Treasury eyes subsidy fund in supplementary budget to ease food prices

Treasury eyes subsidy fund in supplementary budget to ease food prices
Treasury CS Henry Rotich carries a briefcase containing the Government Budget for the 2013/14 fiscal year [Photo: Courtesy]

The government has announced plans to offset the cost of imported maize expected in the country this month in an effort of lowering the cost of maize flour.

The plans are part of the National Treasury’s proposals in the supplementary budget that is currently being prepared as a tool to deal with the escalating high cost of living.

Treasury Cabinet Secretary Henry Rotich says with imported maize retailing at an average of 4,000 shillings per 90 kilogram bag, the treasury will set funds aside to ensure millers get the maize at 2,500 shillings and pass on the benefits to the consumers.

“To get flour to be something around Sh100 that maize has to be around Sh2,500 or there about so we have to deal with the differences and that is what we are now preparing to go to parliament to get that approval so that we can lower the cost of unga,” Mr Rotich said.

The average cost for a two kilogram packet of unga has been Sh153 shillings with fears that it could go even higher.

Millers earlier in the week said they did not foresee maize flour prices coming down before July.

Already the government has released 750,000 bags of maize from the strategic grain reserve to cushion consumers, which millers have since exhausted.

During the period, flour prices came down to an average of Sh130 but have slowly been creeping back up.

The government has already created a duty free maize import window with the hopes of addressing high commodity prices.

Mr Rotich said the subsidy program would also be extended to other imported commodities such as sugar and locally sourced maize.

“In the supplementary basically we are going to fund an arrangement that will lower the cost of maize coming from outside or even that is available locally and the region and ensure that price we are going to bring down will translate when milled into flour,” he said.

Besides maize flour, major basic commodities have witnessed a sharp increase in price.

The government through the Agriculture and Food Authority has announced plans to import 100,000 tons of sugar in the coming months to tame the runway price.

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