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Economy

Flour price rally looms in cut maize imports

Drying the grain: Kenya’s annual maize deficit stands at 20 million bags. PHOTO | FILE
Drying the grain: Kenya’s annual maize deficit stands at 20 million bags. PHOTO | FILE 

Maize imports from Tanzania and Uganda dropped by more than half in the three months to March, setting the stage for a rallying in flour prices.

A report by Eastern African Grain Council says that imports from Tanzania dropped 50 per cent compared to grains that were shipped in between October and December.

Imports from Uganda dropped 57 per cent, increasing maize shortage that has raised the cost of a 90kg bag to Sh2,500, up from Sh2, 000 in January.

“Below average January to February harvests in Tanzania resulted in tightened supplies and reduced exports to Kenya,” says the report.

Kenya is a maize-deficit country and it relies on imports from the two East African states to bridge the shortage of 20 million bags that it faces annually. It relies on maize stocks from Tanzania and Uganda to bridge the gap.

Millers say that the situation will worsen until the onset of harvesting in August, signalling higher flour prices.

The price of two-kilogramme packet of maize flour has increased by an average of Sh5 over the past two months on high maize costs. Flour prices have been falling since last September.

Maize prices have a big effect on inflation in Kenya’s economy where it is the staple food and accounts for a significant share of poor households’ budget.

Inflation stood at 5.45 per cent last month, down from 6.78 per cent in February and has been falling since the start of the year.

Millers have mopped up stocks in the market and it is not clear whether farmers are hoarding the grain in anticipation of higher prices as has been the norm.

A food security report released by the ministry early this year indicated that Kenya would have 16 million bags of maize by the end of December and was anticipated to last beyond March.

The report indicated that as at the end of December the country had 14,383,548 bags with farmers holding about 7,850,200 bags, traders 2,774,948 bags, millers 6,590,200 bags and the National Cereals and Produce Board 3,795,000.

Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, followed by utilities.

Kenyans are likely to get a reprieve in coming months as Tanzania prepares to harvest its maize crop.

The Competition Authority of Kenya (CAK) is investigating allegations of price fixing by maize traders and millers.

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