Decline in Wheat Supply Leads to Increased Prices

Kenyan households are paying more for wheat flour due to increased international wheat prices which have been on a steady rise since last year.

As of August 2018, a tonne traded at 22,440 shillings in the international market and by December, the price had increased to 27,000 shillings and as of February 2019, the prices stood at 28,000 shillings.

Local processors have therefore been forced to align with the increased international prices for wheat thus leading to an increase on wheat flour in local supermarkets where a bale of flour retails at 1,380 shillings with retailers selling two-kilo packet at a higher price.

Kenya is a net importer of wheat, bringing in two-thirds of its requirement to meet the annual consumption of 900,000 tonnes against the annual production of 350,000 tonnes.

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

CMA says there has been a decline in wheat from Russia and Argentina, key suppliers in the world market.

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The cost of clearing the produce, which includes transport from the port of Mombasa to Nairobi has pushed the price to 3,300 shillings for a 90-kilogram bag from previous 2,600 shillings.

Processors have exhausted the expensive local crop and are relying on imports to meet demand.

Domestic farmers normally demand higher prices for wheat, which are way above what millers pay for imported grain.

Millers have argued that they have become uncompetitive after being compelled to pay farmers 3,200 shillings for a 90-kilogram bag of wheat against the backdrop of free movement of goods in eastern Africa.

Millers want the government to stop fixing the price and instead subsidize farmers through inputs and let the buying price be determined by the market forces.

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