Maize shortage forces millers to cut output, raising flour prices

KENYAA millers’ lobby has said its members have cut back production to 39 per cent of capacity as maize shortage bites, pushing up unit cost of production.

KENYAA millers’ lobby has said its members have cut back production to 39 per cent of capacity as maize shortage bites, pushing up unit cost of production.

Cereal Millers Association (CMA) chairman Nick Hutchinson said maize supply has remained unstable in the market, causing flour prices to go up by about Sh15 in the last three months.

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Mr Hutchinson said members who currently hold just 500,000 bags — enough to last just for seven days — are banking on the new harvest from Tanzania.

 “The limited stock coming in from Tanzania has helped to keep the prices of flour where they are, but in the event something happens and we don’t get that maize, then the cost will definitely go up,” he said.

The prices of a two-kilogramme packet of maize has been rising in the last two months with all the major brands retailing at above Sh100, piling pressure on a majority of households that rely on the commodity as their staple food.

A two-kilogramme packet of Jogoo is selling at Sh110, Pembe Sh101, Soko 101 and Hostess Sh147 in supermarkets. Millers said the cost will continue going up until they get enough stocks.

Last week, however, the government accused millers of manipulating flour prices citing a recent food security report that indicates the country has enough stocks to last for the next three months.

The food security report for the month of April shows that there was 10 million bags of maize in the country as at the end of last month.

According to the report, traders are holding 2,472,830 bags, Millers 442,710 bags, and National Cereals and Produce Board is having 2,778,760 bags.

Food Balance Sheet estimates for the main staple food maize, beans, wheat and rice projected up to August 31, shows surpluses, and sufficient stocks to meet national requirements, according to the report.

Kenya mainly depends on imports from Uganda and Tanzania to bridge the deficit of 20 million bags annually.

The cost of food and oil are major drivers of inflation as they play a significant role in determining the cost of living.

The Kenya National Bureau of Statistics data shows that inflation eased to 5.27 per cent in April from 6.45 per cent a month earlier on low food and oil prices.

CMA have denied the claims saying the price of flour is informed by the market forces of demand and supply and that millers have never had a hand in fixing the cost.

June 22, 2016; http://www.businessdailyafrica.com/-/539546/3262368/-/o0k32mz/-/index.html

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