Bakers seek lower duty for wheat imports to boost trade

Manufacturers are pushing for lower duty on wheat imports to boost production of processed goods for local and regional sale.

Kenya Association of Manufacturers (KAM) Director Rajan Shah said easing the cost of the raw material would have a positive economic multiplier-effect on the entire value chain with industries getting a leeway to put out new products.

“Kenya heavily relies on wheat imports for various industrial processes that are turned into biscuits, cakes, chapatis, buns and bread among others.

If you were to allow duty-free wheat, this would mean a gradual fall in prices of wheat-based products and emergence of new industries that create new products,” he said.

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 production of 350,000 tonnes annually.

Mr Shah said it was unfair to allow the importation of finished wheat products that hurt market prospects for local goods.

“We can encourage foreign companies to set up shop here in Kenya to make, say, pasta but must be prepared to ban pasta importation once local companies start making the same products. Allowing duty-free imports of same-line products hurts local industries expansion plans with some industries forced to reduce operations to stem runaway costs,” he observed.

Mr Shah said Kenya would also see new investments and more jobs, which will in-turn spur higher sales due to cheaper locally made products.

Kenya charges 10 percent duty on all imported wheat, which is still cheaper than the locally-produced commodity.

Local farmers have always demanded a higher price for a 90-kilogramme bag of wheat, forcing millers to pay Sh3,100 against the imported type that lands at about Sh2,800.

Millers say high prices have made them uncompetitive as the government compels them to pay farmers Sh3,200 for a 90-kilogramme bag.