Millers warn of looming higher prices of wheat products

By  Barnabas Bii

Correspondent

Wheat millers have warned of possible increases in the prices of flour, bread, chapatis, and other wheat-based products following the government's delayed approval of imports to bridge a looming supply shortfall.

The Cereal Millers Association (CMA) claimed 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 to process into flour for local sale. Millers must first buy local wheat before receiving these permits.

The millers say the delays are occurring at a time when global wheat prices and shipping costs are rising, increasing the risk that higher costs will be passed on to consumers.

Kenya relies heavily on imports to meet its wheat requirements, with about 95 per cent of the country's consumption sourced from international markets and only five per cent produced locally.

Under the existing wheat import framework, millers must first purchase available locally produced wheat before being allocated import permits under the C60 system.

CMA members have consequently raised the price they are offering for locally produced wheat to Sh5,100 per 90kg bag, up from Sh4,750, as they seek to mop up domestic supplies before supplementing them with imports.

The industry contributes nearly Sh2 billion annually through the Agriculture and Food Authority (AFA) levy to support local wheat production.

However, CMA chief executive officer Paloma Fernandes said millers had fulfilled the requirements of the Local Wheat Purchase Programme and committed to buying local wheat at the revised price.

She said outstanding C60 approvals had yet to be released, leaving wheat consignments at the port unable to clear through the normal procedure.

“Millers have fulfilled the requirements of the Local Wheat Purchase Programme and committed to purchase local wheat at Sh5,100 per bag. With these commitments in place, we respectfully urge that the necessary import approvals be released at the earliest opportunity,” Ms Fernandes said.

“Every additional day of delay adds demurrage, storage and financing costs which 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 per cent in July and were 9.9 per cent higher than a year earlier, partly due to disruptions to Black Sea exports and damage to export infrastructure.

Ms Fernandes said the deteriorating security situation around the Black Sea and Sea of Azov had disrupted grain movements and 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, adding further uncertainty to global grain supplies.

Russia has faced shipping constraints through the Sea of Azov, while 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.

“At a time when the global wheat supply chain is once again under pressure, Kenya cannot afford to create an additional bottleneck at home. We should be doing everything possible to secure supplies and keep the cost of food stable, not adding costs through administrative delays,” Ms Fernandes said.

The millers said supporting local farmers and ensuring adequate imports were not competing objectives, arguing that both were necessary to safeguard the country's food supply.

“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,” Ms Fernandes said.

The CMA has petitioned AFA and other relevant government agencies to release all outstanding C60 approvals, prioritise wheat consignments already at the port and ensure that local wheat price negotiations and other administrative processes do not interfere with import planning and vessel clearance.

The association said timely action was necessary to prevent additional costs from cascading through the food supply chain and ultimately burdening consumers.

“Our 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,” Ms Fernandes said.

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