Wheat price records new high as farm­ers re­duce pro­duc­tion

Cost jump helped by re­duced sup­ply af­ter grow­ers shift to lu­cra­tive maize

Business Daily (Kenya) - - MONEY & MARKETS - James Kar­iuki jkar­iuki@ke.na­tion­media.com

A de­cline in wheat acreage amidst puni­tive im­port rules helped raise the price of a 90 kilo­gramme (kg) bag 18.4 per cent to Sh4,934 last month from Sh4,167 in Septem­ber.

Agri­cul­tural Food Au­thor­ity (AFA) ob­served low pro­duc­tion of wheat gave farm­ers lee­way to in­crease prices as millers tried to meet a gov­ern­ment re­quire­ment that they ex­haust lo­cal pur­chase quo­tas be­fore im­port­ing.

The Kenya Pub­lic Health Depart­ment last Septem­ber also in­creased the wheat in­spec­tion fee from Sh600 to Sh8,000 a truck on con­sign­ments sourced from Tan­za­nia, a move that has been bit­terly op­posed by ex­porters from the neigh­bour­ing State.

Last month’s wheat prices were the high­est recorded this year af­ter June’s Sh4,333 a 90-kilo bag, with North Rift farm­ers re­duc­ing acreage on in favour of the lu­cra­tive maize.

While wheat prices had sus­tained a down­ward trend since June, in­creased har­vest saw farm­ers dis­pose of wheat at much lower prices in July (Sh4,303), Au­gust (Sh4,067)

and Septem­ber’s Sh4,167 ow­ing to lack of proper stor­age.

Do­mes­tic con­sump­tion nor­mally stands at one mil­lion bags a year.

This year’s har­vest is ex­pected to be below 350,000 tonnes with the deficit set to be met through im­ports, es­pe­cially dur­ing the De­cem­ber fes­tive pe­riod when wheat traders record the high­est sales.

In­ter­est­ingly, while the price of wheat has in­creased, that of bread re­mains at about Sh50 for a 400 gramme (gm) loaf while the 600 gm loaf goes for Sh70.

Wheat flour prices range be­tween Sh121 and Sh140 for a two-kilo pack.

The AFA re­ported that maize prices con­tin­ued to fall with last Oc­to­ber reg­is­ter­ing a Sh3,206 a 90 kilo bag, down from Sh3,360 earned by farm­ers in Septem­ber.

At the same time high pro­duc­tion of sorghum saw prices plum­met to Sh4,872 (Oc­to­ber) from Sh5,186 (Septem­ber) while mil­let farm­ers earned Sh2,597 in Oc­to­ber down from Septem­ber’s 2,641.

Sorghum is a highly soughtafter ce­real by beer-mak­ing com­pa­nies, which has helped cre­ate a new av­enue for farm­ers to earn hand­some re­turns.

This year’s har­vest is ex­pected to be below 350,000 tonnes with the de icit set to be met through im­ports

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