Market News

Expensive maize pushes up price of wheat flour


A woman displays chapatis. FILE PHOTO | NMG

The price of wheat flour has started rising as the commodity increasingly becomes a substitute for the scarce and often pricey maize flour.

Millers say the price started rising a couple of weeks ago — reflecting what economists call cross elasticity of demand — due to increased consumption, noting they might stabilise when normal maize supply in the country resumes.

The price of different brands has increased in supermarkets with the cost of the Exe brand going up from Sh120 last month to Sh126, Golden Flour from Sh116 to Sh123, Kifaru from Sh115 to Sh122 and Ndovu from Sh116 to Sh120 at the moment.

The country is facing a serious shortage of maize flour which saw the price of the staple hit a high of Sh153 per two kilo bag before government intervention through a subsidy lowered the price to Sh90.

“There has been high demand of wheat flour in recent days resulting from high prices of maize flour.

‘‘However, with the government subsidy in place we expect the cost to stabilise,” said Nick Hutchinson, chairman of the Cereal Millers Association (CMA). Mr Hutchinson noted there was a slight increase in the international price of wheat which could have partly affected the cost given that Kenya relies on imports to meet growing demand.

READ: Wheat farmers locked in row with millers over imports

Kenya is a wheat deficit country and imports three quarters of the grain to satisfy local demand. Millers also prefer imported wheat to local stuff because it is of superior quality. They use it to blend with local commodity for baking.

Farmers have also been demanding higher prices for the domestic produce, which has caused millers to prefer imports.

A 90kg bag of imported wheat lands in Nairobi at about Sh2,650 against the local price of Sh3,000 that was paid to farmers in the last season.
This year, the government changed tack by allocating each miller a local wheat quota based on their installed capacity.

The new rule compelled millers to buy their allocated quotas from farmers before being issued with an import licence for duty free wheat.