Expect prices of cooking oil, fertiliser and wheat flour to further go up, manufacturers have said, as global trade factors hit Kenya.
This is mainly driven by the Russia-Ukraine war which has disrupted the global supply chain of raw materials and shipping, rising oil prices and inflation adjustments which have impacted on the Kenyan shilling.
While some commodities had already seen price reviews, households should expect prices of cooking oil, wheat and maize flour, petroleum products, steel and fertiliser to rise further.
Golden Africa, dealers in cooking oil with brands such as Avena and Pika, on Thursday said a shortage in the supply of sunflower has forced manufacturers to solely rely on crude palm oil for production of cooking oil and fats, of which Indonesia and Malaysia combined produce more than 90 per cent of global supplies.
Ukraine is the largest exporter of sunflower oil globally, responsible for up to 46 per cent of sunflower-seed and safflower oil production. The second largest producer is Russia, which exports about 23 per cent of the world’s supply.
An alternative Soybean oil supplies were also affected by the two-year drought in Argentina and Brazil due to La Nina; while Sunflower oil supplies have come to a sharp slump after start of the Ukrainian crisis.
Malaysia posted weak production over the last six months, with December last year being one of the biggest month-on-month tumble in a year thanks to the heavy precipitation and flooding as well as labour shortages.
This has left the world dependent almost exclusively on Indonesian palm oil which has also enforced a 20 per cent retention of all planned oil exports to be sold domestically.
Crude Palm Oil prices have rose to $1,980 (Sh225,878 ) per metric tonne in the first week of March, from $1,400 tonnes (Sh159,712) before the war. They were at a low of $700 (Sh79,856 ) per tonne pre-Covid.
“Locally, despite the fact that Covid related factors had already caused a jump in the price of a 20 litre jerrycan from Sh2,200 to Sh4,500 in under 2 years; after the invasion, the price shot up to Sh5,100 in under a week,” Golden Africa general manager Abdulghani Al-Wojih told the Star yesterday.
Elgon Kenya Limited which deals in agri-inputs ranging from agriculture chemicals, fertilisers, seeds and irrigation equipment has also warned of a major shortage and price jump in the next two months if sanctions and global supply disruption continues.
According to managing director Bimal Kantari, fertiliser prices could go above Sh7,000 for a 50-kilo bag.
This is on increased costs and a shortage of nitrogen ( gas) a component in fertiliser making.
Global DAP fertiliser prices on Monday increased by 25 per cent with the impact expected to be felt in Kenya in the next one month. It is currently going for Sh5,600 per bag up from Sh2,500 a year a go.
Freight costs have also increased as a result of disruption in the supply chain.
For example, importing a container to Kenya now costs an average $10,000 (Sh1.1 million) from $1,500 (Sh171, 120).
“Currently have enough but we are going to have a big shock in the next three to four months,” said Kantari who also chaired the agriculture sub-committee at Kepsa and KAM.
Last week, Agriculture CS Peter Munya told MPs the cost of the farm input could rise unless it was subsidised for farmers, noting the country gets most of its fertiliser from Russia and China.
Meanwhile, global wheat price have already increased by more than 33 per cent, which is expected to increase wheat flour prices and products such as bread.
A tonne shot up up from $345 (about Sh39, 295) per tonne to $460 (Sh52,394 ) per tonne last week.
Consequently, a 90 kg bag of wheat is now approximately Sh5,650, with a two kilo packet projected to retail at between Sh180 and Sh200.
The price of a 400-grams loaf of bread is expected increase to between Sh60-67, from an average Sh55.
Depending on the availability of wheat, prices are projected to cross $500 per tonne, which would translate to $550 (Sh62, 727per tonne) upon landing in Nairobi, affecting all products made from wheat flour.
A 90 kg bag of wheat is projected to cost approximately Sh5,650, translating to between Sh180 and Sh200 for a 2kg, according to the Cereal Millers Association (CMA)chief executive Paloma Fernandes.
A week shilling against the dollar, which hit a new low of 114.01 against the dollar yesterday, has also seen local industries spend more on importing raw material.
Kenya Association of Manufacturers Phyllis Wakiaga said: “Undeniably, the Russia-Ukraine conflict shall affect the cost of production in Kenya, and further increase the cost of living in the country.”
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