the subsidy programme.

The traders said yesterday that it would be expensive for them to invest in the new requirements that will be enforced for only 28 days.

Those who spoke to The Standard said they were left out of talks with State officials, adding that the conditions that were agreed upon will favour big, established operators.

“It is difficult for small-scale millers to meet the new conditions set by the government within short timelines. Most of us have been out of operations for some time now,” said Rachel Miami, director of Ramm Millers Limited in Eldoret.

Her company is among 30 members of the Grain Belt Millers Association, most of whom have closed shop following the high cost of maize for processing.

The maize shortage has seen some traders buying the cereal from as far away as Zambia and Malawi. This has pushed up the price of a two-kilogramme tin (gorogoro) to between Sh230 and Sh250 in parts of the North Rift.

The businesspeople attributed the increased prices too costly import procedures and long hours spent transporting the grain to the local market.

“The government now wants us to register with the Agriculture and Food Authority (AFA) and avail ourselves at Kilimo House for signing in order for us to access maize subsidy. Registration will cost over Sh30,000, yet the subsidy programme will last for a short period,” said Ms Miami.

According to a Ministry of Agriculture document seen by The Standard, participating millers in the programme must fill in their company name, and have a certificate of incorporation, PIN certificate, tax compliance certificate, and AFA certificate of registration, among others.

According to Patrick Rop, a director of South Rift Millers, “the big millers held talks with the government while small-scale operators in the sector were ignored.”

“We have not been given time to give our views. The demand given by the government to be presented at Kilimo House is too costly for us and will lock out hundreds of SMEs who contribute to the economy,” said Mr Rop.

He added, “We need a lot of resources to register with AFA and get other certifications. The terms of the contract also require engagement with lawyers, which will be expensive for us.”

Rachel Miami, director of Ramm Millers Limited in Eldoret. [Christopher Kipsang, Standard]

Sources said huge stocks of maize harvested last season were sold to South Sudan, while production in Uganda dropped due to the drought experienced last year.

“Most farmers offloaded the surplus maize they had stocked for food to enable them to buy fertiliser and seeds, and to meet the high cost of fuel to prepare their farms. This led to excessive disposal of maize to traders, leading to an acute shortage of grain,” said Ruth Kemboi, the Uasin Gishu Kenya National Federation of Farmers branch chairperson.

Mrs Kemboi said that for the first time, maize prices in the North Rift had hit over Sh6,500 for a 90-kg bag. “Lack of strategic reserves at the National Cereals and Produce Board stores across the country to stabilise prices is to blame for the high cost of flour. Food prices could further soar as Uganda and Tanzania restrict exports.”

Jeremiah Kosgei, a maize trader in Eldoret, said that unless the government increases the subsidy, consumers will pay more this month and in August.

“There is still a serious shortage of maize, and we now rely on produce from Zambia, Malawi, and Tanzania. Transport logistics is a major issue. It costs us Sh550,000 to transport a trailer with 300 bags of maize from Zambia to Kenya,” said Mr Kosgei, adding that transportation costs come to Sh5,500 per 90kg bag, hence they will be forced to sell at over Sh5,800 to local millers.

He described the State waiver as ‘just a drop in the sea’, saying they were only exempted from paying Sh40,000 for 300 bags, which takes traders three weeks to move from Zambia to Kenya.

He argued that if the government wants to stabilize flour prices at about Sh100 per 2kg packet, then it should provide a subsidy of Sh2,000 a bag to enable millers to purchase a 90kg bag of dry maize at Sh3,800.