Wheat prices have started to decline, thanks to the ease in Russia-Ukraine war tensions that caused supply constraints the better part of 2022 and last year, an industry player has said.
“Effects of the decline is well evident across the markets, as wheat products consumption rates have started picking up, though at a calculated spending mode,” said Dominic Kimani, CEO at Weetabix East Africa.
“For instance, Weetabix’s products consumption in the past six months has grown by about six per cent, whereas in terms of value, it has grown by about 12 per cent.”
This as a result of the declined wheat prices trickling down to its end products' price.
He noted a tonne of wheat is now selling at between $280-300 (Sh45,000-49,000), which is a drop from the highs of about $480 (Sh77,975) a tonne during the peaks of the Russia-Ukraine war.
"Traditionally, the average price for a tonne of wheat was about $250 (Sh40,612).”
He however said the declining cereal prices is faced with yet another risk, the new Isreal – Palestinian war, saying the future of the consumption trends still hang in the balance as it is hard to tell what the war’s outcome will be like.
The war has so far affected the supply chain through the Kenya and the region is staring at a sharp increase in freight costs.
The attacks on vessels which began in mid-December, in response to Israel's bombardment of Gaza, has seen shipping lines avoid the Red Sea and Suez Canal, a key route for ships to Mombasa and the East African coastline.
Kimani was speaking on Wednesday in Nairobi, during the company’s expansion plan announcement seeking to expand its local plant, brand and distribution.
In what it termed as inflation-beating strategy, the firm announced Sh85 million investment towards upgrading the manufacturing facility in Nairobi and pushing the brands in the market.
Of this, Sh23 million will go to the distribution channel, production process and consumer rewards, while Sh62 million has been set for upgrading the manufacturing capability and capacity.
