Kenyans posho mill operators hard hit as maize flour prices fall

Small-scale maize millers in the suburbs of Nairobi, Kenya’s capital, are recording low businesses due to low prices maize flour in local retail outlets.


   The posho mills, mainly located in low and some middle-income estates in the city, have been a favourite for many families as they seek to cut cost of maize flour, a staple in the East African nation.
   The last few years has seen the number of local posho mills increase as traders in the capital seek to cash in on demand for services.
   Usually, people visit posho mills, where they buy dry maize and have it ground into flour. This often makes them save at most 0.05 U.S. dollars every two kilogrammes of maize meal.
   However, most posho mill operators faced with increased operating costs, and in a bid maximise profits, have striven to match their prices with those of maize flour in supermarkets.
   Currently, a two-kg packet of maize flour in retail outlets is going for between 1.04 dollars and 1.3 dollars.
   On the other hand, the total cost of buying and grinding dry maize into flour at posho mills averages 1.13 dollars. The operators are charging 0.11 dollars for grinding a two-kg tin of maize.
   And that is what is making posho mill operators lose business as many consumers are now turning to supermarket.
   With maize flour prices at retail outlets ranging between 1.04 dollars and 1.3 dollars, consumers have a variety of brands from which to choose from.
   Some of the maize flour brands, especially the new ones, are costing lower than what posho mills are offering. There are several new maize brands in the Kenyan market as more millers join the business.
   "I was forced to cut the price of maize a month ago by 0.05 dollars to attract customers. I used to sell a two-kg tin of dry maize for 1.02 dollars, then add the 0.11 cost of grinding. A customer would spend 1.13 dollars to buy maize flour here," Mark Kiptoo, a posho mill operator in Nairobi's Kayole estate tells Xinhua.
   He says many consumers now find his price so high as compared to the cost of maize flour in supermarkets.
   "There are two major supermarkets in this area and other small ones. I visited three of the retail outlets and realized why I was getting very few customers unlike in the past," said Kiptoo. The businessperson said he is stuck with stock of maize he bought in March.
   "I was supplied with 30 bags of maize from Eldoret. I had hoped to complete the stock by mid April but this did not happen," said Kiptoo, adding that he barely makes 23 dollars these days.
   Many consumers said they cannot buy maize in posho mills if the price is the same in supermarket.
   "It does not make sense that I should go to a posho mill and spend about 30 minutes to come out with maize flour yet I can pop into a supermarket and buy the same commodity at a lower price," says Salome Ngusu, a resident of the estate.
   Ngusu said it is now close to three months since she stopped buying maize flour from posho mills.
   "For several years I have been getting my maize flour from posho mills, but after realizing there are cheaper brands in supermarkets, I decided to shift," she said. She acknowledged that most people who go to posho mills to grind maize seek to save costs.
   "Why should you go there (posho mill) if will not save anything or if it will even cost you more? Grinding maize is involving. It is not like picking a packet of maize flour from the supermarket. So, there should be a motivation to go to a posho mill," she says.
   Kiptoo, as many other posho mill operators, blamed the rising cost of operations for their predicament.
   "The price of electricity has gone up, thus increasing our operation costs. This made us raise the cost of grinding a two-kg tin of maize from 0.09 dollars to 0.11 dollars some months ago," he said.
   Again, most operators get their maize from outside Nairobi, especially from bread basket areas of the Rift Valley.
   "We buy maize affordably from the areas but costs rise due to transport. However, we try to keep transport costs lower by buying in groups and sharing transport charges," explained businessperson Martin Kariuki.
   In Nairobi, a 90-kg bag of maize goes for 35 dollars. The price has almost been constant for the past three months. Prices go down to 30 dollars in regions in Rift Valley.
   "Experience has shown that as posho mill operators, we can only beat supermarkets if our prices are lower. But if they are the same or higher, we cannot break even," said Kariuki, who owns a posho mill in Kikuyu, on the outskirts of Nairobi. (Xinhua)

muhimu_computers.jpg