Millers to get NCPB maize as State fights unga cartels

The National Cereals and Produce Board (NCPB) was on Monday directed to release bags of maize to millers as part of the quest to tame high cost of flour that has persisted in the past two weeks.

Acting Agriculture secretary Adan Mohamed said the millers will buy the produce from NCPB at Sh2,800 or Sh200 below the prevailing market price of Sh3,000.

“The government is releasing to millers part of the stocks held in SGR with immediate effect to bring down the cost of flour to accepted levels,” said Mr Mohamed at a Press conference held in Nairobi to review the food situation.

The NCPB is expected to release a fraction of the four million bags of maize it holds in the Strategic Grain Reserves (SGR) to check the skyrocketing cost of the staple that crossed Sh100 per two kilogramme bag mark two weeks ago.

It is expected that release of low-priced maize from the NCPB will lower the millers’ costs and that the accruing benefits will be passed on to consumers.

Mr Mohamed, who met the millers shortly before addressing the press conference, said consumers are expected to start enjoying low-priced flour in July.

The minister described the current shortage of maize as artificial, insisting that it is the product of massive hoarding of last season’s crop by farmers and traders in anticipation of higher prices in the future.

“A report compiled by our technical team clearly shows that traders and farmers are hoarding stocks in anticipation of high prices in the coming months,” he said.

READ: Unga price hits Sh100 as millers blame traders for hoarding maize

The ministry’s food security report that was released on Monday shows that Kenya had 14 million bags of maize at the end of April, five million of which was with the farmers, traders held 2.2 million bags while the millers had 2.4 million 90 kilogramme bags of maize while the remaining amount was with the NCPB.

Millers have since the beginning of the month increased the price of maize flour, citing high cost of raw material arising from restricted movement of maize from neighbouring countries such as Tanzania that is facing an acute shortage this year.

The Cereal Millers Association said market speculation has led to a decline in maize supplies and a steep rise in the price of maize flour by at least 27 per cent.

Cost of maize accounts for nearly 80 per cent of the cost of a packet of maize flour, according to millers.

The millers argue that high cost of raw material is the reason ex-factory price of maize flour has risen from the range of Sh84 and Sh87 per two kilogramme bag in February to between Sh95 and Sh100 this month, representing a 13 per cent increase.

Mr Mohamed said increased cost of flour is of great concern to the government and that the 19 per cent rise in retail prices since January is a risk to the lives of many Kenyans who rely on it.

A survey of leading supermarkets in Nairobi found that a two kilogramme packet of Soko flour is selling at Sh104 in Tuskys and Sh102 at Uchumi from Sh86 in January. Jogoo is selling at Sh107 in both supermarkets while Maycorn is retailing at Sh120 in Eastmatt supermarkets and Sh115 at Tuskys.

A steep rise in staple maize flour prices signals tough times for consumers who must allocate more funds to their food budgets, which are also beset by the steep rise in the prices of other consumables such as milk and vegetables.

READ: Rising maize farmgate prices spark inflation fears

The price of maize, a staple food, has a big effect on the rate of inflation and accounts for a significant portion of poor households’ budget.

Inflation last month rose above the government target for the year, pushed by a steep rise in prices of key food items, according to Kenya National Bureau of Statistics (KNBS).

KNBS data showed that inflation rose to 6.31 per cent in March from 5.61 per cent the previous month in what was attributed to increased cost of food items.

Millers insist that the dwindling supplies have seen them buy a 90 kilogramme bag of maize at the prevailing market price of Sh3,000 from Sh2,200 in February, forcing them to pass the additional cost to consumers.

Mr Mohamed said the market is expected to normalise fully in August when the long rains crop is expected from the South Rift.

Kenya is a maize deficit country that relies on cross border trade and crop from the short rains to supplement existing stocks. The Ministry of Agriculture has urged Kenyans to adopt other food crops to cut over-reliance on maize.

Agriculture principal secretary Sicily Kariuki said the government was promoting consumption of orphaned crops such as sorghum and millet to ease pressure on maize.

“We are promoting farming of the high yielding traditional crops such as millet and sorghum in order to cut over-reliance on maize,” she said.