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Role of NCPB in Supporting development and Attainment of Food Security
a Presentation by Prof. Gideon Misoi, Managing Director, National Cereals and Produce Board - NCPB
at the Kenya's food situation: challenges and opportunities Roundtable
held at Laico regency hotel, Nairobi on 18th september, 2009

 

Prof. Misoi made a presentation on Role of NCPB in Supporting Development and Attainment of Food Security. He provided a historical background on NCPB and how it has evolved over the years. He highlighted that Kenya has had deficits in maize and wheat from 1996/97 to date, which are associated with uncertain commodity prices, poor support systems for farmers, unpredictable/severe weather conditions, and poor farming methods, among others. The deficits are normally met through official and unofficial cross border trade and offshore imports. He indicated that after liberalization NCPB’s role was reduced to:

  • Government’s arm for grain price stabilization
  • Procurement of Strategic Grain Reserves (SGR) and Famine Relief Stocks (FRS)
  • Providing logistics support services for distribution of SGR and FRS
  • A commercial grain trading organization (a role it cannot play effectively due to its weak financial position).

In addition, he highlighted the major players in the industry who include, (i) millers with a combined milling capacity of up to 5,575 MT per 24 hr and who process about 110,000 MT of grain per month, (ii) traders who purchase up to 200,000 MT, (iii) and, the GoK and NCPB who purchase about 30% of marketable surpluses estimated at 40% of total national production. He indicated that although small scale millers are crucial players, they are not catered for.

In his presentation, Prof. Misoi enumerated some of the challenges of the grain market in a liberalized environment. The general ones include lack of an effective legal framework; weak support systems for stakeholders; frequent food shortages that greatly compromise the welfare of citizens; stabilization and/or intervention by the government; escalating costs of farm inputs and labor; unpredictable income to producers; escalating unpredictable food prices leading to high inflation; and, uncertainty about the role of NCPB (service provider or commercial trader). The challenges which he classified as specific include: exploitation of the farmers by middlemen; setting up prices of maize which is always not market driven; frequent losses by NCPB compounded by its weak capital base; inadequate institutions to support grain farmers; uncertainty of prices for millers; and, unavailability of grains to small millers.

In addition, Prof. Misoi highlighted several institutional gaps in food distribution namely: disorganized storage facilities for farmers; lack of institutional mechanisms to set up prices (poor price signalling effect); inadequate credit to farmers (inadequate support from AFC); under-capitalised buyer of last resort (NCPB); de-institutionalization of regulation of quality and standards in the grain sector; and, weak government monitoring system and regulatory mechanisms. Further, he suggested a set of reforms that would address these gaps and food security issues in general, which include: transformation of NCPB into a major National Warehousing Institution; introduction of a warehouse receipting system in Kenya and the region; establishment of a commodity exchange that encompasses all agricultural commodities in the Region; preparation of adequate legal and regulatory framework to govern grain trade; facilitation of the emergence of private sector warehouses; and, the introduction of institutional management of risk in grain trade including a futures market for hedging by farmers. He then went on to elaborate on the proposed warehouse receipting system, national warehousing Act, commodity exchange, and re-structuring of NCPB

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