Flour subsidy ends as millers’ contracts lapse

Friday, August 19th, 2022 01:45 | By
Kenyans return to the harsh reality of expensive maize flour as the government’s subsidy scheme ends. PD/file
Kenyans return to the harsh reality of expensive maize flour as the government’s subsidy scheme ends. PD/file

The government has informed millers participating in the Sh8 billion maize flour subsidy programme of termination of their contracts to supply subsidised sifted maize flour after a four-week run.

Since Wednesday this week, the Ministry of Agriculture has been informing millers participating in the programme about the termination of their contracts to supply subsidised sifted maize flour. This was after the ministry had refuted a memo leaked on Monday that asked millers to suspend distribution of the subsidised commodity.

“This is to remind you that your contract for the sifted Maize Flour Subsidy Programme 2022 lapses on Thursday, August 18, 2022,” Crop Development and Agricultural Research Principal Secretary  Francis Owino communicated to some of the millers during the week.

The notices sent to different millers come even sources with the Ministry of Agriculture disclosed that it has requested the National Treasury for additional money to finance a possible budget overshoot.

The ministry will from next week begin receiving invoices of the last batch of millers who signed their contracts on July 22 to participate in the flour subsidy scheme.

It is, however, anticipated that initial allocation could be surpassed in what sources within the Agriculture ministry now partly link to higher uptake of the subsidised flour than was anticipated.

The ministry has also cited high distribution costs, especially in far-flung areas which the millers have factored in their invoices.  It said that there are no intentions to extend the four-week subsidy programme.

“There is an indication that the amount could overshoot. That’s why we’ve made an initiative to request additional funds beforehand to cover the gap. The position is that all millers will be compensated for their supplies during the period,” said a source in the ministry.

Railway development levy

The suspension of the scheme will also bring back the railway development levy and the import declaration fee charged on all imported maize, which was part of the deal with millers during the subsidy period.

By yesterday, the prices of refined flour escalated again in most parts of the country following the end of the subsidy, subjecting households to yet another economic pain orchestrated by the rising cost of living amid political tensions that is yet to cool off.

A two-kilogram packet of unga is now retailing at Sh250 in most of the shops in Mombasa, according to a spotcheck carried out in Kongowea, Bombolulu, Mkomani and parts of Kisauni. A similar trend was witnessed in Nairobi.

Interviewed residents said they are finding it difficult to afford the new prices. 

Alfred Muli, one of the shop attendants in Kongowea, Nyali, said he has no option but to increase the price since millers have stopped supplying the subsidised Unga.

“The prices of Unga in my shop were at Sh150 a few minutes after Agriculture Cabinet Secretary Peter Munya,  gave the directive, so if suppliers avail the product with new prices we will have to adjust because we cannot operate at a loss,” he said.

Muli said following the subsidy last month, he incurred a huge loss, and therefore learnt a bitter lesson.  It is for this reason, that he decided to quickly adjust the prices after the move by President Uhuru Kenyatta a month ago made him incur the loss.

Florence Nyamvula, a mother of two and a Kongowea resident said it will be unbearable to contend with the new prices, considering her joblessness.

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