Commodities

Potato prices rise on global shortage

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Irish Potato 2019 regulations require traders to package potatoes in 50 kilogramme bags. FILE PHOTO | NMG

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Summary

  • Multinational fast-food franchises are grappling with expensive imports of potato following a shortage of the produce in their leading source market coupled with a 30 percent duty imposed by the Treasury last July.
  • Prices of the commodity have shot up by up to 45 percent in four months.
  • Egypt and South Africa are the key markets for potatoes for these fast-food restaurants but the two countries are facing shortages on the back of bad weather, making it expensive for them to import the commodity.

Multinational fast-food franchises are grappling with expensive imports of potato following a shortage of the produce in their leading source market coupled with a 30 percent duty imposed by the Treasury last July.

Prices of the commodity have shot up by up to 45 percent in four months.

Egypt and South Africa are the key markets for potatoes for these fast-food restaurants but the two countries are facing shortages on the back of bad weather, making it expensive for them to import the commodity.

The situation has been worsened by a 30 percent duty that the Treasury introduced in the 2021/22 budget on all the potato imports coming in out of the East African Community.

“Obviously there has been an impact in the cost of the potato because of the 30 percent duty that was introduced by the Treasury and this could be the reason why there have been delays in the importation,” said Wachira Kaguongo, chief executive, National Potato Council.

Locally, the price of potato has gone up to Sh1,600 for a 50-kilo bag from Sh1,100, according to Mr Kaguongo, pointing out that the prices have been on an upward trend since last October.

Excessive rains in South Africa in the latest season impacted negatively on potato production, leading to a shortage of the produce, whose value rose 16 percent.

Egypt has recorded a 15 percent decline in production with the little that is there finding its way to Russia, which is its leading export market.

Major fast-food joints in Kenya rely on imports from mainly Egypt and South Africa for the potatoes they use as most that are grown locally do not meet their set standards for making French fries.

Fast-food chain KFC is at the moment suffering from a shortage of potatoes at its outlets in Kenya in what it attributed to delays in delivery from its overseas suppliers, forcing it to offer customers alternative food items in place of French fries.

The need to produce the required variety of potato chips in Kenya has been growing with private entities joining the enterprise.

Last year, Kenya Agriculture and Livestock Research Organisation licensed Juice maker Kevian Limited to produce quality tuber.

The licensing, which seeks to cut imports, will see the Thika-based firm commercialise five of Karlo’s high-yielding potato seed varieties on a 15-year contract to boost production of the right variety required by multinational franchises.