How state aided traders to reap from food crisis

Maize brought to the country from Mexico had been in waiting in stores in Durban, South Africa, for more than a year.

During this time, the Government slashed funding for the strategic grain reserves.

Questions are now being raised about the timing of the delivery of the 30,000 metric tonnes - with an additional 30,000 metric tonnes expected in two weeks - coming soon after Parliament allowed duty-free importation of maize.

Policy decisions are also in sharp focus, given that while maize production fell by 14 per cent from 42.5 million bags in 2015 to 37.1 million bags last year, exports rose sharply by 59 per cent to 3,191 metric tonnes from 2007 metric tonnes in 2015.

FALLING IMPORTS

Within the same period, imports fell 70 per cent to 148,558 metric tonnes compared to 480,124 metric tonnes in 2015.

Transport Principal Secretary Paul Mwangi revealed the maize was actually procured last year but could not explain why private traders opted to store it in South Africa until the prices were “right”.

To justify the speed at which maize was shipped in after the duty waiver, the PS argued merchant ships like IVS Pinehurst, which brought the maize, are always waiting in the high seas for such business.

Pembe and Kitui flour millers were among the four firms that jointly imported the consignment from Mexico and stored it, yet they were among the firms that had complained about maize shortage at home.

Kenyans are paying upwards of Sh160 per two-kilo packet, nearly double the normal price, following the shortage that has been attributed to a prolonged drought, which cut production in the fields.

Last week, Agriculture Cabinet Secretary Willy Bett said the importer was a UK firm known as Holbud. It turned out, for instance, that the firm was only the transporter.

The Mexican Embassy acknowledged that maize trade is an area of broader bilateral economic ties and technical cooperation between Kenya and Mexico but declined to comment on the latest shipment. 

“Since these are private sector operations, the Embassy will not, and has not made any kind of declaration on these commercial transactions,” read communication from the embassy.

The admission that the consignment was stored for a year raises questions whether the raging food crisis is stage-managed or traders are profiteering from a desperate situation.

Prior to the directive by the National Treasury eliminating taxes, imported maize attracted a 50 per cent duty meaning that the importers for the latest consignment would have paid no less than Sh500 million.

Initially, the agriculture ministry had said that the duty free importation would be allowed for established millers only. This waiver was amended to include commodity traders.

Mr Bett cancelled a scheduled media briefing at the last minute, following his trip to Mombasa where he received the imported maize

The food prices crisis comes after a year of severe drought slashed production by 14 per cent to 37.1 million bags, a record low.

Insiders at the Strategic Grain Reserves managed by the National Cereals and Produce Board have read a well-calculated narrative.

In the first year of CS Henry Rotich’s budget, there was no budgetary allocation for stocking up maize reserves. Then, Kenya had enjoyed a favorable rainfall and consequent good harvests.

GALANA SCHEME

A long term plan to develop the Galana-Kulalu irrigation scheme was also mooted and Sh3.6 billion allocated for the dream 1 million-acre farm. Very little happened on the project in Tana River County in that financial year.

In next two financial years, Rotich allocated Sh2.7 billion and Sh3.5 billion for food reserves and Galana project respectively but it was getting ever more evident that the mega project was facing major challenges.

Then the allocation to the National Cereals and Produce Board (NCPB) started shrinking fast.

Last year, only Sh1.6 billion was set aside for stocking national food reserves. This year, the allocation is Sh1.3 billion.

Economists had warned that reserves were too low creating a recipe for corruption.

“People tend to ignore signs and then they make it a crisis, this becomes an avenue for corrupt practices of single-sourcing maize,” said Francis Karin from Tegemeo Institute.