23 February 2018

Kenya: Wheat Flour Price Falls Again On Low Demand

The price of wheat flour has dropped for the second time in two weeks falling below that of maize flour, which is a relief to many households.

The cost of most brands has reduced by between Sh5 and Sh6 to retail at less than Sh110 which is the same as the average price of maize flour.

A spot check in supermarkets in Nairobi indicated a two-kilo packet of Golden Flour has dropped from Sh112 to Sh106, Pembe (Sh116 to Sh108), Kifaru (Sh117 to Sh106) while Ndovu is currently trading at Sh108. Dola and Ajab are selling at Sh106.

Millers last week said the decline resulted from stiff competition among firms and low demand by customers, forcing processors to review the prices.

"There has been aggressive competition for sales volumes in a soft market," said Nick Hutchinson, chairperson of CMA and Unga Group boss earlier.

Stimulate demand

Mr Hutchinson said since the demand is poor in the market, millers are trying to stimulate demand through pricing.

The decline might see cost of living drop as food is a major driver of inflation.

Last month, inflation went up from 4.5 per cent in December to 4.73 per cent in what was attributed to high cost of food.

In December, millers reduced the price of wheat flour by Sh8 following an increase in supply of wheat through the port of Mombasa after delays that had been witnessed due to logistical challenges were resolved.

The move saw recommended price for a two-kilo packet fixed at Sh129, down from Sh137.

ImportsLocal wheat did not perform well this year and millers have been relying on imports to run optimally.

The Ministry of Agriculture projected local production dropped by half a million bag in last season's harvest.

Kenya does not produce sufficient wheat and relies on imports to meet the annual demand.

This makes Kenya a net importer of wheat, bringing in two-thirds of its requirement to meet the annual consumption of 900,000 tonnes against the annual local production of 350,000 tonnes.

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