Experts have raised questions over a bill seeking to control prices of essential goods.
Timothy Njagi, a senior researcher from Tegemeo Institute, said the only way this can work is if there is enough stock in the Strategic Food Reserve.
He said price control was tried in the 1980s and did not work despite there being marketing boards for various crops.
Experts warn that this may cause public panic in a free market.
The government is proposing the amendment of the Price Control (Essential Goods) Bill, 2024 which seeks to empower the Agriculture Cabinet Secretary to fix prices.
Njagi explained that the state should instead use the SFR to stabilise prices.
"You need to have significant volumes of stock so that the government can use that stock to regulate prices,” he told the Star.
“This means that when the prices are too high the government should ensure there are significant volumes of stock with the SFR, so that they can release it to increase supply and bring the prices down. And when the prices are too low, then the government can go in and buy for the SFR to help increase demand in the market and then the prices can go up."
Njagi said there is a need to let market forces of demand and supply operate freely.
Another expert in the grain sector who did not wish to be named said price control cannot work in a free market.
“Demand and supply work best. The other way to keep prices down is to address the cost of production for raw materials and conversion costs,” he said.
The bill states will be an Act of Parliament to amend the Price Control (Essential Goods) Act and for connected purposes.
The objective of the law is to prevent essential goods and services from becoming unaffordable to the public.
The bill seeks to stabilise prices of essential goods in order to ensure that the cost of living remains manageable for the public.
“To prevent sudden variations in price of essential goods that may lead to a decrease in purchasing power and a decline in overall consumer welfare. To prevent market actors such as monopolies and oligopolies from exploiting their dominant position to artificially inflate prices and take advantage of consumers’ lack of alternatives,” the bill reads.
It also seeks to guarantee access to crucial goods during times of crisis such as natural disasters or public health emergencies, and to contribute to social stability and mitigate the effects of economic inequality.
“The principal Act is amended by deleting section 2 of No. 26 of 2011, and substituting therefore the following new sections. That the Cabinet Secretary shall by order in the Gazette fix minimum and maximum retail and wholesale prices for essentials goods including maize, maize flour, wheat, wheat flour, rice, cooking fat, sugar and prescribed pharmaceutical drugs,” the bill says.
It further states that despite its provisions, the CS may from time to time by order in Gazette Notice declare certain goods to be essential commodities for the purposes of this Act.
"This is in addition to determining the minimum and maximum prices of the commodities in consultation with the industry,” the bill reads.
