KENYA – The National Cereals and Produce Board will establish two maize milling plants in Nairobi and Trans Nzoia to compete with private firms and lower the cost of flour.

The mills will strengthen the government’s hand in its bid to push private firms like Unga Limited, Pembe and Mombasa millers to lower the cost of the country’s staple food.

Millers have been on the spot for not lowering flour prices in tandem with the fall in the cost of maize—which has dropped by nearly half from Sh3,800 in May to the current Sh2,000.

But flour prices have dropped by about 13 per cent since May to an average of Sh100 for a two-kilogramme packet amid a push by the government for the millers to cut the produce to Sh75.

Agriculture secretary Felix Koskei says the mills will be built this year in Moi’s Bridge, Trans Nzoia and Nairobi.

“We want the mills to be located near the retailers so that they (retailers) can access the commodity with ease, this is one of the measures that we are putting in place to cushion consumers,” said Mr Koskei.

He said this would reduce the number of players in the supply chain and ultimately cut the cost of maize flour. Selected retailers, especially top supermarkets, will be tapped to sell the government-made flour at a recommended price.

Mr Koskei said additional mills will be opened in other parts of the country to give the State enough muscle to influence flour prices.

This comes as the Cabinet secretary petitioned the Competition Authority of Kenya to investigate claims of price-fixing among top millers as flour prices continue to defy falling energy and maize costs.

Mr Koskei said the millers had failed to match their prices with production costs even after top officials of the ministry held several talks with them since new harvests started trickling in two months ago.

“I would like the Competition Authority to study the trend where both the cost of power and a 90 kilogramme bag of maize have come down but price of flour remains high,” he said.

Millers said they had cut the factory price of flour by Sh15 to sell at Sh75 over the past two months, in response to the falling price of raw material.

“We do not have control over the prices at which the retail shops decide to sell the flour, but it would be ideal for their figures to reflect the changes in order to benefit the consumers,” said Cereal Millers Association chairman Diamond Lalji in an earlier interview.

January 2, 2015; http://www.businessdailyafrica.com/Cereals-board-plans-maize-mill-plants-in-Nairobi-and-Trans-Nzoia/-/539546/2575678/-/64eenvz/-/index.html