Millers have blamed the current high cost of maize flour on the government’s move to fix a higher price for a 90-kilogramme bag of the grain, piling inflationary pressure on households.
The millers reckon they have been forced to match the Sh3,000 per bag that the National Cereals and Produce Board (NCPB) is buying maize at to attract stocks from growers.
“The cost of maize remains high following the move by the government to fix the price. This simply means that flour will remain at the current prices for long,” said a Cereal Millers Association spokesperson.
The official said the cost of maize, which forms 80 per cent of the raw material, drops during harvesting in the North Rift, the country’s breadbasket.
NCPB has Sh6 billion for buying maize this season, up from less than Sh3 billion—a war chest that is influencing market prices.
Millers have traditionally bought a bag of maize at about Sh2,000 in the weeks that follow the harvest season that starts in October, allowing them to cut the two-kilogramme packet of flour for less than Sh100.
The price of a two kilogramme packet of Jogoo is retailing at Sh110, Soko Sh104 and Jimbi Sh101, unchanged from August’s cost.
Cost of food is major driver of inflation in a country that relies on maize as a staple food. Inflation hit a nine-month high in November on higher fuel and food cost led by sugar and vegetables.
The Kenya National Bureau of Statistics data shows that inflation rose from 6.47 per cent in September to 6.68 per cent last month, the highest level since February.
Early last month, Deputy President William Ruto announced that the State would buy maize at Sh3,000 per bag.
According to Egerton University’s Tegemeo Institute of Agricultural Policy and Development, the cost of production of a bag of maize is Sh1,300 for large-scale farmers and Sh1,700 for small-scale growers, implying that farmers are making a profit of more than 100 per cent.
James Githuku, senior research associate at Tegemeo, said the move by the government to increase the price for the produce was ill-advised and would hurt consumers.
“The move will distort the market price because other players such as millers will also have to increase their price to attract buyers and this will obviously affect the cost of flour,” said Mr Githuku in an earlier interview.
The government has, however, defended the price increase, saying that it was agreed upon by the ministry, the National Strategic Food Reserve oversight committee and the Office of Deputy President.
The State noted that the price increase was aimed at attracting more stocks from farmers to ensure the strategic food reserve has enough maize in store ahead of the anticipated La Nina (dry spell due to climate change) that will affect the short rains crop, hence creating a shortage.