The value of edible oils imports into the country jumped by 19.2 percent in the nine months to September 2021, attributed to lower supply of palm oil in the global market which drove up prices.
Palm oil production in South East Asia was hit when the Covd-19 pandemic struck due to lockdowns that limited work in plantations in the region, which leads the world in producing the product.
The value of edible oils imports into the country jumped by 19.2 percent in the nine months to September 2021, attributed to lower supply of palm oil in the global market which drove up prices.
Palm oil production in South East Asia was hit when the Covid-19 pandemic struck due to lockdowns that limited work in plantations in the region, which leads the world in producing the product.
Kenya National Bureau of Statistics balance of payment data shows the value of animal and vegetable oils rose to Sh83.08 billion from Sh69.7 billion in the corresponding period in 2020, despite a fall in imported volume to 674,860 tonnes from 928,053 tonnes in 2020.
“With the pandemic, farmers (in South East Asia) were restricted to their farms hence harvesting was reduced, affecting the raw material prices,” said Nitin Shah, CEO at Kapa Oil Refineries.
“We also saw foreign exchange constraints and shortage of dollars to pay for the imports. Supplying was a challenge locally due to transport costs from Mombasa to Nairobi and areas like Nakuru and Kisumu.”
As a result, the price of a litre of cooking oil has gone up from an average of Sh210 in January 2020 to between Sh300 and 330 currently.
Kenya is large importer of vegetable oil and crude palm oil, mainly from Malaysia and Indonesia, part of which is exported to Uganda.
Data shows the Malaysia’s benchmark crude palm oil price rose to $1238.16 per tonne as at December 31, from $948 at the start of 2021.
When combined with a 3.6 percent depreciation of shilling over the year, the impact in local currency became even more amplified.
Palm oil was trading at about $650 a tonne in mid-2020.
Mr Shah said that the import cost is likely to remain high at least until the end of the first quarter of this year, saying that flooding in Malaysia has pushed it higher to $1420 per tonne yesterday.
“The increase in prices has affected demand dropping by about 25 percent. Hopefully, the prices will drop to about $800 to $900 per tonne from April or May,’’ he added.
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