State releases 1m bags of maize to curb flour prices

Millers will get access to a million bags of top grade maize worth Sh2.5 billion from the State-owned strategic grain reserve to curb the rally in flour prices.

Agriculture secretary Willy Bett made the announcement day after meeting the millers, saying the move will stabilise the price of the staple food.

The maize held by National Cereals and Produce Board (NCPB) is grade two, a premium over the 700,000 bags released on May 13 that the millers said was fit for animal feed and not for human consumption.

The maize will be sold to millers at Sh2,500 per bag, offering a discount on the prevailing price of Sh2,800.

“NCPB will immediately release a million bags of maize directly to the millers. The intervention is expected to stabilise the pricing of maize and eventually expected to reduce the cost in due course,” said Mr Bett.

The price of maize flour crossed Sh100 in April with millers attributing the price to increased cost of the raw material because of maize shortage.
A two kilogramme packet of flour has gone to an average Sh110.

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.

READ: Maize flour price shoots past Sh100 as shortage hits millers

The one million bags is equivalent to what Kenyans consume in 10 days and analysts reckon it’s unlikely to curb the runaway flour prices ahead of harvests in September.

The board holds 2.2 million bags of maize in the Strategic Food Reserve and release of the one million bags will deplete the emergency stocks.

Kenya consumes about three million bags monthly, a pointer that the reserve is holding less than the optimum amount of maize.

The NCPB stocks will only be sold to millers in a move aimed at locking out middle men. The board is holding 400,000 bags of maize worth nearly Sh1 billion that is unfit for human consumption.

The poor quality grains are linked to failure to sell old stocks. Of the 700, 000 bags released in May, Mr Bett reckons that millers bought 400, 000 bags for food and rest for animal feeds.

Nick Hutchinson, the chairman of the Cereal Millers Association said releasing a million bags will play a major role in calming the prices, but noted that they will only buy the stocks if it meets the set milling standards.

“It is a good move that the government has made stocks available to us and we believe that it is of human food grade,” said Mr Hutchinson, who is also Unga Group chief executive.