Malaysia topples US, Japan imports on edible oil costMonday July 04 2022
The runaway palm oil prices have placed Malaysia above Japan and the US in Kenya’s top import markets, with the key raw material delivering costly cooking oil to households.
Official data released Friday show the value of imports from Malaysia more than doubled in the year to March to Sh106.47 billion, making it Kenya’s fifth-largest source of goods from eighth position a year earlier.
The Kenya National Bureau of Statistics (KNBS) linked the 123.01 percent jump from Sh47.74 billion a year earlier to the rising value of “imports of crude palm oil” from the Southeast Asian country.
The world’s second producer of crude palm after Indonesia, it toppled Japan, the US and Indonesia in the rank of key exporters to Kenya, according to the data obtained from the Kenya Revenue Authority by the KNBS.
Prices of crude palm oil — used in processing of cooking oil, soaps and cosmetics with glycerin— have surged to record highs and deepened a food-cost crisis that has punished the poor in emerging countries such as Kenya.
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The cost for a metric tonne of palm oil nearly tripled to $1,980 (Sh231,283) in March 2022 from an average of $700 (Sh81,767) before the pandemic hit in March 2020, the Kenya Association of Manufacturers said in June.
This has seen the cost of a litre of cooking oil increase 51.7 percent to Sh370.71 in a jump that not only egged on inflation to a 58-month high but altered Kenyans’ spend on imported goods.
The country for the first time spent more on palm oil than on buying cars and machinery from Japan and high-tech equipment including aircraft parts and electronics from the US.
"The world is largely reliant on supply from Malaysia, and, obviously, consumers are all over the world because it’s a global product," said Pwani Oil Ltd commercial director Rajul Malde.
"So, we are competing for the same oil with everybody else in the world and, therefore, prices are high."
Indonesia, the world’s biggest palm oil exporter, has since April restricted shipments of edible oil to flood its domestic market with supplies to control the soaring prices of cooking oil.
Its protectionist export rules have, however, left Malaysia as the main source of crude palm oil.
Poor weather in Indonesia and Covid-related immigration curbs in Malaysia choked palm oil output and caused labour shortages on plantations.
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Disruption of shipments from the Black Sea region in the wake of Russian invasion of Ukraine wiped out a huge share of global supply.
High crude oil prices – another result of the war – have added further pressure to vegetable oil supplies by increasing demand for biofuels.
The KNBS data shows imports from Indonesia were largely flat in the review period, rising a measly 2.10 percent to Sh57.58 billion.
"Indonesia, whilst they lifted the export ban [in April], they have brought in a policy …which is requiring producers to supply the local market first up to a certain percentage before they are issued with export permit to ship out their excess oil," Mr Malde said. "So whilst there’s no export ban for palm oil, it is not free export for local producers in Indonesia."
Japan’s exports to Kenya — which are largely cars, steel and iron — grew at a slower pace of 15.35 percent compared with Malaysia’s to nearly Sh100.83 billion.
Orders from the US, including pharmaceutical products and aircraft, jumped 39.23 percent to Sh88.47 billion in the year through March.
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The data shows China remained the largest source of imports at Sh446.65 billion, a 15.23 percent growth over the prior year.
Beijing accounted for 20.27 percent of Kenya’s Sh2.2 trillion import bill in the review period.
China was followed by India which sold goods worth Sh242.89 billion in the year ended March 2022, a 34.72 percent jump.
Orders from United Arabs Emirates—mainly petroleum products— jumped 106.22 percent to Sh212.64 billion, while Saudi Arabia’s increased 70.46 percent to Sh125.38 billion.