No cheap unga yet as millers seek assurance on payments

Traders weighing maize bags at a store in Isebania. [Caleb Kingwara, Standard]

The pain of expensive maize flour is not about to ease.

This is after millers said they are still consulting with the government and other stakeholders on how best to reduce the price of the staple.

The declaration comes a day after the Agriculture, Livestock, Fisheries and Co-operatives Ministry announced, starting yesterday, that a 2kg packet of maize flour would retail at Sh100 for the next four weeks, a reduction of more than half from a high of Sh250. “Please be advised that the negotiations are at an advanced stage, but no prices have been set,” said the Cereal Millers Association (CMA), a lobby group for millers in Kenya.

It is a blow to millions of Kenyans who on Monday celebrated the announcement of the subsidy, in which millers would be compensated Sh93 for a 2kg packet of maize flour they sell to retail outlets, according to a contract seen by The Standard.

Retailers, including many supermarkets around the country, would get the cereal at Sh90 and sell it to consumers at Sh100.

The subsidy would have offered households a huge relief from the high cost of the flour used for making ugali after drought and costly fertiliser drastically reduced maize harvest in the country.

“We will advise all our stakeholders on the progress made towards achieving our goal of providing adequate, affordable, and ambitious maize flour,” said CMA.

Sources told The Standard that at the heart of the disagreement between the millers and government officials is the experience of the 2017 subsidy programme in which some of the millers claim they have never been paid for the maize they sold at a subsidised price.

To grow the confidence of the, millers the government has proposed the subsidy money be deposited in an escrow account. An escrow account is where funds are held in trust, at the Central Bank of Kenya, whilst two or more parties complete a transaction. The account, which the contract said would always have sufficient funds, would be opened and operated by the Agriculture Ministry.

The subsidy programme and the escrow account are to be overseen by a committee comprising officials from Agriculture Ministry, the National Treasury, and CMA.  

To ensure the millers keep their end of the bargain, the contract stipulates, the ministry will deploy its representatives to the premises and depots of the millers to verify the invoices of the customer for the maize flour being sold.

They will also authenticate the delivery or dispatch document evidencing the sale of sifted maize flour.  The ministry will verify each of these documents by signing and stamping to confirm proof of sale.

The miller shall, on verification by an officer of the ministry, raise and submit invoices daily for the subsidy amount together with a copy of the signed dispatch document to the Principal Secretary in the ministry for payment.

However, millers are also concerned about the availability of maize from the local market, with the government saying that it expects them to continue purchasing available maize at market rates.

Some sources, aware of the deal, had on Monday confirmed to The Standard that indeed the subsidy is in the works and would be rolled out later this week.

“Yes, it is true. This week the price will come down to Sh100 for a 2kg pack,” said a source familiar with the matter.

The maize subsidy programme adds to a bag of campaign goodies President Kenyatta has offered Kenyans to cushion them against the high cost of living.

Already, the government has waived the 50 per cent import duty on non-genetically modified organisms (GMOs) white maize, yellow maize and animal feed.

The government has also waived all levies charged on imported maize.

Under the subsidy programme, millers would sell to retailers a 12-pack bale of 2kg maize flour at Sh1,080, which translates to Sh90 for a packet. The government will, in turn, compensate them Sh1,120 for the 12 packets of unga or Sh93 for one.

The announcement of the subsidy has not been received well by critics, who question where a cash-strapped government that is also struggling to maintain a fuel subsidy, will get the money.

Ruto wondered why the government had to wait for so long to provide cheap maize to Kenyans. According to the DP, this was just a ploy to hoodwink Kenyans to vote for his competitor.

“What we are saying is that we will not be doing what our competitors are doing; to put citizens in a state of hunger and then pretend that you are reducing the price of unga,” said the Deputy President in a campaign rally in Nairobi, on Monday.

He insisted the claim that the high price of food was due to the ongoing war between Russia and Ukraine was false.

However, experts have noted the war and the lingering effects of the Covid-19 pandemic have gutted the global supply chains, with prices of fertiliser, palm oil, wheat and fuel skyrocketing all over the world.