KENYA – Millers are lobbying to import duty-free wheat after they exhaust what’s available from local farmers.
They argue the move will keep prices of wheat products low when the duty is set aside as the country imports up to 75 per cent of wheat yearly.
“As millers, we want to buy wheat from local farmers at a fair price and ensure that we exhaust all they have produced before we are allowed to import the grain duty free,” said Cereal Millers Association chairman Nick Hutchinson.
Mr Hutchinson said the industry is engaging the government and other stakeholders over the issue hoping to reach an agreement. Currently, wheat is selling at Sh2,800 a bag down from Sh3,400 at a similar time last year.
The price might drop further as the main crop harvesting season is expected to start next month.
The Cereal Growers Association (CGA) of Kenya has welcomed the move, saying it is willing to negotiate with the millers.
CGA, which had been opposed to scrapping of duty, says it will agree to the deal if millers offered farmers a good price to enable them expand production.
“We welcome the suggestion by the millers as long as farmers are going to benefit from it,” said CGA chief executive officer Anthony Kioko.
Mr Kioko noted that Kenya does not produce enough wheat, meaning there will be no harm if millers were allowed to bring in the crop duty-free after clearing the local stocks.
In 2010, the cost of wheat flour went up following scarcity of the commodity that sparked off high international prices when Russia, the leading producer, placed an embargo on exports due to a severe drought.
This forced the government to zero-rate imports before it reinstated the taxes in 2011.
Mr Kioko says farmers expect a good crop this year, with the harvest expected to go up by 25 per cent, compared to 2014 when it was hit by poor weather.
Kenya is a wheat-deficit country relying on imports to meet the growing demand. It ships in two-thirds of total requirements to meet the annual consumption of 900,000 tonnes.
Only 350,000 tonnes are produced locally each year.