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Rising wheat price signals costly holiday




Cereal Growers Association CEO Anthony Kioko. PHOTO | DIANA NGILA | NMG 

International price of wheat, which has been on a steady rise since August, is pushing up local cost of flour pointing to a costlier commodity ahead of the festive season.

A tonne of wheat has gone up from Sh22,440 in August to current Sh27,540 on account of fewer supplies from Russia, which is placing a ban on export to protect its citizens against high prices.

Consumer prices of wheat flour have so far shot to a high of Sh122 for a two-kilo packet from Sh112 in August.

Russia is one of the leading exporters of wheat internationally and to Kenya.

“Prices of wheat have been going up since August and this has seen a 15 percent rise on cost of wheat that is landing in the country,” said Rajan Shah, chief executive of Capwell Industries.

The cost of clearing the produce, which includes transport from the port of Mombasa to Nairobi has pushed the price to Sh3,200 for a 90-kilo bag from a low of Sh2,600.

However, there has only been a marginal jump in consumer prices due to stiff competition brought by new players in the market,

“It is a cut-throat competition right now in the market and millers are very keen on how they increase prices as they fight to win customers,” said Mr Shah.

Capwell opened a Sh1 billion wheat flour plant in September as it embarked on an expansion drive.

This comes at a time when Unga Group #ticker:UNGA is testing its second line of newly installed wheat mill in Eldoret as it seeks to improve efficiency in milling to meet growing demand and cut down on production cost.

Wheat production is expected to improve this year following good weather that boosted output across the growing region.

Cereal Growers Association chief executive officer Anthony Kioko said the production is expected to grow from 2.7 million bags last year to three million.

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 annual local production of 350,000 tonnes.