Maize meal prices set to hike as millers face cash flow constraints on the back of pending subsidy dues

KENYA – The Cereal Millers Association (CMA) has warned that Kenyan consumers should brace themselves for a rise in the cost of maize flour, the country’s staple, following an impending shortage of maize due to millers’ financial crisis.

While addressing the National Committee on Agriculture and Livestock, CMA representative Caxstone Kigata lamented that the pending debt of   KES 2.5 billion from the sour maize subsidy program that the state is yet to pay millers may limit their purchasing power soon.

Expounding, Kigata said that millers have been unable to purchase sufficient maize from the local market due to cash flow constraints as The Nation reports.  

This has resulted in an imbalance in the stocks held by millers, which will, in the long run, drive up the prices of maize flour unless the government secures the sector.

The controversial maize subsidy program was an initiative by retired President Uhuru Kenyatta that was aimed at stemming the high-cost flour that had hit KES230 for a two-kilogram packet.

However, the new administration scrapped it and paused any payments to further interrogate the matter, which, the Committee on Agriculture in the National Assembly said that some millers might have extended the supply by up to six days after the contract between them and the State was revoked.

In their defense, Millers who were part of the scheme had earlier noted that they had not received any official communication notifying them of the termination of the program

Appearing before the committee, CMA said that failure by the state to settle Miller’s debts means they cannot be able to produce optimally hence the impending price shoot is likely to affect Kenyans who are already grappling with a high cost of living.  

In addition, millers said that so far, the interest accrued from the KES2.9 billion that the government owes them has hit KES280 million adding that the debt was impacting their businesses which are already being affected by an acute shortage of maize.

The unfortunate news comes after the Tanzanian government gave a green light on effective exports after export permits go online effective July 1 to ease cumbersome procedures experienced by exporters.

Tanzania is one of the major maize exporters to Kenya, hence the move to ease export would liberate Kenyan millers from the maize shortage crisis.

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