How Kenya will be affected by Russia wheat export ban

Despite repeated assurances by analysts that the East African wheat industry is not likely to suffer from the ban on the grain’s exports by Russia, there are fears that Kenya may not escape unscathed after all.

The latest development in the global market complicates matters further for the industry that is presently grappling with a decision on whether to lower import duty to be at par with its fellow partner states in the East African Community (EAC).

This could translate into drastic rises in the prices of wheat products in Kenya.

There have been price spikes in the global market over the past two weeks.

This does not help millers who have to pay a 35 per cent import duty that remains in place, as the government makes a decision on whether to lower it.

Like the rest of EAC, Kenya is a net importer of wheat, regarded as the second most important staple, producing only 30 per cent of its estimated one million tonnes annual requirement.

In 2007, an estimated $506.6 million worth of wheat was brought into the EAC from Russia, Argentina, Canada and Australia.

Official figures indicate that Kenya had the second highest wheat import bill after Tanzania, which received about 813,000 tonnes.

According to the chairman of the Cereal Millers Association Diamond Lalji, Kenyan millers are operating at a disadvantage compared with their colleagues in the region.

“The prices in the international market have spiked, while farmers are reluctant to sell their produce,” explains Mr Lalji.

The high prices will inevitably be passed on to the consumers, who are likely to opt for the cheaper flour imported duty free under the Comesa protocol from Egypt and Mauritius.

Nonetheless, analysts insist the temporary ban on wheat exports by Russian Prime Minister Vladmir Putin will not snowball into a global crisis.

According to the director of Tegemeo Institute of Agricultural Policy and Development, Mary Mathenge, there is likely to be little effect in East Africa.

However, she adds, East African countries could be affected indirectly as a result of the lower supply of wheat in the international market, driving the prices up.

Russia produces about eight per cent of the global wheat supply.