Private millers in western Kenya have raised maize flour prices to meet operational costs following the implementation of the 16 per cent VAT on petroleum products.
The prices have increased by about Sh5 for the two-kilogramme packet of maize flour, signalling hard times for most households already grappling with increased fuel costs.
"The rise in fuel prices has forced us to raise the cost of our product to sustain our operations, passing the burden to consumers who will have to pay more," said Mr Kipngetich Mutai, of Ineet Millers in Uasin Gishu County.
A two-kilo packet of flour that was used to retail at Sh85 will be selling at Sh90 as some of the consumers opt for flour from local posho mills, which is relatively cheaper. The posho mills sell a two-kilogramme tin of maize for Sh40, and charge Sh10 to grind it, hence a total of Sh50.
RISE IN FUEL PRICES
This comes even as the Cereal Millers Association (CMA) warned that the increase in fuel prices would directly affect the price of wheat and maize flour due to high transportation costs.
"Taxes on fuel will affect millers directly despite the fact that the Ministry of Finance had exempted taxation on flour," said Mr Mohamed Islam, the CMA chairperson.
Some of the millers have been forced to scale down operations to twice a week due to low demand for the sifted maize flour in the local market.
"We have no option but to reduce our operations and possibly consider restricting due to low demand for our products and increase in fuel price," added Mr Kimutai.
Most millers in the region are reluctant to buy maize from farmers. Instead they opt for cheap maize imports from Uganda, which is selling at Sh1,200 per 90-kilogrammer sack. The imports have now saturated the local market.
LIBERALISED MARKET
"We are operating in a liberalised market economy and there is nothing wrong doing business under the East Africa Common Market protocol," said Mr James Maina, one of the traders in Eldoret Town.
Maize farmers who delivered their produce to the National Cereals and Produce Board (NCPB) last season are demanding an outstanding payment of Sh3.5 billion.
The National Treasury has released Sh1.4 billion for farmers who will have to be vetted before they receive any payment.
Moiben MP Silas Tiren has faulted the government for failing to honour pledges to farmers over the release of the Sh3.5 billion despite numerous promises.
He blamed the government for entering into agreements that allowed maize imports without considering the plight of local farmers.
"The maize from Uganda, Tanzania and Mexico is not imported on debt. Why have our farmers not been paid on time?" asked the Jubilee legislator.
