Market News

Maize flour subsidy to close end of month


A supermarket worker restocks a maize flour section. FILE PHOTO | NMG

The State subsidy on maize flour formally ends on October 31 when new crop harvests enter the market, Agriculture secretary Willy Bett has said.

This is a slight extension from an initial mid-October date announced by Treasury secretary Henry Rotich last week when he appear before a special Parliamentary committee scrutinising the supplementary budget.

“We just don’t want to end it without a proper exit plan. We must be certain that there would be no spike in the cost of flour, that is why we want it to come to an end on October 31,” Mr Bett said in reference to the subsidy.

Under the subsidy, a two-kilogramme packet retails at Sh90 with the one-kilogramme one selling for Sh47.

Mr Bett said an assessment by the Agriculture ministry showed that new maize stocks from the main producing areas of the North Rift region are expected to enter the market at the end of October.

The close of the subsidy could provide relief for growers who had opposed its extension beyond the current harvest window, saying such a move would have destabilised the market.

The Cereal Growers Association two weeks ago claimed the subsidy had triggered a dip in farm-gate prices to Sh2,300 per 90-kilogramme bag, giving room for brokers to profiteer by mopping stocks for sale to the National Cereal and Produce Board at higher prices yet farmers faced losses due to high cost of production.

But despite the end of the subsidy, the government may be forced to consider similar interventions next year amid projections of steep maize imports from April to cover for a shortfall of about five million bags from the long rains season.

Egerton University’s Tegemeo Institute last week said a projected harvest of 32 million bags of maize from the long rains season would only service the country’s consumption demands until April.

The country requires an average 36-40 million bags of maize annually to satisfy demand, estimates by the Agriculture ministry showed.

Prolonged drought in the first half of the year coupled with an infestation of the Fall armyworm pest cut maize output down from 37 million bags realised last year.

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