(NAIROBI, KENYA) – Wheat millers have warned of possible price increases for flour, bread, chapatis and other wheat products. The warning follows delays by the government in approving imports to bridge a looming supply shortfall.
The Cereal Millers Association said there are delays in the release of a critical government permit document known as C60. The C60 allows approved millers to bring in specified amounts of wheat under the duty remission scheme. The wheat is processed into flour for local sale. Millers must first buy local wheat before receiving these permits.
The millers say the delays come at a time when global wheat prices and shipping costs are rising. This increases the risk that higher costs will be passed on to consumers.
Kenya relies heavily on imports to meet its wheat needs. About 95 percent of the country’s consumption comes from international markets. Only five percent is produced locally. Under the existing wheat import framework, millers must first buy available locally produced wheat before being allocated import permits under the C60 system.
Cereal Millers Association members have raised the price they are offering for locally produced wheat to KES 5,100 per 90 kilogramme bag, up from KES 4,750. The aim is to buy up domestic supplies before supplementing them with imports. The new price is equal to about $31.50 or £24.80 per bag. The earlier price is equal to about $29.40 or £23.10 per bag.
The industry contributes nearly KES 2 billion annually through the Agriculture and Food Authority levy to support local wheat production. This is equal to about $12.4 million or £9.7 million.
Paloma Fernandes is the chief executive officer of the Cereal Millers Association. She said millers had fulfilled the requirements of the Local Wheat Purchase Programme. They have committed to buying local wheat at the revised price. She said outstanding C60 approvals had yet to be released. Wheat consignments at the port are unable to clear through the normal procedure.
Fernandes said millers have fulfilled the requirements and committed to purchase local wheat at KES 5,100 per bag. She urged the government to release the necessary import approvals at the earliest opportunity. She said every additional day of delay adds demurrage, storage and financing costs. These costs do not benefit the farmer, the miller or the consumer. They are simply additional costs being introduced into the food supply chain.
The warning comes as the international wheat market faces fresh supply pressures. The Food and Agriculture Organisation reported that global wheat prices rose by 5.8 percent in July. Prices were 9.9 percent higher than a year earlier. The rise was partly due to disruptions to Black Sea exports and damage to export infrastructure.
Fernandes said the worsening security situation around the Black Sea and Sea of Azov has disrupted grain movements. It has also increased shipping and insurance risks. Recent attacks on ports, vessels and export infrastructure in Russia and Ukraine have forced exporters to consider alternative shipping routes. This adds further uncertainty to global grain supplies.
Russia has faced shipping constraints through the Sea of Azov. Ukrainian Black Sea export infrastructure has also come under repeated attacks according to international reports. The developments could have a significant impact on Kenya because of its heavy dependence on imported wheat.
Fernandes said Kenya cannot afford to create an additional bottleneck at home at a time when the global wheat supply chain is under pressure. The country should be doing everything possible to secure supplies and keep food costs stable, not adding costs through administrative delays.
The millers said supporting local farmers and ensuring adequate imports are not competing objectives. Both are necessary to safeguard the country’s food supply. Fernandes said millers remain committed to purchasing their allocated local wheat. But timely imports are equally necessary to bridge the country’s substantial supply deficit and ensure mills can continue producing flour without interruption.
The Cereal Millers Association has petitioned the Agriculture and Food Authority and other relevant government agencies. It wants the release of all outstanding C60 approvals. It also wants priority given to wheat consignments already at the port. It further wants local wheat price negotiations and other administrative processes not to interfere with import planning and vessel clearance.
The association said timely action is necessary to prevent additional costs from cascading through the food supply chain. This would ultimately burden consumers. Fernandes said the priority remains protecting the farmer, maintaining an uninterrupted wheat supply and ensuring that Kenyan families continue to have access to affordable wheat flour, bread and other essential foods.