Maize flour prices hit 13-month high on rising grain cost

Maize flour prices have jumped to a 13-month high, putting pressure on households that depend on the cereal as a major source of food.

Kenya National Bureau of Statistics data indicates that the price of a two-kilogramme packet rose to Sh115 last month, up from Sh112 and Sh110 in April, on high maize costs. Flour prices last went above Sh115 in June.

A maize shortage has raised the cost of a 90kg bag to Sh2,800, up from Sh2,200 in February but millers say that the situation is about to change with the onset of harvesting next month.

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. Inflation stood at 5.84 per cent last month, down from 6.62 per cent in July.

Millers argue that the price of flour is expected to drop in the coming months due to increased supply of the produce in the market.

“Consumers are about to enjoy low cost on flour as we expect the supplies to improve starting next month when key grain regions embark on harvesting,” said Cereal Millers Association chairman Nick Hutchinson in an interview.

Maize prices are expected to dip on increased supply from farmers as well as the grain imports from Tanzania.

In April, acting Agriculture secretary Adan Mohammed said the price of flour would come down this month after the State announced it would release 500,000 bags of maize into the market.

READ: Maize millers rule out reducing flour prices

Millers argue that dwindling maize reserves are to blame for the high cost of flour, even as they shun the stocks that the National Cereals and Produce Board had allocated them over quality concerns.

The millers argue that the high cost of grain has pushed up the ex-factory price of flour from between Sh84 and Sh87 in February to Sh95 and Sh100, representing a 13 per cent increase.

The millers currently rely on stocks from Tanzania and Uganda that land in Nairobi at Sh2,800, the same price that the State was offering them on the maize held in the Strategic Grain Reserve.

The short rain crop that started in October is expected to lift the stocks of maize to a surplus of 9.8 million bags in October, according to official data.

The rains will deliver 17.5 million bags between July and October on top of the current stocks of 8.1 million bags, leaving a surplus after consumption of 12 million bags in the months to October.