MPs to decide fate of proposed grain facility

By Jackson Okoth

Parliament will soon decide the fate of the proposed second grain-handling terminal at the port of Mombasa.

"We have already received the port’s masterplan on the proposed facility, and will be looking at it closely before making our recommendations," said Chris Okemo, chairman of the parliamentary committee on finance.

There has been growing concern that some big players in the milling business are keen to control the lucrative grain import handling business.

Already, the milling business has seen rapid consolidations, acquisitions and merger deals, creating larger outfits. The end game for these corporate raiders is the control the grain import trade.

Powerful elite

Parliament’s involvement in the tussle has further been complicated by manoeuvres by powerful Cabinet Ministers.

The Grain Bulk Handlers Limited (GBHL) at the port of Mombasa. The proposed second grain terminal is to be located in the yet to be constructed port of Lamu. Photo: File/Astandard

In November, the Prime Minister, Raila Odinga, announced that the cabinet had approved the building of a second grain terminal, to be located in the yet to be constructed port of Lamu.

While Grain Bulk Handlers Limited (GBHL) is the dominant player in the grain handling business at the Mombasa port, it insists that it does not enjoy monopoly status.

Other bulk grain handlers operating at the same port include Multiport Limited, Mitchell Cotts, Interglobe and Coast Silos Limited.

Charges levied by GBHL have been the subject of heated debate, with some accusing the firm of exploitative tendencies.

But GBHL maintains that its handling charges are based on cost of investment and volume of cargo flow. The firm charges $12.50 per tonne (Sh 937.50 per 1000 kg). This translates to 90 cents per kilo.

With the exception of periods when the country has to rely on imports, cargo passing through the terminal has been low, thereby increasing the fixed costs of running this facility. And with GBHL’s excess capacity, the entry of millers into the grain-import handling business could drive it and others out of business.

not adjusted

While grain handling at the port forms a component of the price charged for a packed of processed maize meal, GBHL states that it has not adjusted its handling charges for the last 8 years.

While a packet of maize meal was retailing at Sh50 in 2000, it has since risen to Sh120 in some outlets, while GBHL charges have remained static.

The latest country World Bank report says maize prices in Kenya are double international prices, and substantially above those prevailing in neighbouring Uganda and Tanzania. Moreover, the report says the prevailing high returns benefit less than two per cent of maize farmers, who capture half of the gross revenue from maize trade, while the majority of the urban and rural poor continue to pay high prices.

"Port handling is just one component of what determines the overall consumer price of maize meal. The cost of transport from the port of Mombasa to upcountry areas remains very high. The road and railway infrastructure needs to be looked into to reduce cost per unit," said Paul Mbuni, CEO of the Kenya Society of Agriculture Professionals.

Available figures indicate that cost of handling accounts for approximately Sh2 of the total cost of a packet of maize flour.

not responsible

GBHL insists that it is not entirely responsible for the end price of maize flour. In the past, attempts have been made by a section of millers to place the blame over rising costs of maize meal solely on the grain handler, ignoring other components.