The Cereal Millers Association (CMA) would like to thank the Government for its intervention in assuring food security for the population by releasing 450,000 bags of maize from the Strategic Food Reserve to its members at a price of Ksh 3,000 per 90 kg bag.
This price, to which was added the transportation and handling costs from the National Cereals and Produce Board (NCPB) facilities to the respective member mills, temporarily enabled the reduction in retail maize flour prices from between Ksh 145 and Ksh 155 per 2 kg packet to Ksh 119 and Ksh 130 per packet, a significant reduction in light of the high cost of living.
In spite of the NCPB releasing the 450,000 bags, price reductions have unfortunately been temporary as these stocks represented only 8 to 12 days of milling for the Association’s members. As a consequence, millers were either forced to blend the NCPB stocks with significantly higher priced stock purchased from the market or quickly exhausted their allocated stock and were forced to return to buying grain from a market characterised by scarcity and prices in excess of Ksh 4,000 per 90 kg bag.
The ever worsening scarcity of grain now has millers buying at between Ksh 4,300 and Ksh 4,500 per 90kg bag. Some millers are unable to produce enough maize flour to meet customer demand – they either do not have access to adequate grain and/or are unable to compete with the prevailing market prices of maize flour. The lack of sufficient grain in the market, along with the high prices being paid for what is available, are factors responsible for increases in the ex-mill price of maize; the shortage of maize flour in the market is resulting in incremental price increases on the retail shelf.
Unfortunately the supply of Ethiopian maize has slowed down further over the past week, with the limited quantity available trading at Ksh 4,200 and Ksh 4,400 per 90 kg bag. Zambian maize is expected to be priced at similar levels, but has yet to begin moving out of the country.
The first vessel carrying Mexican grain is expected to arrive at the port of Mombasa on 9th May; the second on 28th May. It is important to note that vessel arrival is only the first step in the landing process. The berthing date for the first vessel is scheduled to be 17th May; ongoing rain delays are likely to delay berthing. Once berthed, subject to weather delays, vessel discharge is expected to take 6 days. It will take around 10 days from the first day of discharge to collect the entire cargo from Grain Bulk Handlers Limited (GBHL), after which transfer from GBHL to the mills takes between 0.5 and 4 days, depending on mill location and the availability of transport. It is important to note that subsequent vessels will wait longer between arrival and berthing; a wait of 3-4 weeks is expected going into the months of June and July.
The first Mexican maize to arrive is expected to be priced at between Ksh 3,500 and Ksh 4,400 per 90kg bag; price depends on volume purchased, timing of decision to purchase and whether or not tonnage was bought prior to vessel loading or ex-warehouse Mombasa. It is important to note that only a small number of millers will have access to maize from the first vessel; the majority of millers will continue to purchase from the market. These prices are significantly higher than the cost of the recently released NCPB maize but, for those millers with a CNF position on the vessel, are lower than the prevailing market prices.
Since, in the initial weeks of the import program some millers will have access to imported maize and others will not, the CMA does not expect maize flour prices to stabilize until adequate imported grain stocks are distributed across all the mills, which is expected to be in late June/early July. When this happens, prices are expected to settle at the Ksh 125 – Ksh 135 per 2 kg packet level.
“We expect that the all the value chain players including traders, grain handlers, transporters, distributors, wholesalers and retailers to join our members in passing on the reduced prices to consumers, offering them a reprieve from the current high prices.”