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Economy

Traders make huge profits on subsidised maize flour

A maize flour shopper. PHOTO | JOSEPH KANYI
A maize flour shopper. PHOTO | JOSEPH KANYI 

Retailers made huge profits selling subsidised maize flour above Sh90 for the two-kilo packet, official data reveals.

Data collected by the Kenya National Bureau of Statistics (KNBS) reveals that on average shoppers bought a packet of flour at Sh129.64 in the third week of May when the subsidised flour was already in the market.

Kenya on May 16 announced Sh6 billion subsidies on maize imports to help lower the cost of flour which shot up due to a regional drought and poor planning.

The subsidy cut the price of a 90 kg bag of maize to Sh2,300 from over Sh4,000, allowing the 2kg packet of flour to be sold for Sh90 from May 11 against the market price of Sh140.

“The average price of a two kilogramme packet of maize flour declined… due to government intervention,” said KNBS, indicating that sifted flour prices on average dropped by Sh6.20 from April when it stood at Sh135.87.

The flour sold from mid last month was milled from the subsidised cheap maize, which arrived in the country on May 9 from Mexico via South Africa.

The Treasury published a gazette notice last Friday giving legal backing for State control of sifted maize flour prices and marks the first time the order is issued under a law passed in 2011 allowing price control of essential goods.

This means that those found selling the two kilogramme packet of subsidised maize flour above Sh90 risk a fine of Sh1 million or a five-year jail term.

“A person who contravenes the provisions of this Act commits an offence and is liable on conviction to a fine not exceeding Sh1 million or to imprisonment for a term not exceeding five years or both,” states the law.

President Mwai Kibaki signed the Bill into law in September 2011. The law allows the Finance minister to set maximum prices of essential commodities upon consultation with the relevant industry.

The Cereal Millers Association said it was unable to meet demand on reduced supply and termed the imports inadequate. This has led to shortages and a scramble for the cheap flour, encouraging retailers to sell the staple at above the set Sh90 a packet.

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