Unga prices set to fall below Sh100 on cheap Uganda grain

A customer shops at Samrat Supermarket in Nyeri. photo | JOSEPH KANYI | nmg 

By LYNET IGADWAH

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Summary

• The cost of the two-kilogramme packet of flour has dropped to less than Sh110 in recent weeks from Sh115 and millers expect the staple food to dip to below Sh100 on cheap grains.
• Kenya inked a deal with Kampala to buy 6.6 million bags of maize at Sh2,050 each to plug a deficit of more than five million bags following poor weather last year and curb a rise in flour prices.

Maize flour prices look set to dip further with an increased supply of cheap grain from Uganda, easing inflationary pressure.

The cost of the two-kilogramme packet of flour has dropped to less than Sh110 in recent weeks from Sh115 and millers expect the staple food to dip to below Sh100 on cheap grains.

The imports from Uganda and the government putting a freeze on maize purchase has pulled down grain costs from Sh3,200 a 90-kilogramme bag in January to between Sh2,300 and Sh2,500, offering millers room to cut flour prices.

Kenya inked a deal with Kampala to buy 6.6 million bags of maize at Sh2,050 each to plug a deficit of more than five million bags following poor weather last year and curb a rise in flour prices.

“The government advised millers that it would release maize from the cereal board, which would, in turn, bring the price of a packet further down in the month of April,” said Peter Kuguru, United Grain Millers Association chairman.

READ: Farmers cry foul as millers import maize from Uganda

Flour prices rose to Sh115 for the two-kilogramme packet compared to Sh90 in December after the government ended the Sh6 billion subsidy to maize importers.

But the prices have since fallen by at least Sh6 across brands.

Further reduction will ease pressure on inflation, which fell to 4.46 per cent in February from 4.83 per cent a month earlier, pushed by a fall in some food prices.
Mr Kuguru forecast that some flour brands would dip to below Sh100 in coming weeks.

A spot check on retail outlets within Nairobi’s central business district revealed a packet of Jogoo brand was retailing at Sh109, Pembe Sh103 and Jimbi at Sh100.

The Uganda deal look set to hurt farmers who had expected to profit from a forecast rise in maize prices to last year’s level of above Sh4,000 a bag.

Maize prices rose to above Sh3,000 for a 90-kilogramme bag after the government started buying from farmers at Sh3,200 in a Sh6.7 billion plan. The State has since stopped buying the produce tilting the market in the favour of millers now buoyed by the Uganda deal.