Traders sell potatoes at Soko Mjinga market in Nyeri on June 22, 2011.
The cost of chips and crisps is unlikely to fall soon despite the collapse of potato prices, denying consumers the benefits of a bumper harvest already being enjoyed in homes.
Fast food joints which sell French fries as their main menu and makers of crisps said high production costs in the supply chain would not lead to a drop in prices.
“The prevailing high operating costs in transport, energy and ingredients are wiping away prospects of lower crisps prices,” said Deeper Industries managing director Navin Shah.
The company produces various food products under the Tropical Heat brand. It had increased the prices of crisps by seven per cent from Sh500 to Sh535 per kilogramme in February when a bag of potatoes reached Sh5,000 per bag.
The price of potatoes collapsed this week from Sh5,600 to Sh2,000 in Nairobi on the back of a bumper harvest induced by good weather.
Mr Shah said the “slight increase” still left the company absorbing higher costs of diesel used to run the plant’s fryers as well as corn oil, used for deep frying. “In February, the price of a litre of corn oil was Sh140. This has now increased to Sh190, a situation compounded further by the spike in fuel prices being experienced.”
There are 40 processors of crisps including Norda Industries which markets the Urban Bites.
Price drop
A source in the company said “the net effect of the potato price drop was not significant enough to warrant a price review” until high packaging costs and unfavourable exchange rate turn.
Potatoes are also used in the production of starch. Other than increasingly being part of the staple diet in Kenyan homes, most of the potatoes are consumed as junk food in the form of chips. In Nairobi alone, conservative estimates put restaurants selling chips at around 800. However, a spot-check showed most of the fast food outlets have maintained the price at between Sh60 and Sh70 per serving, with only one having reduced its prices. The prices were increased by between Sh10 and Sh20 in April when the price of potatoes was at Sh4,000 per bag. Mr John Ng’ethe, the supervisor of New Rossilas Fish and Chips on Tom Mboya Street, said the price review of Sh10 last week had failed to win customers.
“Customers seem to have settled for the prevailing prices and the reduction has not significantly increased numbers,” Mr Ng’ethe said.
He said the outlet was buying a bag of potatoes at Sh1,700. In Eldoret, fast food operators said high prices of fuel and cooking oil mitigated against reducing the price of chips.
Price shot up
“We cannot reduce the price on our menu because the price of other items has shot up,” said Dominic Nyambane of Take Away Joint. A plate of chips served with a sausage sells at Sh130 at the restaurant having gone up from Sh105 in the past two months.
Ms Ann Karuga, the managing director of Raybells in Nyeri, said the price of a 10 kilogramme tin of cooking fat had doubled from Sh800 to Sh1,600. A plate of chips at a modest hotel in Nyeri town costs between Sh120 and Sh150.
“We use fuel and cooking oil to prepare them and expecting us to drop prices is insensitive,” said Ms Jane Njoki, the owner of Sweets Café in Naivasha.
Spot checks showed that most hotels in Kisumu and Mombasa had not revised the prices of chips. In Kisumu, a plate was selling at between Sh70 and Sh120 compared to between Sh80 and Sh100 in Mombasa.
Additional reporting by Gerald Andae, Bernadine Mutani and Joyce Kimani
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