Millers keeping prices up to fleece hungry Kenyans

Just as the hull of IVS Pinehurst, the ship ferrying 229,900 metric tonnes of maize was docking at the Grain Bulk facility in Mombasa, millers were crafting a narrative that it will barely scratch the surface of the biting shortage.

Cereal Millers Association (CMA) said since only a small number of millers will have access to maize from the first vessel; majority will continue to purchase from the market and nothing much would change.

In October, when the government instructed the National Cereals and Produce Board (NCPB) to release a million bags from the Strategic Grain Reserves to lower the price of flour which was then approaching Sh100, millers were also quick to sell the same story.

To hype the narrative, they added that the maize from NCPB was discoloured, and for most part, unfit for human consumption.

However, Sunday Standard has reliably learned that this cycle of regurgitated arguments are mere statements to keep the prices propped up. All millers, in fact, store their maize at NCPB, the same storage facilities used for the government’s Strategic Grain Reserve.

NCPB CEO Newton Terer also pointed out that the maize that was recently released was actually yields from the last season.

Apparently, CMA has two lists of the big millers and another for small millers, who have the exclusive rights to all the maize released by NCPB but no one knows how many millers exist.

The millers are put on a list by the associations, which is submitted to the Ministry of Agriculture, which then forwards it with apportioned allocations to each miller. NCPB cannot go outside this list or sell to individuals.

Briefcase millers

Sunday Standard can reveal that interested parties have penetrated the association, allowing briefcase millers who buy the maize, hoard it and sell to real millers at a profit.

Mr Peter Njuguna Mwangi is an incredibly powerful but faceless man whose authority extends to your dinner table.

He is soft-spoken but is the Secretary General of the influential CMA.

In itself, the association is an amorphous group but its members are the only ones that can access the strategic food reserves that is managed by the National Cereals and Produce Board.

“Just send me your documents and I will help you,” Njuguna told us when we talked to him posing as millers interested in joining the lobby.

Applicants are required to pay a subscription fee to join the club.

Nothing wrong with that, except that the State has allowed only members of the lobby – some reported to only exist on paper, access to the reserve while locking everyone else out. “We do not even know if some of these millers really exist,” Newton Terer told Sunday Standard.

In a sense, the lobby has created a club of wealthy individuals who have benefited the most from the national food reserves intended to help the vulnerable by stabilising prices for maize and other grains.

Just last month when the millers were allowed the last 750,000 bags of maize remaining in the stores, they claimed to have taken only a third of the amount offered.

Their reason: the maize offered was not fit for human consumption as most of it had been in the stores for as long as eight years.

Their version of the story, however, fell apart when the NCPB said it had released all the maize it had in stores and that the millers were not honest.

Millers bought the maize at only Sh3,000 per bag, translating to Sh33 per kilo.

However, the price distortions are so bad that NCPB maize sold at Sh3,000 per 90 kilogram was still retailing at Sh4,500. The ‘Mexican’ maize from Durban South Africa landed at between Sh3,500 and Sh4,400 for a 90kg bag, compared to the prevailing market cost of Sh4,750.

This has kept the retail prices for unga unchanged as CMA epitomizes the problem in the country’s famine cycle, especially in the current administration whose policies do not allow ordinary citizens like Mary Lena to purchase directly from NCPB.

Getting on the list is such a lucrative business that has attracted fake companies. The association does not check whether one is actually a miller or just a shell company that wants to mint money out of hungry Kenyans.

However, Cereal Millers Association chairman Nick Hutchinson says CMA is ran professionally and one has to have audited accounts, be a registered company, clear with government agencies before being allowed to join the elite millers. They will also be required to pay a subscription fee based on their milling capacity.

“We recently approved one new member and we are reviewing other applications. The association is open to all Kenyans as long as you satisfy the requirements,” he said.

Mr Hutchinson said for his members, the shortage is actually real and severe.

“I keep an eye on our competitors and you can visit our own mills, this matter is a really big issue,” he said on the telephone.

Mr Hutchinson says the very fact that the number of millers in the country is not very clear has created the problem.

Mary, who operates a stall selling second hand clothes near the NCPB depot at Donholm, Nairobi, remembers vividly how thousands of her neighbours at the Sinai slum would scramble to buy maize flour at the government facility.

It is nearly a decade back when the country was ravaged by the drought in 2008, pushing the prices of unga above Sh100 per two-kilo packet for the first time.

“I think former President Kibaki tackled the food crisis in a brilliant manner,” she told us when we visited her stall next to the old railway line linking the Nairobi terminus to Embakasi station.

She was referring to the direct intervention by the government which allowed individuals to buy maize and flour from the strategic reserves, effectively locking out millers and other middlemen from the supply chain.

Poor households were able to buy unga, she recalls rather pensively, looking at the ‘tougher’ life back then when she was only able to run a vegetables kiosk. Available details indicate that the NCPB depot in her neighbourhood is the largest in Kenya, yet her slum is among the hardest hit areas considering that virtually everyone lives in rusty shanties – a sure symbol of abject poverty.

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