President Uhuru Kenyatta on Saturday directed the price of a kilo of paddy to be sold at Sh85. Paddy is unprocessed rice.
But while this could be good for rice farmers, consumers may have to dig deeper into their pockets.
Agriculture experts say the directive may increase the price of a kilo of white rice by Sh50 to a high of Sh200.
Timothy Njagi, a researcher from the Tegemeo Institute, said the problem is not that the price of paddy is low, but the cost of production is high.
By 2018, the cost of production for rice farmers was Sh58 per kilo of paddy. Currently, the price of non-aromatic paddy is Sh45, while the aromatic paddy is Sh64.
“So if you add the milling costs and other logistics such as transport and packaging, the price of a kilo of white milled rice may go up to a high of Sh200,” Njagi said.
He said if prices increase, consumers will shift to buying imported rice, which is cheaper.
Njagi said at Sh85 per kilo of paddy, the buying price for milled rice will be Sh160.
“The market is very competitive and this is the price for white rice that is not branded and packaged so when the two components of branding and packaging are added, the price increases to close to Sh200 per kilo. This will make consumers shift to imported rice which sells at Sh100 per kilo. The price of a kilo of imported rice even after duty gets to the supermarket at between Sh100 to Sh120,” he said.
National Irrigation Authority–Mwea Irrigation Scheme–manager Innocent Ariemba said one kilo of paddy gives 0.6 kilos of milled rice, and the cost of milling a kilo of rice is between Sh125-135 for a trader who has bought paddy at Sh75 or Sh85.
“This cost is inclusive of transport, milling [which costs Sh3 per kilo] and packaging material. The current price of a kilo of white rice is Sh120. A kilo of paddy selling at Sh85 may push the consumer price at Sh170,” he said.
Ariemba said production was at 250,000 metric tonnes against a national consumption of about 500,000 metric tonnes. The deficit is imported mainly from Pakistan.
Njagi said the cost of production is high and is making rice farming unprofitable for farmers, "but the way to solve this is not by increasing the price of paddy".
“In order to help farmers, the key thing is to reduce the cost of production. Look at the key components that are making the cost of production go high and then come up with interventions for that. That way you have a solution that is much more sustainable that will benefit farmers and consumers. Interventions that affect the market does not help anybody the farmer or the consumer,” Njagi said.
“While the pronouncement was with good intentions, the way the government is going about it is similar to the intentions in maize will lead to unintended consequences,” he said.
