Politics of ugali: Millers’ hand in the ever rising maize prices

Millers have bought less than 200,000 out of a million bags of maize after they alleged there was a shortage.

In the latest intrigue of the maize politics, the millers have now softened their appetite for the commodity after the Government moved to end speculation by putting the one million bags on sale.

Last month, millers claimed that they were running out of stock, a shortage that was used to justify the rising prices of maize flour.

The National Cereals and Produce Board (NCPB) was ordered to release the maize to deal with the “shortage”.

“There was a complaint that the price was going up and I think they (millers) have to explain why it is still going up because I have only sold 170,000 bags out of the one million we released,” said NCPB Managing Director Newton Terer.

At the same time, wholesale prices of maize have remained almost unchanged since January, yet millers have increased the retail prices by 20 per cent over the period.

Data from NCPB shows the national average wholesale price for a 90kg bag of maize was Sh2,441 at the end of January while the retail cost was Sh2,880.

Six months later, the same bag was fetching Sh2,445 on wholesale, a marginal Sh4 increase, but the retail price had risen in June to Sh3,150.

Mr Terer dismissed allegations that they released bad maize. “The one million bags of maize released was Grade 2, which is fit for human consumption,” he said.

Agriculture Committee Chairman Adan Mohamed Noor said in an interview that his committee invited all players in the sector to assess the veracity of the maize shortage claims.

The Mandera North MP said his committee established that the claims were false and that the country was only experiencing an artificial shortage that had nothing to do with lack of sufficient stocks.

“We have met with millers and relevant Government agencies after claims of the maize shortage were made. From these meetings, I can ascertain that there is no shortage of maize,” Noor said in an interview with The Standard.

Currently, the country relies on a strategic food reserve managed by NCPB, which stocks maize for emergency relief supplies.

NO SHORTAGE

“The Government went ahead and released one million bags of maize to the market but to date, less than 300,000 have been bought. This tells you that it was only an artificial shortage and that millers had no intention of buying the maize,” said the parliamentary committee boss.

Mr Noor said the millers may have had problems with the pricing of maize, but it was clear that there had been no shortage.

“They may have problems with the price that is being offered and I do not know how they negotiated it, but I am sure there is no shortage of maize,” said Noor.

Cereal Millers Association Chairman Nick Hutchinson, who first raised the alarm over the alleged maize shortage, said the released maize had not changed the prices but had achieved the purpose of stabilising the market.

Mr Hutchinson, who is the millers’ spokesperson, defended the slow uptake of the maize by his members on grounds that the maize had only been made available a week ago and the millers could not snapped it up all at once.

“We cannot say that the country is swimming in maize. But the situation is now manageable. The released maize has helped stabilise the market.

People who were speculating now have no reason to do so. There is no longer any need to hoard the product and this has stabilised the market,” Hutchinson said in a phone interview.

He said many people did not understand the workings of the sector, given that there were other logistics required, from transportation to storage to support the uptake of the maize.

Millers have also been accused of being reluctant to purchase maize from NCPB to avoid selling flour at affordable prices.

Hutchinson explained that the new stocks had calmed the markets and ended speculation that was straining supply. He said it would take some time before the millers bought all the available maize from Government stores.

The dramatic turn of events is the latest in cyclical rounds of artificial shortages engineered by the market to cause panic and make quick profits.

Artificial maize shortages have been created in the past to force the country to rush to open its gates for importation while creating overnight millionaires.

In 2009, politicians and well-connected individuals would use the privilege of their offices to demand allocation of maize from the NCPB, in what came to be known as the “maize scandal”.

According to a dossier tabled in Parliament then, some legislators demanded for allocations on the pretence that they were desperately needed by secondary schools in their constituencies or relief organisations working in their area.

But in reality, the legislators were putting in requests for maize allocation on behalf of maize traders and friends. This helped create a shortage as the traders speculated with the commodity.

Deputy President William Ruto, who was then the Agriculture minister, was one of the top Government officials forced to fight off allegations of conflict of interest in the scam.

The DP, who defied pressure to resign, defended himself at the time and blamed his troubles on politics. The scandal was one of the first pressure points for his relationship with Opposition leader Raila Odinga, who was at the time the Prime Minister in the coalition government with President Mwai Kibaki.

Former First Lady, the late Lucy Kibaki, was cleared by Parliament following a sensational claim by Budalang’i MP Ababu Namwamba, who had tabled some documents that had suggested that Mrs Kibaki was a director at one of the companies that bought maize from the NCPB.

Before the dust settled on the scandal, the Kenya Bureau of Standards impounded 6,500 tonnes of maize at the port after declaring that the shipment was unfit for human consumption.

But the Government Chemist and Kenya Plant Health Inspectorate Service said there was absolutely nothing wrong with the maize that had been imported from South Africa.