Kenyan millers want the ban on Indian wheat lifted

Millers in Kenya have warned that the country could run out of options if the wheat import ban from India is not lifted. Kenya, which gets nearly 66% of its wheat supplies from Russia and Ukraine has been struggling to meet its requirements after the former invaded the latter in February. India, which has recorded a bumper wheat harvest, has therefore become a source of choice for many. But the government of Kenya has prohibited the import of wheat from the Asian producer on because of fears that the presence of a fungus occasionally found in Indian wheat. The fungus - tilletia indica – better known colloquially as the Karnal bunt (named after the agricultural town where it was first detected) has been under scanner since 1982.

While urging the government to lift the ban the CEO of the Kenyan Cereal Millers Association Paloma Fernandes has asked for “a proper risk analysis”. In 2021, Kenya imported 2.2 million tonnes of wheat, and produced 180,000 tonnes domestically. Indian brokers are offering wheat at US$80 a tonne – a rate far below the global average asking price of US$500 a tonne. India is the second-biggest wheat producer in the world after China. Its farmers are experiencing an unusually fruitful harvest this year, thanks to an early dry spell in the key wheat-producing areas. New Delhi claimed its wheat exports more than doubled in the fiscal year ending Mar 2022 to 7 million tonnes. Commerce and Industry Minister Piyush Goyal believes India could export as much as 10 million tonnes by the end of the surrent fiscal year. Its biggest buyers in Africa are Ethiopia and Somalia, with Uganda a distant third.

Kenyan millers – and households – could well use the breathing space Indian wheat would give them. Food inflation is already hitting hard. In March, after it had declined for five straight months, CPI inflation went up to 5.6% in year-on-year terms – compared to 5.1% y-o-y in February. Inflation in the food and non-alcoholic drinks subindex was 9.9% y-o-y, up from 8.7% y-o-y in the previous month, owing to a large degree to a 4.5% y-o-y increase in the price of wheat flour in the month.

In its appeal to the government, the Cereal Millers Association is also asking for the removal of duties on wheat imports as an exceptional measure. Wheat imported into the East African Community (EAC) from is subject to a 30% import duty.

 

References

‘Millers seek lifting of India wheat importation ban’, Business Daily, 1 April 2022

‘Millers seek to import wheat from India’, The Star, 31 March 2022

‘Lifting tardy, wheat glut in Karnal grain markets’, The Tribune, 10 April 2022

‘India to export 3-3.5 million tonnes of wheat in Apr-July: Food Secy’, Business Standard, 8 April 2022

‘Booming wheat exports from India to help ease global shortage’, The Economic Times, 29 March 2022

Export data from Observatory of Economic Complexity

‘Kenya Inflation Quickens as War in Ukraine Pushes Up Wheat Costs’, Bloomberg, 31 March 2022

‘State eyes 4m bags duty-free maize imports on low Uganda supply, poor rains’, Business Daily, 11 April 2022

‘Maize flour prices to rise on tax, shortages’, Business Daily, 18 March 2022