Sh90 subsidised maize flour running out of stock

Retailers are running short of the Sh90 maize flour following the end of the six-month import subsidy, setting the stage for a rally in flour prices
Agriculture secretary Willy Bett said the Sh6 billion subsidy would not be extended beyond December 31.

Top retailers like Naivas, Choppies and Tuskys say they are clearing old stocks of the Sh90 flour, warning that flour prices would rise from Monday.

Millers say they have started buying maize at between Sh3, 200 and Sh3,400 for 90kg bag, in what will force them to increase flour prices by at least Sh20.

This will increase the cost of a packet maize flour to at least Sh110, putting pressure on inflation, which fell to 4.73 per cent in November, from 5.72 per cent a month earlier, pushed by a fall in some food prices.

The government on May 16 announced Sh6 billion subsidy on maize imports to help lower the cost of flour which had shot up due to drought and poor planning.

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The subsidy lowered the price of a 90kg bag of maize to Sh2,300 from above Sh4, 000 with taxpayers offering importers a rebate or the difference of about Sh1,700.

This has kept the cost of the two-kilo packet of flour at Sh90 from a high of Sh153 in April.

The subsidised flour prices was backed by a Kenya Gazette notice that criminalised the sale of the product above Sh90.

Millers will now revert to the market price of maize, which will influence the purchase of the grain by the government to replenish the strategic reserves. The government is buying a bag from farmers at Sh3,200 in a Sh6.7 billion plan.

Millers say transport charges will raise the cost of a bag to Sh3,400.