Millers have increased ex-factory (wholesale) price of maize flour supplied traders by 22 per cent following the end of a subsidy programme, as they started processing expensive commercial maize.
The factories have since New Year been processing stocks procured from traders and farmers in a move that has pushed the cost of a bale, containing 12 bags, to Sh1,230 from the initial Sh1,010.
This has been passed on to consumers with the price of a two-kilo packet, which previously retailed at Sh90 before the end of subsidy on December 31, going up by between Sh10 and Sh15.
“We have had to adjust the ex-factory price for a bale of flour since we started milling commercial maize at the beginning of the year,” said an official from Cereal Millers Association (CMA).
The CMA says the cost has gone up to reflect the current price of over Sh3,000 paid for a 90-kilogramme bag of maize, compared with the Sh2,300 for subsidised grain by the government.
However, millers say the retail price is unlikely to go beyond Sh120 in the next three months because of adequate supply of grain, unlike last year when there was a serious shortage.
“Supply of maize is currently stable and we do not foresee further increase in the cost of flour because there is no shortage at the moment,” said the CMA.
Ministry of Agriculture has projected a shortage of about eight million bags from last year’s crop, likely to put more pressure on the prices in the next quarter.
Agriculture think-tank Tegemeo Institute of Policy and Research has already warned of a shortfall starting May, advising the government to put in place proper mechanisms for imports.
“With erratic rains and armyworm invasion, there would be a shortage of maize in the country this year and the imports would have to start as early as May,” said the Institute in a research finding last year.
The government was forced to intervene through the subsidy in a move that lowered the cost of a 2kg packet from an all-time high of Sh153.