* Regulations allowing GM maize expected next week
* Maize imports cost 25 pct more due to weak shilling
* Crisis set to cost millers millions of dollars
By Beatrice Gachenge
NAIROBI June 29 (Reuters) - Kenya’s state-run National Safety Authority is set to approve importation of genetically modified maize into the country for the first time to mitigate a looming shortage, its head said on Wednesday.
The Kenyan government last week forecast a shortfall in the supply of maize, a staple in east Africa’s biggest economy, of 14.8 million 90-kg bags in the 2011/12 season due to drought.
“With the prevailing circumstances we are looking to expedite the publication of regulations on gene modified (GM) crops that will spell out guidelines on the importation of GM,” Roy Mugiira, acting head of the state body tasked with regulating biotechnology, told Reuters.
“We are targeting to publish the regulation by next week and it is a first for the country,” said Mugiira.
This would end the restrictions on GM maize that have locked out major exporters including South Africa from the Kenyan market, which faces frequent grain deficits.
The maize shortage threatens to cripple the supply of flour in the country after six major millers closed their main plants, and millers said GM would curb future shortfalls.
“Bio-tech is the way we should go and ... it will help us to overcome our perpetual shortage of maize,” said Diamond Lalji, chairman of Cereals Millers Association, which comprises 28 major millers in Kenya.
“GM maize is cheaper by about 30 percent compared with non-GM and that is expected to bring down the cost of the final product,” said Lalji.
He said GM imports would cushion Kenyans from surging prices and double digit inflation at a time when imports have been adversely hit by the weak shilling .
A sharp depreciation in the local currency has left the cost of importing a 90 kg bag 25 percent higher than a year ago.
An increasing frequency of drought has hit the country’s farm-based economy hard.
Lalji said six of the 28 major Kenyan millers, who between them hold a 20 percent market share — had halted operations due to the lack of maize and none of the remaining millers were operating at full capacity.
Among the worst affected is Pembe Flour Mills Ltd — the country’s second biggest producing 10,000 bales of 24 kgs a day — which has not produced any maize flour in the last 12 days.
Unga , the country’s fourth largest with brands including Jogoo shut its plant in Eldoret, the firms biggest, last Saturday.
“We have a lot of orders pending from (supermarkets) but we cannot supply,” said Abdulmajid Mohamed, a local manager at Pembe.
The millers are projecting losses running into millions of dollars thanks to lower sales, the tanking local currency and increased labour costs.
Pembe said millers were paying 4,000 shillings ($44.20) per 90 kg bag of maize compared with 1,350 shillings a year ago. (Editing by Richard Lough and Keiron Henderson) (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/) ($1=90.50 Kenyan Shilling)