• President Kenyatta has directed that the floor price for a 90kg bag of maize should be Sh2,500
• Earlier this year the government decided that NCPB should stop buying maize and only store it
President Uhuru Kenyatta yesterday directed the Agriculture ministry to ensure that the floor price of a 90kg bag of maize is not less than Sh2,500 (see P2).
This is probably unnecessary since farmers are presently selling their maize for up to Sh3,000 per bag.
But it is inherently problematic because government has rightly decided to exit the business of buying and selling maize because of the huge costs and distortions generated by the National Cereals and Produce Board.
Now the NCPB will only provide private storage facilities to farmers and buyers. Maize will be bought and sold using Warehouse Receipts. This will modernise and liberalise maize production in Kenya.
The President also halved the drying charges imposed by NCPB. That is well within his power and will surely be welcomed by farmers.
If the government wants to stabilise the market, it should remove the restriction on maize imports. Anyone should be allowed to bring in maize at any time.
But to protect the farmer, and to stop cartels enriching themselves, no-one should ever be allowed to import maize duty-free. It should always incur the standard 50 percent protective tariff.
Quote of the day: "He who has no bread has no authority".
Suleiman the Magnificent
He was proclaimed Sultan of the Ottoman Empire on September 30, 1520