Commodities

Regulator stops wheat quota plan by millers

narok-wheat

The competition watchdog has stopped a bid by large-scale millers to manage the allocation of locally produced wheat among themselves. FILE PHOTO | NMG

geraldandae

Summary

  • The Competition Authority of Kenya declined the request by Cereal Millers Association (CMA) to divide among themselves wheat that they can purchase from local farmers before importing.
  • The Agriculture and Food Authority (AFA) normally allocates millers the buying quota based on the available crop that has been harvested against their installed milling capacity.
  • The government started the quota system for wheat purchasing a couple of years ago to safeguard farmers from cheap imports.

The competition watchdog has stopped a bid by large-scale millers to manage the allocation of locally produced wheat among themselves.

The processors sought to take over the function performed by the government.

The Competition Authority of Kenya declined the request by Cereal Millers Association (CMA) to divide among themselves wheat that they can purchase from local farmers before importing.

The Agriculture and Food Authority (AFA) normally allocates millers the buying quota based on the available crop that has been harvested against their installed milling capacity.

“The Authority made a determination and declined CMA’s request to manage the allocation of locally produced wheat among its members and instead vested the allocation to AFA,” said the CAK in a communication seen by the Business Daily.

The CMA has, however, requested the regulator to reconsider its position and allow it to share the uptake of the local wheat with its members and stakeholders.

However, the millers got a reprieve in regard to taking part in meetings that are aimed at setting the price of wheat, a thing that the processors have opposed over time.

“The Authority made a determination and granted an exemption to CMA to participate in the Government’s wheat purchase programme to discuss wheat price per 90-kilogramme bag for a period of three years,” the CAK noted.

The government started the quota system for wheat purchasing a couple of years ago to safeguard farmers from cheap imports. This scheme requires millers to exhaust the local crop before importing.

Kenya is a net importer of wheat, bringing in two-thirds of its requirement to meet the annual consumption of 900,000 tonnes against the annual local production of 350,000 tonnes.

Millers have argued that high prices in the domestic market rendered their finished product uncompetitive in the region.

At the moment, Kenya charges a 10 percent duty on all imported wheat, but it is still cheaper than the locally produced commodity.

The CAK has also directed AFA to publish, annually, the growth in wheat production in Kenya and the subsequent consumer welfare benefits as envisaged by the programme.

[email protected]