Economy

Retailers demand Sh175 million to lower maize flour prices

unga-retail

Retailers now want the state to reimburse them Sh175million that they paid millers for maize flour supplies before they can cut the price of the staple commodity to Sh100 under a Treasury-backed subsidy.

Retail Traders Association of Kenya (Retrack) chief executive Wambui Mbarire said they need the money to cater for the high cost they incurred to stock maize flour at higher prices before the subsidy.

Ms Mbarire said retailers are still holding maize flour stock of 750 tonnes that were purchased at the high market prices and as such, lowering their prices before the reimbursement is done will be untenable.

“While the new price tags are affixed, our analysis indicates that as of the close of business on July 20, 2022, retailers affiliated with Retrak were holding unsold stocks amounting to more than 750 tonnes,” said Ms Mbarire in a statement Thursday.

“We have commenced engagements with the respective maize meal suppliers to recover more than Sh175 million, which is a cumulative estimate of the higher price earlier paid to them to facilitate deliveries.” 

The plea by Retrack to the state to reimburse them Sh175million that they paid millers for maize flour supplies sourced at highercosts comes barely a day after President Uhuru Kenyatta announced a price cut of maize flour from Sh205 to Sh100 for a 2-kilogram packet.

The Head of State said maize flour is out of reach for many Kenyans due to the high prices and suspended levies charged on imported maize including the Railway Development Levy (RDL) and Import Declaration Fee (IDF).

Under the plan, the government will compensate millers Sh105 for every two kilogramme packet they sell to retail outlets.

A crop failure due to poor weather and a shift in the movement of Uganda maize to South Sudan have seen flour prices hit a record high of Sh210 for a two-kilo packet, up from Sh120 at the start of the year.

Kenya traditionally receives imports from Uganda and Tanzania, but grain trade flows have shifted to other countries.

The bulk of Ugandan maize is now heading to South Sudan, encouraged by higher prices in the country relative to Kenya where a 90-kilo bag is selling at Sh7,000 from Sh2,800 in January.

The Treasury opened import window in May to allow millers to bring in maize outside of Africa duty-free. However, the processors said they could not ship the commodity because of scarcity and high prices in the international market.