Agriculture secretary Felix Koskei has directed the Competition Authority of Kenya to commence investigations into claims of price fixing among top millers as flour prices continue to defy falling energy and maize prices.
Mr Koskei said the millers have failed to match their prices with production cost even after top officials of the ministry held several talks with them since new harvests started trickling in two months ago.
The price of 90kg-bag of dry maize has dropped sharply to an average of Sh1,500 from Sh2,500 in September and Sh3,000 in May. Prices have remained unchanged over the period.
A two-kilogramme packet of Jogoo maize flour is selling at Sh111 at Uchumi Supermarkets, Sh103 at Tuskys, while the same quantity of Soko flour is retailing at Sh86 in both retail chains.
“I would like the Competition Authority to study the trend where both the cost of power and 90-kg bag of maize have come down but price of flour remains high,” he said.
Mr Koskei said the ideal cost of two-kilogramme packet of maize flour should be Sh75 basing on the current price of the grain, which forms 80 per cent of the raw material.
He said the competition watchdog would find out why the market dynamics of supply and demand have failed to work in the maize milling industry.
The minister has also instructed Agriculture Food and Fisheries Authority (AFFA) to study the actual cost of milling and come up with ideal price.
“I want AFFA to move around the millers with the view to establishing the cost of producing flour, the study will be significant in helping us determine the price at which consumers should be buying flour,” he said.
Millers said they had cut the factory price of flour by Sh15 to sell at Sh75 over the past two months, in response to the reducing price of raw material.
“We do not have control over the prices at which the retail shops decide to sell the flour, but it would be ideal for their figures to reflect the changes in order to benefit the consumers,” said Cereal Millers Association chairman Diamond Lalji in an earlier interview.