Millers warn govt. ugali ‘relief’ could be short-lived
The expected reduction of maize flour prices in Kenya will be short-lived as it will only last for less than two weeks.
This is according to the Cereal Millers Association (CMA) which argues that there would be need to increase the amount of subsidized maize available for the price effect to be realized by consumers.
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Last week the National Treasury and the Ministry of Agriculture brokered a deal that will see a total of 750,000 bags of maize released by the National Cereals and Produce Board (NCPB).
However the millers association said on Wednesday that the 450,000 bags of maize allocated to them would only offer a short term relief from the high maize flour prices.
Cereal Millers Association chairman Nick Hutchinson said he expects that once the strategic food reserve intervention maize is milled, the price of flour will readjust according to market forces.
“CMA is however projecting that the maize being released now will only last members between 8-12 days, depending on market demand,” he said in a statement to newsrooms.
The government has been forced to step in to adjust the price of what is considered a Kenyan staple, ugali, after the average price of a 2 kilogram packet of maize flour hit Sh153.
Large millers began collecting the maize from NCPB stores on Saturday which they have already milled and distributed to the market.
They expect the collection process to last another 10 days depending on the location of the pickup points relative to the mill location and the logistics associated with grain loading and transfer to mills.
The millers are buying the government maize at a discounted price of Sh3000, with the government expecting retailers to pass the benefits of drop in prices of maize flour as they have confirmed a drop in ex-factory prices.
“We expect that the retailers will pass on the change on ex-factory prices to the consumer. If this happens, we expect shelf prices to settle between Sh115 to Sh125 per 2kg packet,” Mr Hutchinson said.
In his budget statement, Treasury CS Henry Rotich announced that the government would allow duty free import of maize for four months to further drop the price of maize flour.
“In the meantime, we are encouraging the government to urgently pursue regional interventions to ensure that maize supply returns to normalcy,” he stressed.