Millers warn of maize shortage

May 6, 2009

, NAIROBI, Kenya, May 6 – Millers are warning of an impending maize crisis in the country should the government not extend the liberalisation of the grain market that lapses next month.

Citing what they term as ‘the recent erratic rainfall pattern’ in the country, the Cereal Millers Authority wants the government to extend the liberalised market window until such time that the local maize supplies in the country are adequate and can sustain the Kenyan demand.

“Liberalisation of the grain market will remove the uncertainty faced by millers regarding adequate supplies of maize grain,” a statement from Chairman Diamond Lalji read in part.

Mr Lalji said such a move would allow the supply of cereal to surpass demand whether from local or international sources.

“Surplus supply in any economy will spur the competitive nature of the industry and automatically cause prices to decline.” the statement said.

The Authority noted that price controls cannot be a solution as it would lead to speculation in the market, hoarding and black marketeering which would result in product shortages and consequently higher prices.

As a short term solution to avert the shortage, the millers are further proposing that price reductions currently extended to Grain Bulk Handlers Limited for conventional grain handling by Kenya Ports Authority should also be given to other conventional grain handlers, so that the element of competition in the market lowers prices.

Meanwhile Mr Lalji said the cereals body strongly opposes the directive from City Council of Nairobi directing millers to deduct Sh40 per bag for all deliveries of cereals.

“This directive will lead to double taxation as local cereal is already charged to the producer, and now will be charged at final destination as well,” the statement indicated.

Mr Lalji observed that the earlier directive by the government was aimed at reducing food costs, however the cess duty being imposed on imported cereals adds up the cost of the final product.

He noted that the country has been reeling under high food prices and this levy would ultimately end up hurting the consumer.

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