Government chalks up Sh5 billion losses in maize sale

The government stands to lose over Sh5 billion for the 1.7 million bags of maize it released to millers at a low cost under a subsidy programme to cushion consumers from high flour prices.

The Strategic Grains Reserve (SGR) now wants a Cabinet approval of the losses to facilitate release of a further 1.5 million bags of grains ahead of importation of 12.5 million tax-free bags of maize as the flour prices remain high in most retail outlets.

“The government should take responsibility for the losses considering the fact that we sold the maize at Sh2,300 per 90kg bags, which is much lower as compared to the prevailing market prices of above Sh3,000,” explained Dr Noah Wekesa, the chairman of the SGR.

The NCPB is releasing the subsidised maize selling at Sh2,300 per bag against Sh3,200 by traders due to an acute shortage of the grains in the market.

Dr Wekesa disclosed that millers have exhausted the two million bags of maize released last month, resulting in the rise in the cost of flour.

“We allocated 1.7 million bags to millers for human consumption and an additional 300,000 bags for production of animal feeds but some of them have cleared the stocks,” said Dr Wekesa.

The government now plans to import 12.5 million bags for household consumption and two million for processing of animal feeds.

According to Agriculture Chief Administrative Secretary Andrew Tuimur, the country has enough maize to last this month and duty-free maize will be imported next month. But the SGR board has maintained that it will release additional maize only after the Cabinet approves the losses it has incurred.

The government pumped in Sh6 billion in 2017 to import maize under the subsidy programme to lower flour shelf prices that had hit Sh153 for 2kg pack, before coming down to Sh90 following the intervention.

It had imported 10.4 million bags mainly from Mexico and African countries to contain the high price of maize flour and make it affordable to consumers.