Farmers concerned over government's unsettled Sh1.8billion maize seed subsidy bill

Farmers in the country's breadbasket of Trans Nzoia have criticised the government for its failure to settle the Sh800 million it owes Kenya Seed Company (KSC) for subsidised seeds.

KSC Managing Director, Sammy Chepsiror, said he recently held fruitful engagements with Treasury officials over the pending bill expected to rise to Sh1.8b this year.

"The treasury promised to settle this year’s Sh1 billion within the shortest period," he said, adding that the Sh800 million bill for 2013 would be factored in the next plans for payment.

Maize seed prices were capped at Sh210 for a 1kg packet, Sh420 for a 2kg packet, Sh2,100 for a 10kg packet, and Sh5,250 for a 25kg packet.

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Chepsiror said KSC had sufficient seed stock for maize, sunflower, wheat, and horticultural crops to meet demand. He warned unscrupulous traders selling counterfeit fertilisers.

However, farmers and experts said the delay in paying the bill pending since 2013 was affecting the operation of KSC, including the timely delivery of maize seeds during this planting season.

The national government owes KSC over sh800 million for the maize seed subsidies dating back to 2013, in addition to the sh1 billion subsidy announced this year.

Farmers relying on subsidised maize seeds fear that delayed payments to KSC could lead to shortages and increased prices of maize seeds affecting production and food security.

Fredrick Rono, a maize farmer in Kiminini sub-county, said the uncertainty surrounding the availability of subsidised maize seed during the planting season was wrong.

“If the government doesn’t pay KSC on time, the company won’t have the capacity to produce enough seeds in future. This will force us to buy seeds at higher prices or settle for uncertified seeds, which will affect our yields,” Rono said.

He added: “We are urging the government to honour its commitments. Farmers depend on KSC for high-quality seeds, and any financial instability on their end will affect the entire agricultural sector.”

Another farmer from Kapsitwet, John Komen, emphasised the direct impact on small-scale farmers.

“The pending bill from 2013 and the newly announced Sh1 billion subsidy will put KSC under severe financial constraints if the debt is not paid on time.

"Most of us depend on subsidised seeds to keep our farming businesses afloat. If KSC struggles, it means we will struggle too,” Komen noted.

Dr Edward Wasike, an economist, highlighted the risk of maize seed shortages and inflation if the issue is not resolved promptly.

“If the government does not pay KSC over Sh1.8 billion on time, the ripple effect will be felt across the economy in the future as farmers will struggle to access quality seeds," he said.

Dr Wasike said reduced maize production will drop, driving up food prices and increasing reliance on maize imports that would put pressure on Kenya’s foreign exchange reserves. 

Kwanza MP and a member of the National Assembly Agriculture Committee, Ferdinand Wanyonyi, revealed that Parliament had passed a supplementary budget to subsidise maize seeds, with funds set to be disbursed to Kenya Seed Company in the near future.

“The National Assembly approved a supplementary budget to subsidise maize seed prices. The allocated funds will soon be wired to Kenya Seed Company to facilitate affordable seed distribution to farmers,” Wanyonyi disclosed.

During his visit to the National Cereals and Produce Board (NCPB) Kitale depot last week, Agriculture Principal Secretary (PS) Dr Paul Rono assured farmers and KSC that the government is working to address the issue.

“The government recognises the importance of KSC in ensuring food security. While we acknowledge the pending payments, we are actively engaging with the Treasury to secure funds for settlement. Our goal is to prevent any disruption in seed production and distribution,” Dr Rono said.

Dr Rono also emphasised that the government remains committed to the subsidy programme.

“The Sh1 billion subsidy announced this year will be disbursed as soon as the necessary financial arrangements are finalised,” he added.