Wheat imports drop 90pc after State directive

Wheat imports fell by 89 percent in June after a State directive to millers to mop up all the local supply before shipping in grain from abroad.

The Ministry of Agriculture says imports in July dropped to 267,000 bags from a high of 2.5 million bags in May.

In June, the ministry told millers to buy local wheat at Sh3,700 for a 90 kilogramme bag. The processors are issued with quotas based on their milling capacity and only given import permits after exhausting their domestic allocation.

Official data shows there are 2.8 million bags of wheat in the country currently, out of which farmers are holding 554,000 while millers and traders have 2.29 million bags.

Wheat imports to Kenya had gone up by 12 percent in the first five months of the year as millers stepped up volumes ahead of budget reading on fears that the Treasury would revise shipping taxes upwards.

Imports increased to 8.1 million bags during that period from 7.1 million bags in corresponding period last year.

The government started the quota system of wheat purchasing two years ago as it moved in protect farmers from cheap imports.

Kenyan farmers have been demanding a premium price for their grain arguing that high cost of production has been eating into their margins.

Millers have on the other hand argued that high local prices have made them uncompetitive in the market as the government compels them to pay farmers a higher cost per bag, hence their turning to imports.

Kenya charges 10 percent duty on all imported wheat but it is still cheaper when compared with the locally produced one.

The import price of wheat, which millers normally refer to as the premium grade, goes at between Sh3,100 and Sh3,500 for a 90-kilo bag.

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