How Kenya will be affected by Russia wheat export ban

The International Food Policy Research Institute (IFPRI) estimates the projected loss of crop at 1.6 per cent of the global wheat supply.

The Food and Agriculture Organisation on the other hand, has adjusted its earlier forecast for wheat production downwards by 25 million metric tonnes.

However, both organisations insist that the rise in wheat prices will not turn into a crisis in the short run, at least.

“It is tempting to think that a six to eight million metric tonne reduction in Russian exports will create supply shortages in regions such as the Middle East and North Africa [the main buyers of Russian wheat], but excess wheat supplies around the world could easily fill the gap,” says an IFPRI briefing paper.

Besides the wheat export ban in Russia, anticipated lower output in Kazakhstan, Ukraine and Canada have contributed to the fresh worries over global availability of the crop.

Past studies on price transmission by IFPRI have indicated that unlike Asia and the rest of the world, Africa is less likely to feel the effects of such prices.

FAO says, “But after two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall. Even more importantly, stocks held by the traditional wheat exporters, the main buffer against unexpected events, remain ample”.

Either way, the happenings in Russia have unsettled the favourable global outlook for wheat during 2010/ 2011 period where supply was projected to exceed demand.

In its forecast released last month, the Economic Intelligence Unit projected that the consumption of wheat would rise to 654 million tonnes and by a further 12 million tonnes in the next year.

Indication are that the ban might be the beginning of hard times for the industry.

FAO has warned that should the drought in Russia persist, this could spell danger for the situation in the 2011/ 2012 season.

This would translate into even more disastrous results for the local wheat industry that has refused to break from the mould of protecting its farmers.

Mr Lalji says over the past three decades, import tariffs in Kenya have remained higher than its neighbours, between 25 and 35 per cent, ostensibly to protect the local industry.

Among the factors blamed for the decline in wheat production from 312,000 tonnes in 2002 to 220,000 tonnes last year, is land sub-division.

“You cannot grow wheat on a five acre plot and still be competitive,” he argues.