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Farmers expect to reap big from selling their produce to the Government during harvest season

By Dominic Omondi | Published Tue, October 10th 2017 at 10:33, Updated October 10th 2017 at 10:41 GMT +3

NAIROBI, KENYA: Maize farmers expect upwards of Sh3,000 for a 90-kilogram (kg) bag from the Government, a move that could see their Christmas start early.

But for urban consumers, Christmas might never come.

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For President Uhuru Kenyatta who recently unveiled the Sh6 billion kitty to buy maize from farmers - and hopes to be re-elected on October 26 presidential elections, this puts him in a catch-22 situation.

He will be damned if he pays, damned if he does not.   

The Government has, so far, kept farmers guessing by not revealing the exact price at which it will buy the cereal from them. The prevailing price of a 90-kg bag of maize is Sh2,500.

But with less than two weeks to the repeat Presidential elections, farmers see a rare opportunity to arm-twist the Government to give in to their demands - just as urban consumers pushed the State to subsidise maize flour in the run-up to the August 8 elections, whose Presidential results were nullified by the Supreme Court.

In May, three months before the General elections, the Government announced that it would spend Sh6.5 billion on maize flour subsidy programme. Having found that the country was experiencing a deficit of five million bags, it gave Sh3,600 per bag and sold it to millers at a discounted price of Sh2,300. The target then was urban consumers who grappled with the rising cost of maize flour.

The retail price of a two kg maize flour had risen sharply from an average of Sh121 in January to Sh151 in May, with popular brands such as Jogoo, Soko and Shujaa going at Sh155.

A crippling drought had plagued the Horn Africa, depressing harvest of maize in the entire region.

Political suicide

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Thus, a 90-kilogram of the grain almost doubled from a price of Sh2,675 in January to Sh4,554 in May. Consumers were hurting and close to four million Kenyans plunged into hunger, with the head of state declaring drought a national disaster.  

In the report to Parliamentary Committee on Food Security Situation and the Intervention Measures by Government, Agriculture Cabinet Secretary Willy Bett said his ministry bought the maize at Sh3,600 per bag.

The maize would then be sold to millers at a subsidised cost of Sh2,300.  At this cost,  a two-kg maize flour was to retail at Sh90 while a kilo went for Sh47.

Although faced with hitches at first, with shoppers fighting for the cheap unga, the programme finally stabilised.

And now, most Kenyans still enjoy the cheap flour.

Urban consumers, who will not hesitate to vote with their stomachs, will still expect to buy a two-kilogram maize-flour at Sh90 and a kilogram at Sh47, at least until elections are over.

Tinkering with this two weeks to the repeat presidential election pitting President Uhuru Kenyatta and NASA’s Raila Odinga would be tantamount to committing political suicide by the former. However, rural farmers, also a formidable voting block, will expect nothing short of Sh3,000 for a bag of maize.

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Kenya Farmers Association Director Kipkorir Menjo told the Financial Standard that farmers expect the Government to give them more than Sh3,000 per bag, to compensate them for the high cost of production.

A Government that has been willing to pay foreign farmers as much as Sh3,500, reckons Menjo, should not find it difficult to give farmers over Sh3,000 for working against such unprecedented odds like massive invasion by fall army-worm, inadequate and erratic rainfall and high cost of pesticides.

The Ministry of Agriculture told the Parliamentary Committee that a price of Sh3,600 was being paid to both local and foreign farmers though Menjo says the Government has been paying farmersSh2,800.

“The State cannot pay less than Sh3,000 because the cost of production went up,” says Menjo, noting that accessing credit was not easy as the Agricultural Finance Corporation was underfunded.

Mr Menjo says farmers also paid more for pesticides to tackle  armyworms that devastated huge maize plantations in parts of Rift Valley and Western Kenya.

He says Sh6 billion kitty is the highest the Government has ever given and expects the State to mop up all available stocks from the market if it was to get an accurate figure of the deficit.

The Government cannot bolt out given that farmers, who are potential voters will have no alternative to sell the maize as millers are buying the grain from the Government at a subsidised price of Sh2,300 from the State. This is to sustain the maize flour price subsidy programme which has been extended to the end of December.

Experts fear that a price higher than Sh3,000 is likely to push the 2kg maize flour to over Sh120, further straining poor households’ budget.  The poor spend over a third of their income on food, and for most maize flour takes up a huge chunk.

Unfortunately, it is the farmers’ turn to be rewarded. “They (Government) should not buy it more than they bought it last year because it means the quantity purchased will be significantly lower,” said the new Director at Egerton University’s Tegemeo Institute Dr Miltone Ayieko.

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He says if the Government using the Sh6 billion buys the maize from farmers at Sh3,000, it will acquire two million bags of maize. This is 1.2 million bags short of what the country consumes in a month.

 

 

 

 

 

 

 

 

A farmer harvest her maize crop at Mukinyai village in Molo (PHOTO:KIPSANG JOSEPH)

NAIROBI, KENYA: Dr Miltone’s colleague, Dr Dennis Otieno, thinks giving farmers more than Sh3,000 will be paying them for what they have not worked. He concurs that although farmers have incurred huge costs of production, especially following the erratic rains and armyworm invasion which saw farmers’ expenditure of pesticide soar, Sh3,000 is too much.

Besides being given more than the share of the sweat, the Government has also spent billions on farmers through the fertiliser subsidy programme yet the yields have not improved.

Despite fertiliser usage rising to 50kgs per hectare - thanks to the massive subsidies from Government, production of maize has barely improved. In financial year 2017/2018, the Government allocated Sh4.1 billion for the fertiliser subsidy programme.

According to study conducted by Tegemeo Institute, an agricultural policy think-tank, no maize farmer in Kenya spent more than Sh2,700 on production costs.

This cost appreciates the fact that some farmers will rent land for farming (thus inclusion of land rent) and has also factored a 30 per cent margin.

The report by Tegemeo Institute found that large-scale farmers with more than 10 ten acres of land, spent on average Sh1,787 per bag on land preparation, planting, seed, fertiliser, pesticides, weeding, harvesting and handling and working capital.

And this was inclusive of 30 per cent margin.  

The cost rose to Sh2,544 if they had rented the land, as a lot of people are doing today.

The production costs for small-scale farmers - with less than five acres, was Sh2,028, plus a 30 per cent margin. With land rent, their cost went up to Sh2,685.

Dr Otieno insists that if State gives farmers more than Sh3,000 they will be “compensating inefficiency.” Another agricultural expert, who did not want his name revealed thinks this is political economics which just as in the run up to August elections, will triumph over economics.   

Dr Otieno thinks something is not right. Maize from Western Kenya, already harvested, is just not there. In Kisumu, a bag is going at Sh4,100, whereas from Kakamega, Mumias and Butere where it costs Sh50 to transport it, a bag of maize is going at Sh2,000.  With maize already becoming scarce, the Government will have to pay more for it. But consumers will still expect to pay less for end-product - unga.  


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