Kenya government has reached a deal with Uganda to buy 6.6 million bags of maize at $20 each to plug a deficit that has triggered a rise in flour prices.
The multi-billion shilling deal that was brokered by the Trade ministry will see Kenya millers pay Grain Council of Uganda for delivery of cargo at the National Cereals and Produce Board depots.
According to Kenya’s Business Daily, the development will curb rising flour prices in Kenya, which increased to Ksh115 ($1.14) for the two-kilogramme packet compared to Ksh90 ($0.89) in December after the government ended the Ksh6 billion ($59.3 million) subsidy for maize importers.
In Kenya, Maize prices rose to above Ksh3,000 ($30) a bag after the government started buying from farmers at Ksh3,200 ($32) in a Ksh6.7 billion ($66.3 million) plan. The state has since stopped buying the grains tilting the market in the favour of millers now buoyed by the Uganda deal, the paper reported.
Kenya remains a major export destination for Ugandan maize, followed by Tanzania. Last year, however, Kenya suffered a major setback after the two countries banned the export of grain due to scarcity in the two countries.
Maize imports from Uganda to Kenya grew 78 per cent in January compared with December 2017, as traders rushed to cash in on good price following a shortage of grain lifted the trade.
Data from Eastern African Grain Council indicate cross-border trade between the two countries increased from 25,791 tonnes last December to 46,010 in January at a value of Ksh1.4 billion ($13.9 million).