Lobby blames State for botched unga subsidy initiative

Shoppers rushed to buy unga hours after the government struck a deal with maize millers to subsidize flour on July 21, 2022. [Harun Wathari, Standard]

The uncoordinated rollout of government interventions may have precipitated the biting maize flour supply crisis in the country, industry players have said.

According to the Eastern Africa Grain Council's (EAGC) quarterly report to June this year, the exercise could have been conducted better, averting shortages and unprecedented price increases.

"Simply put, three months is too little for importers to secure foreign currency to finance the imports, confirmation of orders and bulking in the export country and transit time to the Port of Mombasa, especially with the current global challenges in international shipping," says EAGC in the report.

The Agriculture Ministry on May 9, 2022 removed import duty on 540,000 tonnes of white non-GMO maize to be imported by August 6 to avert shortages following inadequate rains in key grain production areas.

The directive also came on the back of a sharp increase in the price of maize from the beginning of the quarter, rising 74 per cent from Sh35,000 per tonne in April 2022 to Sh62,000 per tonne by end of June.

Prices consequently rose sharply in subsequent months following a drought and a surge in prices of fertiliser, with a two-kilogramme (2kg) packet retailing for as high as Sh230 in some outlets.

The price was attributed to maize scarcity and various policy developments during the quarter, including removing import duty on inputs for animal feed and maize grain for food consumption. But following days of negotiation between the State and millers, a 2kg packet of maize flour fell to Sh100 in July.

The subsidy was, however, scrapped soon after last month's polls.

EAGC noted that while the gazette notices attempted to offer a welcome respite to millers and consumers, they proved ineffective in addressing supply and pricing challenges.

Millers who took part in the maize flour subsidy claim they are owed Sh11 billion by the government.