Vested interests choking grain market

Two news items in our newspaper today illustrate the vicious cycle that hunger has become in this country, and the reasons behind it.

The first is news that National Cereals and Produce Board is now buying maize from farmers at the Hola and Bura irrigation schemes in Coast Province grown under the national Economic Stimulus Programme.

That should be good news, given that the desperate farmers have been selling their crop to middlemen at Sh900 per bag.

Nothing could be farther from the truth. After starving the NCPB of cash, Treasury waited cynically for President Kibaki and Prime Minister Raila Odinga to inaugurate the revived scheme, before releasing funds to NCPB to buy the maize.

Tragically, most farmers, with nowhere to store much of the good maize harvest had already sold most of their crop to middlemen at throwaway prices.

So NCPB is receiving an average of three bags of maize per farmer, a pitiful amount given the size of the harvest.

The other matter concerns the lack of competition in grain milling, with one or two operators holding sway over most of the market.

As our story in today’s Financial Journal shows, this has allowed millers to control flour prices as well as those for grains.

With NCPB slow to buy enough maize to fill the national Strategic Grain Reserves (SGR), we are looking at recurrence of soaring maize prices and new scandals even before we can recover from the latest one.

Pyrrhic victory

There appears to be little or no co-ordination between the Ministry of Special Programmes, responsible for stocking the SGR and that of Agriculture.

The latter has been claiming a somewhat Pyrrhic victory by pointing out that maize harvests in the revived Hola and Bura schemes are good.

That is all very good, but what use is that if we can’t buy enough to store it? The problem’s roots lie in the fact that ministers and their chief accountants are also involved in the business of buying and selling maize, and it is therefore not in their interest to see the SGR stabilise.

Cruel as that may sound, it is the reality in a country led by a divided government, whose top leaders put on a lame public show of unity, only to unleash their claws when the show is over. The battle for control of the food grain market is an uneven one, with millers having the upper hand.

It was targeted that NCPB would buy at least 10,000 bags from the farmers. That now looks unlikely. It is these same millers who are fighting to have a second grain handling facility at the port of Mombasa. We are not against the idea of competition in handling grains, but it is important that Government set some rules to prevent price manipulation of a commodity whose scarcity has a direct effect on inflation and food security.

There are interventions that that can improve the farmer’s ability to anticipate pricing and avoid exploitation by millers and middlemen. One of these is by developing a price discovery mechanism.

Another is by providing farmers with knowledge on grain handling and harvest management, and exploring the possibility of constructing storage facilities at the district and even constituency level.

Importation spree

As things stand at the moment, maize is likely to rot in farms. The country is eyeing a harvest of 1.8 million metric tonnes for the long rains season, and 300,000 metric tonnes for the short rains.

Yet national demand is an average of 3.2 million metric tonnes per year.

The deficit of 1.1 million metric tonnes could even rise further should the long rains prove inadequate.

In short, brace yourselves for another spree of imports, tariff waivers and scandals as the maize barons get into high gear.

It may be time Government reviewed the role of NCPB, including the possibility of upgrading it to an independent regulator with enough teeth to restore parity and sanity in the grains business.