Economics Of Unga Prizing In Kenya.

Fluctuating and cynical prices of consumable commodities in any country pose a very serious problem in the supply chain of goods and services. This does not only reflect the performance of the economy but also instability and unsustainable budget control of government operations. In the first half of 2022, Kenya has seen a rise in the price of maize flour from an average of Kes.112 per 2 kg to current Kes.136 across the country signifying a 21% increase between January and June 2022. Amid the excess supply of Maize from farmers in the harvest of December 2021 to the National Cereals and Produce Board (NCPB) the prices have continued to steadily increase without substantive mitigation from the government. Every two kilograms of maize that is supplied to NCPB is received at Kes.56. The hundreds of thousands of bags that are sold at Kes.800 would translate to Kes.18 per 2kg of flour. In the local mills, the cost of milling is about sh. 10 per 2kgs and what is packed and retailed in shops is grade 1 flour milled by big millers enjoying economies of scale which translates to lower costs. The ministry of agriculture estimated that maize consumption in Kenya stood at an estimated quantity of 55 million bags against a national harvest of 45 million bags of maize. This means that the country needs to meet the 10 million bags deficit by importing from countries with a surplus.

The government of Kenya has cited that cartels hoard maize for in anticipation for a prize jump. The government also argues that the country has enough grains for supply after the 2021 bumper harvest. On the other hand, maize miller’s protest about low supply level of maize stocks from farmers, high purchase price of the grains at the farm and high handling costs that are caused by a national inflation driven by high cost of fuel.

Regulation of unga prizes therefore factors all costs incurred by farmers, millers and retailers. Government subsidies are needed at each input level of the value chain. There is also a need to reassess our form of agriculture such that profits earned by farmers be driven by low input costs rather than high retail rates. Implementation of Strategic Grain Reserves should also be put in place to safeguard the needs of over fifteen million households who are not able to meet their minimum dietary requirements. These measures will not only secure a steady supply of consumable goods but also fulfill the right to food enshrined in the constitution of Kenya, 2010 Article 43 1(a).

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