TOUGH TIMES

Weak shilling pushes up feed millers production costs

Uganda, Zambia and Malawi are now quoting prices of commodities by the dollar, rejecting the Kenyan shilling.

In Summary

•On Wednesday, the US dollar traded at Sh115.80 compared to ShSh115.74 the previous week.

•Manufacturers say the cost of production is going up as the dollar continues to strengthen against the shilling.

A cashier at a Nairobi forex bureau counts dollars and shillings/
WEAK SHILLING: A cashier at a Nairobi forex bureau counts dollars and shillings/
Image: FREDRICK OMONDI

The continued weakening of the Kenya Shilling is pushing up the cost of production of animal feeds with millers worried that they might soon not afford key ingredients.

Association of Kenya Feed Manufacturers (AKEFEMA) secretary general Martin Kinoti says countries within the region including Uganda, Zambia and Malawi are now quoting prices of commodities by the dollar, rejecting the Kenyan shilling.

"We are importing vitamins to manufacture animal feed and are now being sold by the dollar or Euro. The shilling value depreciating has made the landed cost to increase, yet we cannot pass the increase to farmers," Kinoti told the Star.

On Wednesday, the US dollar traded at Sh115.80 compared to ShSh115.74 the previous week.

The Central Bank of Kenya has downplayed the currency depreciation, saying the shilling remained stable against major international and regional currencies.

Meanwhile, the shilling has depreciated 5.2 per cent since last year and by 2.1 per cent since January.

Zachary Munyambu, the coordinator of Kiambu Poultry and Pig Feed Millers said the high cost occasioned by the shilling depreciation has affected production so much so that the mill is on the verge of closing down.

Munyambu said the mill which produces 300, 70kg bags of chicken feed daily is losing customers de to the high cost of feeds which has gone up by an average Sh400 in a span of one month.

"The cost of producing a bag of layers mash was Sh650 months ago, now the price has risen to Sh1,000 per bag. This is just the investment cost of one bag, imagine producing 1,000 bags daily," Munyambu said, adding that most millers have opted to downsize production.

Wonder Feeds Limited which produces 80 tonnes of animal feeds such as layers mash, growers mash, broiler finisher, economy dairy meal and early calf weaner said production cost has increased by an average Sh300 weekly per bag over the past months.

Jane Wairimu, accounts officer at WonderFeeds told the Star that the miller is now opting for countries with cheaper raw materials to evade cut on production cost.

Jubilee Feeds, a major animal feed manufacture said it has equally been affected by the rising cost in production in recent months.

Maize price has shot to Sh4,200 per 90 kg bag from less than Sh3,000 at the same period last year.

Delays in publishing changes to genetically modified organisms (GMO) rules governing the importation of yellow maize in the Kenya Gazette is hampering the importation of the produce by millers.

The government announced last month that it had lowered the requirement on the purity of yellow maize to be imported by processors to 99.1 percent from 100 percent, meaning that imports would be allowed to have traces of GMO.

However, the notice has not been published nor other measures taken to resolve the crisis in the sub-sector almost a year on.

Millers have avoided importing the produce under the current total GMO ban for fear that the shipments will be confiscated.

Kinoti said feed millers remain hopeful that the government will publish the rules this week to allow the millers source the raw materials readily available in the global market. 

He said millers are currently at the mercy of Rift-Valley farmers who are holding on to their maize anticipating the price of a bag to cost Sh5,000 in the next few months.

"This is a hopeless situation but we hope the government will act by this week," Kinoti said.


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