Published on 13/10/2010
Vice-President Kalonzo Musyoka either does not understand the dynamics of the maize industry, or is simply playing cheap politics when he says the Cabinet will fix the price of the commodity to cushion farmers against high production costs. Apparently, the price of maize in Trans-Nzoia has fallen to Sh700 per bag, and local politicians now see a chance to trumpet their constituents’ woes, yet even they know where the challenge lies. The VP’s utterances should be viewed with deep cynicism for the simple fact that in the recent past, Government intervention to fix maize prices has turned out to be a choreographed cue for well-connected traders and millers, with vast transport resources and cash, to buy up all the maize from small-scale farmers. They act in concert with public officials, including ministers and permanent secretaries, the chief accounting officers of any ministry. This is a well-oiled machine and the financial rewards are huge, especially when unplanned State procurement is thrown into the mix. The end result is always a scandal. This is how it works. Politicians in areas affected by the ‘poor prices’ demand action by Government to save farmers from the jaws of middlemen, most of whom are their friends. Leaders’ public outrage is almost always cosmetic and designed to feed media’s insatiable appetite for sensational stories on hunger. Cabinet then meets and agrees to set a higher price for maize. No mention is made that the market is liberalised. The fact that even the State’s own think tank, Kenya Institute of Policy Analysis and Research, has published research that shows such action not only distorts true market prices, but also does not benefit small-scale farmers, is conveniently ignored.

Buying spree

National Cereals and Produce Board is then ordered to increase its prices, but even before that happens, the traders and millers have already mopped up most of the maize from small-scale farmers, which they then sell to the Board through proxies, making huge profits in the process. Let us not forget that taxpayers are funding much of the maize-buying spree by the board. Invariably down the line — weather being what it is — there will be an acute shortage of the commodity. The price of flour will shoot up in supermarkets, and appeals will go out for the Government to intervene. At this juncture, civil society groups, who are selective about which cause to support, will be the most vocal, painting woeful pictures of a hunger-ravaged nation at the mercy of its uncaring leaders.

Political pressure will then pile up for Government to do something: in this case, the next course of action is for Cabinet to recommend that the NCBP offload its excess stock (if it really has a surplus) to the market at very low prices, to avert hunger. Rules for buying the maze will be deliberately obtuse, leaving loopholes for enterprising individuals to exploit. Again, it is the traders and millers with the resources that buy the maize. And officials in Treasury and the Ministry of Agriculture keep them abreast of decisions.

At this point, Government suddenly realises the NCPB does not have enough surplus maize in its stores and orders it to release part of the Strategic Grain Reserve. This turns out to be a drop in the ocean and the next step is to authorise traders and millers to import maize duty-free. Because they will have been tipped off early, some will even have ships bursting with ‘imported’ maize idling just outside international waters, waiting for the Government to waive duty. No need to guess whose maize will get to the NCPB silos faster. This is a cycle that is repeated every year and had become entrenched due corruption networks in and outside Government.

Buy and hoard

The true reason for low maize prices is that small-scale farmers who account for the majority in the industry, cannot access markets where the prices are better, reason being that Kenya’s transport infrastructure is still very poor. This, and the high cost of fuel have pushed up the cost per unit of transporting any commodity, including maize. Things are worsened by the fact that most farmers do not have proper storage facilities and cannot afford to build one, or keep the maize safe for human consumption. Recent cases of contaminated maize testify to this. As a result, they sell to middlemen who buy and hoard it in anticipation of prices shooting up in the near future due to shortages. Fix the roads and empower farmers through co-operatives, and this problem will go away.