Kenya’s flour prices surge on declining wheat supply

KENYA – Kenya’s dwindling wheat supply has continued to exert pressure on the local flour prices on account of high international price of wheat.

According to a report by Business Daily, the price in the world market has been on a steady rise since August last year when a tonne traded at US$224, rising to US$269.5 in December before settling at US$279.5 this month.

Kenya relies heavily on wheat imports to meet the annual demand which according to the Cereal Millers Association is the major cause of the increasing prices since they are majorly dictated by international prices.

“The prices have been going up since August and this has seen an increase in cost of wheat that lands in the country,” said the Cereal Millers Association.

Subsequently, Kenyan processors have adjusted the factory prices of the product which currently retails at US$28.70 for a 50 kilogramme bag.

The country is a net importer of wheat, with shipments amounting to two-thirds of its requirements to meet the annual consumption of 900,000 tonnes against the annual production of 350,000 tonnes.

The cereal millers association said that a decline in major suppliers of the commodity, including Russia and Argentina, to the international market has also been a contributor.

Additionally, increased costs of clearing the produce and transportation to increased milling firms has a pushed the prices up to US$32.94 for a 90-kilo bag from previous US$25.95.

The government normally allocates processors a local quota to be exhausted before securing import permits.

However, the expensive locally produced wheat has caused millers to abadon the source and seek cheaper imports.

Millers have argued that higher local prices are becoming uncompetitive against the backdrop of free movement of goods in eastern Africa.

According to a report by Cision, Kenyan wheat flour market is expected to reach US$1.15 billion by 2020 at a compounded annual growth rate of 9.2%, accounting for 47.2% of the market by 2020.

Kenya is among the many African countries which heavily depend on wheat imports.

Wheat imports in the continent increased to 47 million tonnes from 27.3 million tonnes between the 2007-08 and the 2018-19 growing seasons representing a 63% increase in the commodity imports, a report by World Grain reveals.

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