Costly unga prices to persist despite grain import tax cut
Packets of maize flour at a Nyeri supermarket. A two kilogramme packet is selling between Sh190 and Sh240 depending on the brand.
Consumers will have to continue paying more for maize flour due to acute shortage in local and regional market.
This is despite the introduction of measures by the government including suspension of fees and levies on imported grains.
According to the millers, lifting of levies and charges on imported maize, will translate to ‘minimum’ reduction due to challenges in sourcing for the grains to sustain crushing operations for the next three months-before the next crop is ready.
“As much as we appreciate the suspension of charges on imported maize, it is too early to determine the cost of flour after implementing the changes in levy, considering the biting shortage of maize in local and regional market,” said Kipngetich Mutai, chairman Grain Belt Millers Association(GBMA).
Maize prices have skyrocketed with 90kg bag being sold at Sh6,200 up from Sh5,400 two weeks ago, forcing most millers to suspend operations to cut down on costs.
Agriculture Cabinet Secretary Peter Munya in a notice issued on July 1, suspended the payment of fees and levies on imported maize for 90 days to cushion millers and consumers from acute maize shortage and help lower flour prices.
The millers in a petition to the national government said they face challenges importing the grains from Tanzania due to tough conditions set by the East Africa Community (EAC) member state.
“Although there is some maize in Tanzania, the stringent conditions on export license is making it hard for our members to import the grains,” added Mr Mutai.
Among the charges they pay per a truck loaded with 311 bags of maize are Sh7,200 to Kenya Bureau of Standards (Kebs), Sh500 to Kenya Plant Health Inspectorate Services (Kephis) and Sh10,000 for cess among other levies.
The millers want the government to negotiate with Zambian and Tanzanian authorities to facilitate importation of six million bags of maize to meet the current shortage and lower flour prices that have hit Sh165 up from Sh130 per two-kg packet.
“It is also critical that government supports transport and logistics for the importation of maize from these countries. This is because of the high cost of transporting produce from neighboring countries, which ultimately drives up the price of finished products,” added the millers in their petition.
Transportation costs
They decried increased transportation costs of the grains from Lusaka- Zambia estimated at Sh185,000 up from Sh120,000 per tonne and escalated sea freight costs since the outbreak of the Covid-19 and worsened by the Russia - Ukraine conflict.
Maize imports from Tanzania retail at Sh5,400 per 90-kg bag while that from Zambia and Malawi lands at Sh5,200 which the millers have termed as too expensive.
“Consumers are already struggling with high price of commodities. The implementation of these recommendations will be crucial in mitigating rising costs of wheat and maize-based commodities,” said the millers.
The petitioners include Kenya Association of Manufacturers (KAM), Cereal Millers Association (CMA), Association of Kenya Feed Manufacturers (AKEFEMA), Eastern Africa Grain Council (EAGC), Agro-Processors Association of Kenya (APAK), Grain Belt Millers and Farmers Association (GBMFA), Agriculture Sector Network (ASNET) and United Grain Millers Association (UGMA).
Maize production is estimated at 3.2 million metric tons annually against the consumption of 3.8 million metric tonnes with the deficit being bridged through imports from EAC member states.
The country produces approximately 100,000 metric tonnes of wheat against an annual demand of 2.4 million metric tonnes, hence relies heavily on imported wheat estimated at - 96 percent of the produce.
“Kenya imports 60 percent of the deficit mainly from Ukraine and Russia. The current situation in the two countries has disrupted the importation supply chain. As a result, players in the sector have turned to the expensive importation of wheat from USA, Argentina, Australia and Canada. This has been aggravated by the total ban of imports from India by the Kenyan government,” explained the millers.
Customers will no longer receive traditional ugali saucer after hoteliers enforced array of cost cutting measures to endure the escalating flour prices.
The hoteliers have suspended ‘ugali saucer’ until further notice to cope with the deteriorating maize supply that has pushed flour prices beyond Sh200 per 2kg packet.
“Kindly take note that ugali saucer has been suspended until further notice due to biting maize shortage that has impacted negatively to our operation,” read a notice in one of the food kiosk in Eldoret Town.
“We have no option but to suspend ugali saucer due to the increased flour prices to enable us remain afloat in the market,” said Susan Too, a hotelier in Kapsabet Town, Nandi County.
Millers have expressed fears of further rise in the prices as the supply deteriorates.
