Hard times as prices of maize flour, cooking oil to increase

Kilifi county residents walk outside the Pwani Oil Company plant

Kilifi county residents walk outside the Pwani Oil Company plant on June 9, 2022. There have been few activities around since the company temporarily shut down its oil plant due to a shortage of raw materials which it blamed on difficulties accessing dollars to pay suppliers on time.

Photo credit: Wachira Mwangi | Nation Media Group

Kenyan households should brace themselves for high prices of edible oil and maize flour from next week due to lack of raw materials for the essential food items.

Maize millers have run out of stock. This is due to shortage of the product locally and hoarding by countries in East Africa, while prices of palm oil, which makes edible oils, have doubled for the past one month.

Kitui Maize Mills chief accountant Paul Miiri said they have already communicated the situation to the government but no intervention has been made. He said for the past three days, the company has not received any supply and if the situation persists, they will have to import even though the sources of maize abroad are hoarding the product.

“We have asked, in vain, the government to move to engage Tanzania to release maize to Kenyans. Tanzania is hoarding maize, while those who are selling have hiked the price by Sh2,000 per bag,” said Mr Miiri. “Reserves at the National Cereals and Produce Board have dropped and supply from local farmers has dried up. The government has also failed to subsidise cost of importing maize from Latin America, making it difficult to import.”

According to importers, a bag of maize, which retailed at Sh4,000, now goes for Sh5,800. Millers confirmed to Sunday Nation that most of their maize reserves are running dry as Tanzania cut supply into the country, hence the price of two-kilogramme flour is expected increase from Sh140 to about Sh200.

As the maize crisis persists, the cost of edible oil is also expected to continue rising as palm oil importers face a serious shortage.

John Muriuki, a Mombasa-based palm oil dealer, confirmed the shortage supply of palm oil—a key ingredient in the manufacture of edible oil. “The decision by Indonesia to suspend export of palm oil affected the cost of key products, ranging from cooking fats, soap and cosmetics. We have had challenges in importing the product.”

The situation is expected to worsen as palm and vegetable oil, which is used in the manufacture of cooking oil, soap and cosmetics, is not listed among the goods to be shipped in through the Port of Mombasa in the next 10 days.

According to Mombasa port ship schedule until June 20, a total of 23 ships are expected to dock with different products except palm and vegetable oil.

Records obtained from Kenya Ports Authority (KPA) indicate last palm oil and vegetable tanker Mv Maritime Venessa and Mv Navigating 8 Guard respectively last docketed at the port on May 19, resulting in a serious supply shortage of the two products.

As a result of the shortage due to the ongoing conflict in Ukraine and lack of dollars to buy the expensive palm oil, Pwani Oil and Kappa Oil companies have suffered production hiccups.

“Given the prevailing challenges, Pwani Oil has temporarily halted operations at its refinery in Kilifi as we work to resolve the problem. We, however, wish to assure our customers, employees, suppliers, partners and other stakeholders that this is a temporary measure and the business remains in operations and our products available in retail outlets,” read part of the public notice by Pwani Oil commercial director Rajul Malde.

Kapa Oil Refineries was the second edible oil producer to reveal how the dollar shortage in the midst of raw material rationing has disrupted its manufacturing.

“Our operations have been hampered by dollar scarcity and inability to access raw materials,” marketing manager Sid Shah told the media.

Vegetable oil prices have already risen more than 50 per cent in the past six months as factors from labour shortages in Malaysia to droughts in Argentina and Canada—the biggest exporters of soyoil and canola oil respectively—curtailed supplies.

Manufacturers of cooking oil are now buying palm oil at between Sh176,000 per tonne and Sh198,000 after the escalation of the Ukraine-Russia conflict.

Before the conflict, the commodity retailed at Sh149,000 per tonne. It has more than doubled from Sh70,000 per tonne before the onset of Covid-19 in March 2020. The price jump, driven by the pandemic, was attributed to export restrictions by Indonesia.

“Locally, Covid-related factors had already caused a jump in the price of a 20-litre Jerrycan from Sh2,200 to Sh4,500 in under two years and the ban to export by Indonesia will aggravate the problem further,” said Kenya edible oils subsector chairman Abdulghani Alwojih in an earlier interview.