Government can decide to protect producers in case of surplus production when prices tend to fall resulting in farmers making losses; or to protect the consumers in times of shortages when prices become too high for majority of consumers to afford. In Kenya before the market liberalization policy of 1994, the government set farm-gate prices and consumer prices for all basic agricultural commodities like maize, maize meal, sugarcane, sugar, wheat grains, wheat flour, bread, milk and milk products, etc. Currently (2010) most of the agricultural commodities are technically left to the free market forces of supply and demand to set their prices. However, for maize which is the staple food in Kenya, government intervention in pricing mechanism is still accepted and expected as normal despite the market liberalization in 1994. The Government of Kenya through the National Cereals and Produce Board (NCPB) still feels obliged to intervene in the pricing of maize especially at farm level. The NCPB is a parastatal which before Market liberalization era of 1994 monopolized the commercial buying, distribution, storage and selling of maize throughout the country at prices preset by government. After 1994, the board instead of being privatized was retained as one of the strategic government boards and was given the mandate to carry out both commercial maize trade and also to carry out humanitarian function of carrying the Strategic Grain Reserve (SGR) of 6 million bags kept for emergency to be released into the market or to be distributed through government relief agencies during shortages in the country. Thus NCPB protects the farmers at harvest time by buying maize at government set prices, usually above the free market prices; then again they protect the consumers in times of shortages when they sell the maize at prices below the free market prices.

Government taxes on a commodity raise prices paid by traders and consumers. In Kenya government has put some taxes on cash crop commodities like sugar, tea and coffee. Such taxes affect the competitiveness of such commodities in local, regional and international markets. Apart from imports, maize being an essential commodity is not taxed.

Use of subsidies is another method of government intervention that affects price functions in a free market. Government can give subsidy to farmers to reduce production costs and thereby act as incentive for farmers to increase production of a given commodity. The Malawi Government has successfully done this by subsidizing fertilizers to maize producers and the country is now a net exporter of maize in the region. After the devastating drought of 2009, the Government of Kenya gave seed and fertilizer subsidies to farmers and the result is the bumper harvest realized in 2010 to the extent that the free market price of maize dropped to Ksh 700/= per bag. To cushion the farmers the Government directed the NCPB to purchase maize at Ksh 1800/= per bag.

Subsidies can also be used to protect consumers at times of shortages either to ensure affordability by the poor or to stimulate demand by encouraging buying or consumption. In Kenya’s maize market the NCPB is directed to sell maize below the free market price which normally gets very high in deficit seasons. Indeed in extreme cases where people are starving, the government will buy the NCPB maize below the free market price and distribute it as free relief food to areas badly affected by the maize shortage.