Russia deal renewal spares Kenyans expensive wheat

Kenya has been spared from higher wheat prices after Russia agreed to renew the grain initiative deal. FILE PHOTO | NMG

Kenya has been spared from higher wheat prices after Russia agreed to renew the grain initiative deal that allows the produce from Ukraine to pass along the Black Sea- a major corridor that supplies the commodity to the world market.

Manufacturers have welcomed the UN-brokered deal, which has seen the agreement that was due to expire on Thursday renewed for a further period of two months.

There were fears that the price of wheat would significantly go up after Russia announced early this month that it will not extend the deal until sanctions that have been slapped on Moscow after it invaded Ukraine are lifted.

“This extension of the deal is good news for Kenyans as it has now cleared the uncertainty that was there over the likelihood of prices going up,” said Rajan Shah, chairman of the Kenya Association of Manufacturers.

Wheat processors said that should the deal not be renewed, then the cost of flour and bread would remain at the current high levels or increase further as Ukraine is a key supplier of wheat to Kenya.

However, Mr Rajan, who is also the chief executive officer of Capwell Industries, said there could be no immediate impact on the current cost of wheat products because of a weak shilling that has made imports expensive.

The UN Secretary-General Antonio Guterres hailed it as "good news for the world” after Russia agreed to renew the deal.

The deal, which was first brokered in July last year, has seen the international price of wheat drop to $310 for a tonne of grain currently from a high of $520 in May last year, which was the highest cost to be recorded in recent years.

Russian exports of food and fertiliser are not subject to Western sanctions but Moscow says restrictions on payments, logistics and insurance have amounted to a barrier to shipments after the country was banned from using Swift payment platform.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.