Farmers in the country are hoarding six million bags of maize in anticipation of high prices in future, even as millers complain of dwindling supplies. Millers say the situation will push up the price of flour.
The March Food Report by the Ministry of Agriculture indicates that farmers are holding huge stocks of maize harvest.
Last week, millers issued a warning that the price of flour would go up in the coming weeks as scarcity of maize in the market has pushed up the cost of the produce.
“Farmers are holding six million bags as they anticipate that the price of maize will go up in the coming weeks,” said an official from the Ministry of Agriculture who did not want to be named because the report is yet to be made public.
The price of a two-kilogramme packet of maize flour has increased by an average of Sh5 over the past two months on high maize costs. Flour prices had been falling since last September.
The ministry says the price of maize has shot up to Sh2,700 per 90 kilogramme bag from a low of Sh2,000 in January.
The millers say the situation will only normalise when the country gets the crop from the South Rift in July and August.
SUPPLIES GONE DOWN DRASTICALLY
“Currently supplies have gone down drastically and millers are unable to keep stocks. They are milling all the produce that they are getting within a day,” said Cereal Millers Association chairman Nick Hutchinson.
He noted that the current crop from the eastern region has not helped much in stabilising the flour prices as most of it is affected by the lethal aflatoxin. He said some millers have reported high cases of aflatoxin.
Millers are hopeful that the Tanzanian maize, expected from next month, could help ease the pressure on the price of flour. However, the Tanzanian crop could find its way to Zambia where the commodity is fetching a premium price due to the recent shortage caused by drought.
However, the Cereal Growers Association (CGA) has sharply differed with the millers and the government saying that there is enough maize in the country and that farmers are not hoarding.
“It is common knowledge that there is enough maize in the country, otherwise how would one explain the depressed price of the produce currently?” noted Mr Kioko, the chief executive of CGA.
EFFECT ON INFLATION
Maize prices have a big effect on inflation in Kenya’s economy was the crop is a staple food and accounts for a significant portion of household budgets.
Food takes up the largest share (36 per cent) of the basket of goods that is used to calculate inflation, followed by utilities.
Inflation stood at 6.45 per cent in March compared to 6.84 per cent a month earlier due to a slight drop in the cost of food and fuel prices.
Kenya is banking on the Galana-Kulalu irrigation scheme to ease the perennial shortage of maize in the country as the country seeks to reduce reliance on rain-fed farming.
The National Cereals and Produce Board (NCPB) released over two million bags of maize to millers last year, and they (millers) have purchased 1.8 million bags with about 800,000 bags from previous years still lying at the facility.
Millers say the old stocks do not meet the quality required for milling.