REFORMING SECTOR

NCPB buys 200,000 bags of maize, worried about Sh7bn loan dues

The board targets one million bags; farmers not happy with current price of Sh2,700.

In Summary

• Officials are worried about an unsettled fertiliser loan that has increased from Sh4 billion to Sh7 billion

• Iringo said the aging staff in critical areas are to be replaced; the NCPB has not recruited for the last 10 years.

National Cereals and Produce Board MD Joseph Kimote and chairman Mutea Iringo during a media briefing on February 18 at the head office
National Cereals and Produce Board MD Joseph Kimote and chairman Mutea Iringo during a media briefing on February 18 at the head office
Image: Fredrick Omondi

The National Cereals and Produce Board has so far bought 200,000 90kg bags of maize from farmers, MD Joseph Kimote has said.

"This is against a target of one million," he said.

Kimote expressed confidence that the target will be met, citing long queues of lorries waiting to deliver maize.

The NCPB is purchasing a 90kg bag of maize at Sh2,700. Farmers are, however, not happy with the price and want it increased to Sh3,200.

Kimote said they purchased four million bags in June last year. More than 40 million bags were harvested last year, up from 35 million bags in 2019. 

Kimote and board chairman Mutea Iringo on Thursday spoke about ongoing reforms in the institution, which had been dogged by claims of corruption and irregularities. 

The two are, however, worried about an unsettled fertiliser loan that has increased from Sh4 billion to Sh7 billion. This was after the government instructed the NCPB to import subsidised fertiliser for farmers.

"In 2016-17, the government requested NCPB to import fertiliser through post-import facility arrangement. The fertiliser was coming at a higher price than the price we are selling to farmers. The arrangement was that the government would provide the difference, the subsidy to NCPB, so the board could recover its expense," Kimote said.

He said the subsidy component that had been promised by the government did not come as expected.  The letter of credit matured and the post-import facility paid for the fertiliser and became a term loan by the bank.

"That is the challenge we have. The interest rate was increased to 12.5 per cent and a penalty was charged at 10 per cent because of lack of alignment to the conditions. The loan attracts an interest of 22.5 per cent every month," he said.

"This translates into Sh110 million per month. That is what we are paying. We do not have money to pay and it has accumulated."

Kimote said the loan still accumulates as they have no money.

Iringo said he has tried to turn around the institution since he was appointed chairman in 2018 when the NCPB was under probe over irregularities pertaining to the purchase of the Strategic Food Reserve maize stocks and the sale of government fertiliser.

"The reforms recognise the need to revitalise the commercial trading activities of the NCPB, as well as the handling of National Food Reserve functions together with supporting the food balance sheet committee activities," Iringo said.

He said trading division and National Food Reserve divisions have been created as part of the reforms. However, they have yet to operate for lack of funds.

Iringo said aging infrastructure needs at least Sh1.8 billion to be fixed. He said modern driers will be purchased to help farmers curb aflatoxin. Testing labs for aflatoxin will be set up.

Iringo added that aging staff members in critical areas are to be replaced in line with their transformation roadmap. The NCPB has not recruited for the last 10 years.

The chairman also decried the low uptake of the warehouse receipt system introduced by the Agriculture ministry. 

Under the system, owners of commodities, who may be producers or dealers, deposit produce in certified warehouses and are issued with a document called a warehouse receipt as proof of ownership.

The receipt can be used as collateral, reducing pressure on farmers to sell their produce immediately after harvest when prices are usually low.

The receipts can be used to access credit from participating financial institutions or traded in commodity markets. The NCPB has plans to launch the first WRS in Nakuru between March and May.

Iringo said they will ensure no imported maize land at its stores. He said they have information about farmers, their identities, and the size of their farms.

 

Edited by F'Orieny