Bread and wheat flour prices to rise as wheat shortage grows

Agriculture CS Peter Munya says there has been challenges in the international markets.

In Summary
  • More than 80% of wheat is imported mainly from Russia, Argentina, USA and Ukraine, as local production fails to meet demand.
  • The country's annual consumption is at an average 900,000 tonnes against a local production of about350,000.
"Bread prices in Sudan have doubled since the government eliminated subsidies this week under its 2018 budget."
"Bread prices in Sudan have doubled since the government eliminated subsidies this week under its 2018 budget."

You could continue paying more for a loaf of bread and wheat flour amid disruption on imports and rising international prices of the cereal.

Prices have been on an upward trend since the last quarter of 2020 and spiked in the past month after Russia, the world’s largest exporter, slapped export taxes on wheat and grain export quotas.

Covid-19 disruption on the shipping industry has further hurt import trends into the country as importers struggle to secure vessels for shipment, with successful cargo landing at the Port of Mombasa on higher import bills.

Agriculture CS Peter Munya on Wednesday admitted to challenges in the international markets which he said the government has no control over, signalling continued high wheat prices in the short-term as the country remains heavily dependent on imports.

“We grow about 20 per cent of our wheat demand. More than 80 per cent is imported and there have been challenges in that sector because of Covid-19 and other developments out there,” Munya told a journalist. 

While millers have called on the government to abolish the duty on wheat, in order to cushion consumers against the rising international prices, the ministry has said it has little influence over the price hike. Imports are currently charged a 10 per cent duty.

“Wheat prices have been going up and there is not  much we can do in terms of controlling that,” the CS said, as he called on local  players and consumers to diversify on cereals uptake and tap into the likes of millet and sorghum.

The price of a 400 grammes bread increased to an average Sh51.52 in January from Sh48.35 in December, Kenya National Bureau of Statistics' January inflation data shows.

Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households, increased by 0.63 per cent from 111.86 in December to 112.57.

A two-kilogram packet of wheat is currently averaging Sh145 on the shelves up from Sh135 in December, with a tonne of wheat reported to have increased by 30 per cent last month to Sh33,000 from Sh25,300.

This came as food prices contributed to a jump in overall year-on-year inflation to 5.69 per cent in January, from5.62 per cent in December.

The higher cost of living was driven by the month-on-month food and non-alcoholic drinks index, which increased by 1.26 per cent between December and January, KNBS director-general Macdonald Obudho said.

Kenya imports her wheat mainly from Russia, Argentina, the USA and Ukraine, with clearing agents at Mombasa noting a slowdown in the commodity's imports.

“The number of vessels calling at the port with wheat imports has been low. There has been disruption on shipping lines operations,” Kenya International Freight and Warehousing Association national chairman, Roy Mwanthi, told the Star.

One vessel docked at the Port of Mombasa on Wednesday with 42,000 metric tonnes of bulk wheat, Kenya Ports Authority ship arrivals data shows, with another expected on Saturday bringing in 37,515 metric tonnes.

Two more vessels have been booked for docking on Tuesday next week, bringing in a total of 77,300 metric tonnes.

This is about 17 per cent of the country's annual consumption of 900,000 tonnes where local production is marked at 350,000.

The low local production is expected to continue even as the Cereal Growers Association argues that the country has sufficient land to grow enough wheat to satisfy local demand.

Large scale farmers have also adopted modern technology equal to international standards, CGA says, with a potential to be self-sufficient in wheat production, the second most important grain in Kenya after maize.

In an interview with the Star, trade expert Peter Biwott blamed poor policies for the country's overall high import bill, where Kenya has imports three times its exports.

“This is because the country has deliberately chosen to not focus more on local competitiveness making it easy for import options,” said Biwott, who is the former CEO of Export Promotion Council.

“Our fiscal policy is not enabling to local production for exports. It is too tasking and burdensome to engage in exports business than imports which is why many Kenyan entrepreneurs decide to import or outsource,” he added.

Meanwhile, CS Munya has warned bakers and millers they stand to lose out if they avail wheat products at a high cost to the consumers, who are likely to shift to other options.

“Don't be greedy in setting prices and using international prices as excuses for increasing bread prices. You will be affected because consumers are price-sensitive, and given the hard economic times they will move to other products,” he said.