Tax cut on wheat imports good for Kenyans

The past few weeks have witnessed a flurry of activity with farmers and some MPs expressing outrage over Finance minister Uhuru Kenyatta’s decision to lower import duty on wheat from 25 per cent to 10 per cent instead of commending him for taking a bold step to make food more affordable for the Kenyan consumer.

This reveals the sad irony of the country’s food security policy which has led to exorbitant prices through imposition of high import duties on wheat and other cereals despite the fact that local production does not satisfy millers’ demand.

Indeed, a major disparity exists between the amount of wheat produced locally and the country’s demand.

While Kenya’s annual wheat requirement is about 900,000 metric tonnes, farmers produce 300,000 metric tonnes.

To bridge the gap, the remaining 600,000 tonnes are imported.

The farmers are entirely dependent on local millers since, unfortunately, Kenya’s wheat is not competitive enough to penetrate the regional market.

The country’s installed milling capacity is 1.5 million metric tonnes per annum but only 60 per cent is utilised.

This is due to various reasons, key among them is the 25 per cent duty levied on imported wheat.

It is sad that although Kenya relies heavily on imported wheat, the country’s policies make it expensive to buy the grain because of high tariffs which in turn drive food prices up.

The same case applies to maize and rice — Kenya’s staple cereals.

Over the recent past, the country has encouraged high wheat prices partly by paying farmers rates that are above world market prices and compounding this with a 25 per cent duty levied on imported wheat.

Any policy that raises prices above market levels hurts the poor most.

This is why wheat flour prices are beyond the reach of the majority of Kenyans.

Mr Kenyatta’s decision is beneficial to consumers who have borne the burden of high food prices.

Indeed, he is to be commented for being mindful of the plight of poor Kenyans — rather than being vilified.