Agriculture CS Mwangi Kiunjuri has directed millers to reduce the price of a 2kg packet of maize flour to Sh75.
Kiunjuri said any trader selling the flour at more than Sh75 will be arrested for exploiting consumers.
Early this month, millers had indicated they would increase the price of a the 2kg packet of unga by Sh4 due the increase on fuel tax.
But the CS said the price of a 90kg bag of maize has reduced to Sh1600, a 50 per cent reduction from last year’s prices.
“It is therefore disappointing and unfortunate that this benefit is not being passed to the consumers. The position of the government is that the a 2kg unga should not retail at more than Sh75,” Kiunjuri said.
The CS said the excuse that eight per cent tax on fuel is driving up the cost of maize flour does not hold given VAT on milling is zero rated.
Kiunjuri met with the Cereal Millers Association last week. He had another meeting with the United Grain Millers Association and found that they are selling a bale of unga at between Sh700 and Sh800 per bale.
This, Kiunjuri said, translates to an average wholesale price of Sh65 for a 2kg packet of maize flour.The packet is currently retailing at between Sh100 and Sh82.
Cereal Millers Association chairman Mohammed Islam on Tuesday said the eight per cent VAT on fuel will not affect the prices of maize and wheat flour as had been previously indicated.
“The new changes mean that millers can claim back input VAT and we do not see the need to increase the prices of unga,” Islam said.
In September 4, millers had indicated that the recent surge in the cost of production would lead to an increase in flour prices, while small scale millers had indicated that eight would increase the cost of unga by Sh4.