Economy

NCPB to tame high flour prices with cheaper 2m bags of maize

flour

A customer buys maize flour at a supermarket in Nyeri. PHOTO | FILE

Summary

  • Acting Agriculture secretary Adan Mohamed seeks talks with millers over sale of grain held in depots to cut costs.
  • Millers have shunned maize from the strategic grain reserve (SGR) due to its cost, which is above the prevailing market prices of between Sh2,500 and Sh2,700.
  • They also argue that the maize that the government is offering them has stayed for long and most of the grain cannot meet the milling standards.

Nearly two million bags of maize will be released from the strategic grain reserve to millers at a lower price to curb the rising cost of flour.

Acting Agriculture secretary Adan Mohamed said millers have shunned maize from the strategic grain reserve (SGR) held by the National Cereals and Produce Board (NCPB) due to its cost.

“We will be having a meeting with the relevant stakeholders on a possibility of lowering the price so that we can attract buyers,” Mr Mohamed told the Business Daily.

The prices of a 90-kg bag of maize from the reserve was set at Sh2,800, which is above the prevailing market prices of between Sh2,500 and Sh2,700.

This has seen millers snub the purchase of 500,000 bags of maize from the strategic reserve that was released in April to bring down the cost of flour — the country’s staple food. Millers have so far bought 15,000 bags.

Maize flour prices have jumped to a nine-month high, putting pressure on household budgets and inflation.

Kenya National Bureau of Statistics data indicates that the price of a two-kilogramme packet of flour rose to an average of Sh112 last month, up from Sh110 in April, on rising maize costs.

Flour prices last rose above Sh110 in August last year. Shortage of the grain raised the cost of a 90-kg bag from Sh2,200 in February.

READ: Flour price hits 9-month high on rising maize costs

NCPB managing director Newton Terer said the board has three months to sell its maize stocks to create room for purchase of grains expected from the coming harvest from September.

“We need to get rid of at least two million bags to be on the safer side when the harvesting season begins in October,” he said.

Mr Terer said NCPB bought 1.6 million bags of maize last year and that the purchase of the same quantities would be hampered by a lack of storage place.

Millers have argued that the maize that the government is offering them has stayed for long and most of the grain cannot meet the milling standards.

However, Mr Mohamed said millers were worried about the price and not the quality of the maize at the SGR.

They millers reckon that the cost of moving the maize from NCPB depots in North Rift to their plants in Nairobi is expensive. They said the maize lands in Nairobi at Sh3,000 per 90-kilogramme bag while exports from Tanzania gets to the city at Sh2,800.

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 household budget. Inflation stood at 7.03 per cent in June compared to 6.87 per cent in May.