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December 17, 2018

Millers oppose fixed, controlled unga price

Cereal millers chief executive Paloma Fernandes at a CMA briefing in Nairobi on June 22.Photo/Enos Teche.
Cereal millers chief executive Paloma Fernandes at a CMA briefing in Nairobi on June 22.Photo/Enos Teche.

Millers are against the government’s decision to fix the price of a 2kg packet of maize flour.

 Agriculture CS ordered that it be sold for Sh75.

But the millers want the market forces to prevail.

He said any trader selling the flour at more than Sh75 would be arrested for exploiting consumers.

Early last month, millers had indicated they would increase the price by Sh4 to cater for the increase in fuel tax.

Yesterday, Cereal Millers Association CEO Paloma Fernades said the government should let market forces to regulate the retail price.

Read:Reduce unga prices to Sh75, millers told

 “Price fixing is bad for the industry. It causes distortion in a market that is very competitive.

When there is a lot of maize, as it is now owing to a bumper harvest, the prices of maize and unga will automatically go down,” she said.She attended release of a report on the cost of production for maize, irish potatoes and rice in Kenya by Tegemeo Institute in Nairobi.

By yesterday, millers had given in to the pressure by government agencies to reduce the retail price.

At city supermarkets, a spot check by the Star revealed that Soko and Jogoo brands are selling at Sh75 and Kifaru at Sh71.

Some millers told the Star that by last week, some retailers threatened to return stocks they had if millers did not reduce prices as per the government’s directive.

The retailers said the authorities, especially Nairobi county officers, intimidated and warned that their licences would be cancelled.

President Uhuru Kenyatta had urged millers to reduce the price to Sh75.

He said there was a surplus of maize.

Related: Hard times ahead as Rotich effects 16% VAT on fuel

“This year, the country will have a stock of 56 million bags against an annual consumption of 52 million, meaning a surplus of four million bags,” he said.

He spoke after Nairobi governor Mike Sonko warned that the county would withdraw licences for retailers selling above Sh75. Sonko asked Uhuru to allow the city askaris to crackdown on such traders.

Yesterday, Tegemeo Institute director Milton Ayieko said price control and fixing can distort the market and raise the consumer price.

“Price fixing distorts the market and doesn’t allow the forces of demand and supply to play out to move the produce to where it is intended for consumption,” he said.

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