A customer at a supermarket in Mombasa. Grain millers have warned that inadequate harvests will push up retail prices of flour next year. file
Cereal millers have appealed for an extension of the duty-free maize and wheat imports, warning that inadequate harvests will push up retail prices next year.
Treasury had allowed duty-free importation of maize between June and December while import tax on wheat was knocked down to 10 per cent earlier in the year to ease a surge in food prices.
Maize flour prices had climbed to more than Sh150 per two- kilogramme packet, but have since eased to about Sh112.
“We have re-applied for a six-month extension through the Ministry of Agriculture,” said the Cereal Millers Association chairman, Diamond Lalji.
Treasury had rejected the millers’ initial appeal last week, saying there was no legal basis to extend the duty exemption.
The millers were, however, advised to re-apply through the Ministry of Agriculture, which has to take into consideration the plight of local farmers who stand to lose if there is flooding of commodity in the local market.
Due to the common market regulations governing the East African Community, Treasury cannot grant an indefinite extension as earlier sought by the millers. The Minister for Finance has the powers to renew a previous tax free window for a period of six months.
Efforts to get to the Ministry of Agriculture and Treasury for comments were not successful.
The country has a deficit in maize supply estimated at between 10 and 15 million bags.
The National Cereals and Produce Board is currently holding 2.2 million bags, which is six million bags below the country’s statutory reserve levels.
The millers say local production will only be sufficient till the month of March when the country could be forced to import.
Mr Lalji said the association fears that at that time other countries will ban exports as was the case with Tanzania earlier this year. Farmers will hoard their supply, leading to high flour prices as witnessed in the year.
Food security experts at Rockefeller foundation supported the millers’ request, saying that it will allow the government to boost the country’s strategic reserves by buying and storing local produce.
“The government should continue to open the import window because it makes economic sense and ensures we build our stocks,” said Dr James Nyoro, CEO at Rockefeller Foundation Kenya.
Farmers are, however, skeptical of the move, saying that imports will flood the market denying them good prices.
“We have a lot of maize in the country and we expect more from the eastern parts of the country. Why don’t the millers deal with the local market before looking beyond?” said David Nyameino CEO of Cereal Growers Association.
The millers said for the six months that the window has been opened they have imported 50,000 tonnes which was sufficient to ensure that farmers did not hoard the produce.
“The prices out there are high because of the global commodity market and the exchange rate so the imports will not destabilise local prices,” said Dr Nyoro.
Hoarding fears
Maize imports are subject to a 50 per cent importation tax.
Currently, the millers are importing from Tanzania owing to the heavy rains that have made harvesting difficult and increased the moisture content in freshly harvested maize, making it unsuitable for milling.
NCPB has also experienced decline in deliveries but is now drying maize for farmers at no charge so as to avoid waste due to rot. The situation has seen flour prices remain above Sh100 even with the onset of harvesting seasons. The price of a two-kilogramme packet of maize flour is averaging Sh112 in Nairobi supermarkets.
