Wheat product prices to rise on Russia woes

Politics and policy

 

A customer shops at a supermarket in Nairobi. PHOTO | FILE 

By  GERALD ANDAE

In Summary

• Russia is restricting exports as plunging oil prices and Western sanctions hammer the rouble, pushing up inflation.

The price of wheat-based products like bread, flour and cakes are set to rise as Russia restricts grain imports to cool domestic prices in the face of economic crisis.

Russia is one of the world’s leading wheat suppliers and its pullback from international grain markets could lead to a spike in grain prices.

This could expose local bakers who rely on imported grain to the rising wheat prices, ultimately putting pressure on the cost of bread and cakes.

Russia is restricting exports as plunging oil prices and Western sanctions hammer the rouble, pushing up inflation.

“We expect the prices to go up in the coming days as the shortage of the commodity is evident, judging from the current trends in the market,” said Cereal Growers Association chief executive Anthony Kioko.

Bread makers said the cheap local wheat does not make quality bread, prompting them to blend Kenya-grown grain with imports.

Wheat prices have increased 15 per cent since September to about $270 (Sh24,381) a tonne as uncertainty over Russian supply continues to support global grain prices.

This comes at a time when Narok County, which accounts for half of the country’s total production, registered a poor crop this season due to poor weather.

READ: Consumers brace for costlier flour as wheat prices rise

In 2010, Russia imposed a ban on exports and Kenya was hard hit by the move as the price of bread and other related products shot up, forcing the government to zero-rate tax on imported grain.

Bread makers prefer expensive imported wheat to the local variety which is blended with the local grain to obtain quality products. The wheat that is imported costs Sh3,200 per 90-kg bag in Nairobi and about Sh3,400 in Eldoret, and is expected rise in line with the global trends.

The cost of bread has increased from Sh45 mid last year to the current Sh50.

Global cereal maker Weetabix has also been importing wheat from overseas in the past years in a move mainly informed by the low quality wheat produced by local farmers, but it is currently working with selected large-scale farmers to get the produce locally.

Kenya is a wheat deficit country, relying on imports to meet the growing need by bringing in two-thirds of the requirement to meet the annual consumption of 900,000 tonnes.

It produces 350,000 tonnes annually.