Kenya Bans Wheat Imports Indefinitely
Kenya in early October announced a moratorium on importation of wheat ostensibly to cushion the country’s wheat farmers from effects of competing with cheaply produced raw wheat from other countries.
President William Ruto says the sudden and indefinite ban will allow Kenya to stabilize wheat prices that have been increasing in recent months.
The ban on wheat imports comes soon after the country’s Agriculture And Food Authority (AFA) indicated Kenya is a net importer of wheat.
AFA’s Director General Beatrice Nyamwamu stated in a 2022 food situation analysis report the high importation levels for wheat is because “the area under wheat production has decreased over time due to changes in land use and subdivision of land.”
However, Nyamwamu added the area under wheat production in Kenya increased from 132,231 hectares in 2020 to 134,070 hectares in 2022.
The increase did not, however, translate into more output; production volumes fell from 404,695 tons in 2020 to 349,056 tons in 2021 “due to unfavorable weather conditions.”
Meeting Growing Demand
Yet, demand for wheat products in Kenya has been increasing “steadily over the years, resulting in an increase in wheat imports.”
In 2021, the country imported 2.1 million tons of wheat up from 1.8 million in 2020 while exporters were a mere 139,791 tons in 2021, albeit an increase from 155,540 tons in 2020.
Wheat consumption in Kenya, East Africa’s biggest economy, is estimated at 1.94 million metric tonnes.
The quest to import enough to meet demand has been impacted by the war in Ukraine and a worsening foreign exchange rate that pushed up the cost of wheat to beyond affordability for many Kenyans.
Since June 2022, Kenya’s local currency has depreciated more than 9% against the U.S. dollar, and the free fall continues.
According to the Kenya Institute for Public Policy Research and Analysis (KIPPRA), an independent institution that provides policy guidelines to government, the country sources 44% of its wheat from Russia and Ukraine.
Feeling the Effects of War in Ukraine
“The sanctions imposed on Russia have led to an increase in wheat importation costs, with the landing cost in Kenya increasing to US$500 per ton from $400.”
The conflict has also triggered a spike in fuel prices in Kenya, “leading to high production and transportation costs and thus affecting the distribution of food commodities.”
Average wheat prices increased from $407 per metric tonne in 2021 to $431 million in 2023.
In fact, the price of a 2kg packet of wheat increased by more than 32%, one of the greatest price increases among popular food commodities in Kenya, from Ksh 122.8 (US$ 0.8) to Ksh 174.54 (US$1.15) in 2022, according to Macdonald George Obudho, director general of the Kenya National Bureau of Statistics (KNBS).
Despite an apparent expansion of restaurants and bakeries especially in Kenya’s capital, Nairobi, wheat and wheat product consumption levels remain depressed, Obudho stated in this year’s Kenya Economic Survey.
The report indicates the grain milling subsector in Kenya posted a decline in the production of wheat flour to 1.40 million tonnes in 2022 from 1.44 million tonnes in 2021.
The bakery products sector grew by 6.3% in 2022, compared to a 9.4% increase in 2021.
“The growth was attributed to an increase in quantities of bread and other bakers’ wares from 152,000 tonnes in 2021 to 164,400 tonnes in tonnes in 2022,” said the KNBS report.
Tariff Advantage for Millers
For some time now, Kenya’s registered millers enjoy a 10% ad-valorem tariff for wheat imported from outside the East African Community (EAC), an intergovernmental organization composed of seven countries in the Great Lakes region of East Africa, including Kenya, Democratic Republic of the Congo, Tanzania, Burundi, Rwanda, South Sudan, and Uganda.
The tariff advantage, however, is on condition that the millers participate in the local Wheat Purchase Program (WPP), which obligates them to first purchase all locally produced wheat before they can apply for import licenses.
The WPP is managed by Kenya’s Agriculture and Food Authority, a government agency in partnership with two industry groups, the Cereal Millers Association and the Cereals Growers Association.
Any other wheat imports outside this arrangement attract a 35% EAC Common External Tariff.
However, Obudho says the volume of wheat imports declined by 11.3% to 1.7 metric tonnes in 2022 from 1.9 metric tonnes in 2021.
On the reverse, the unit price of imported raw (unmilled) wheat increased by 41% to KSh 46,571.4 per tonne during the same period.
Apart from Russia, whose wheat was competitively priced compared to other exporters, Kenya imports wheat from Argentina, the Black Sea region, Australia, and North America.
According to KNBS, the value of marketed wheat increased by 4.8% from KSh 10.4 billion (US$ 68.7 million) in 2021 to KSh 10.9 billion (US$ 72 million) in 2022, which led to higher earnings despite the reduction in quantities of marketed wheat.
The ban on wheat imports coincides with predictions of falling wheat yields in producer regions such as Narok and Laikipia counties due to “short-term land leases that disincentivize investment in soil and equipment” according to the U.S. Department of Agriculture (USDA).
“Production is also affected by seed recycling and occasional outbreaks of the Ug99 rust disease,” says USDA.
“Overall production is expected to remain below normal levels due to severe drought conditions in the Timau area of Laikipa and below average rainfall in Narok county,” adds USDA.
Wheat, the country’s second most important cereal crop, is mainly grown in Meru, Uasin Gishu, Trans Nzoia, Elgeyo Marakwet, and Nyandarua counties.
However, USDA predicts an increase in the area under wheat production that could reach 150,000 hectares.
Wheat millers and consumers are hoping the Kenyan government will provide guidelines on how the deficit met by imports would be sourced to ensure adequate supply of wheat and wheat products in the country.
Shem Oirere is a freelance writer based in Nairobi, Kenya. He can be reached at shem@shemoirere.com, +254-722-167-733.