The new maize flour subsidy programme, though short-term, must be managed well to avoid distorting markets and causing a shortage of the staple. The government says the commodity will retail at a maximum of Sh100 for a two-kilo packet in the next four weeks.
This is more than half the high of more than Sh210 to which the price had rallied over the past few months in what has been attributed to the depletion of the country’s stocks. The Sh100 price is, therefore, less than the cost of production and the government must ensure that millers are compensated promptly to maintain their cash flow and margins.
A delay in remitting the subsidies will hurt the finances of the processors, potentially worsening the current shortage. This will be a disaster brought by a noble intention. The latest maize flour subsidy follows the initial one in 2017 which distorted the markets and caused a major shortage of the staple on shop and supermarket shelves.
It later emerged that the government had issued a secret directive to millers banning them from selling premium maize flour during the time the subsidy was in place.
We insist on the proper implementation of the new maize price cut because of the problems seen in the petroleum subsidy. The failure by the government to pay oil marketers promptly was part of the causes of the biting shortage of petroleum products.
Maize flour is an even more sensitive commodity and we cannot afford to mess up its supply chain. Another issue to address is how the subsidy will be transmitted to make the Sh100 price a reality across the country.
The millers and the government needs to work together to ensure that small retailers get the product at the same price as major supermarkets. It also goes without saying that enforcement of the maximum price will be critical if the subsidy is to achieve its objective.
There is a real risk of unscrupulous traders selling the commodity at inflated prices during or soon after the end of the subsidy. But more importantly, we need long-term solutions to the issue of maize and, for that matter, food security.
