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Economy

Ministry seeks lower maize flour prices in talks with millers

Top Ministry of Agriculture officials have opened talks with maize flour millers in a fresh bid to cut factory prices by at least 20 per cent.

Agriculture secretary Felix Koskei says a two-kilogramme packet of flour, which currently retails above Sh100, should be available on the shelves at between Sh80 and Sh85 based on the current price of maize.

The cost at which maize is procured forms 80 per cent of the shelf price of maize.

“The cost of buying maize has significantly dropped but we are concerned that the price of flour remains relatively high. We are negotiating with the millers to facilitate further price cuts,” he said.

Mr Koskei said the talks, which ministry has been holding with Cereal Millers Association in the recent weeks, would continue until consumers benefit from cheap maize prices.

Millers have already cut the factory price of flour by Sh15 to sell at Sh75 over the past two months.

The decline comes on the back of reduced dry maize prices following harvest in the country’s grain basket that has cut the price of a 90-kilogramme bag to Sh1,500 from Sh2,500 in September and Sh3,000 in May.

The ministry officials said consumers had not benefited fully from the harvest season’s glut.

A two-kilogramme packet of Jogoo maize flour is selling at Sh111 at Uchumi Supermarkets, Sh103 at Tuskys Supermarkets, while the same quantity of Soko flour goes for Sh86 in both retail chains. Millers, however, argue that it is up to retailers to determine the price of flour on their shelves.

“We do not have control over the prices at which the retail shops decide to sell the flour, but it would be ideal for their figures to reflect the changes in order to benefit the consumers,” said Cereal Millers Association chairman Diamond Lalji.

While the falling maize prices may be considered to be a boon to consumers, farmers have taken a hit with many struggling to break even.

Tegemeo Institute, the Egerton university-based think tank, in a report released yesterday indicated that farmers are currently making huge losses on their maize crop.

“Our analysis of cost of production indicated that the cost of producing a bag of maize in 2013 ranged between Sh1,639 and Sh1,916 in Uasin Gishu, Sh1,518 and Sh2,623 in Trans Nzoia, and it averaged about Sh2,328 and Sh2,714 in Narok and Nakuru counties, respectively.

“Based on these figures, the current prices are lower than the break-even price yet farmers need to cover their costs and make an acceptable margin on their investment,” reads the report.

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