Manufacturers seek duty waiver to cut flour prices
Thursday May 26 2022
Manufacturers want the government to waive a 10 percent duty imposed on imported wheat to offset the current high international prices of the grain and offer a reprieve to consumers on skyrocketing cost of flour.
Kenya Association of Manufacturers and a host of other stakeholders in the grain industry say the government should remove duty for the next year in order to cushion consumers from high costs.
They said players in the sector have turned to the expensive importation of wheat from USA, Argentina, Australia, and Canada on the back of the Russia-Ukrainian war that has cut supplies.
Kenya imports 60 percent of wheat mainly from Ukraine and Russia and the current situation in the two countries has disrupted the importation supply chain.
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“The government should grant full duty exemption to bonafide food and feed millers charged on wheat for a period of 12 months to cushion consumers,” said a joint statement.
They said consumers are already struggling with the rising price of commodities and that the recommendation to remove the duty will be crucial in mitigating rising costs.
At the shelves, the price of Ajab wheat flour has gone up from Sh168 last month to Sh202, currently, Dola is now retailing at Sh194 from Sh160 while Ndovu is going for Sh190 from Sh165.
Up to 89 percent of wheat consumed in the country is sourced from imports as Kenya only produces245,000 tonnes against the requirement of 2.1 million tonnes annually.
Under the EAC Common External Tariff, wheat imports attract a duty of 35 percent. However, millers are allowed to ship in the grain at a levy of 10 percent under the duty remission Scheme subject to approval by the Ministry of Agriculture.
India announced last week that it stopped the exports of its wheat to the world market in order to protect its local stocks. It had planned to export at least 10 million tonnes of wheat in the current financial year.
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The stakeholders also want Kenya to diplomatically and bilaterally negotiate with the governments of Zambia and Tanzania to allow the importation of six million bags of maize and ensure efficient and effective trade facilitation.
“It is also critical that the government supports transport and logistics for the importation of maize from these countries,” said the manufacturers.