Business Daily (Nairobi)
Jim Onyango
7 May 2008
As the price of wheat products continue to rise, bread is still finding its way to the breakfast tables of most Kenyans with disposable income.
The trend might not be sustained for many months as bakers and millers say they are likely to increase the price further following a worldwide shortage of wheat and grains.
The price of bread has gone up for the fourth time in six months, a rise which bakers and millers are attributing to a steep increase in the cost of wheat, baking oil, fuel and packaging materials.
Mini Bakeries, the makers of Super Loaf bread, said they had increased the retail price of their 1.5 kilogrammes of bread by Sh8 to Sh125. The 800grammes bread is retailing at Sh65 up from Sh63 while the 400grammes bread is selling at Sh35 up from Sh33.
"We have no control over the increasing prices of wheat flour, fuel, baking oil and plastic bags," said Shem Nyangweso, the marketing assistant.
But bakers in Western Kenya said although the price of raw wheat had gone up, they would absorb the cost to safeguard sales in an area with many low incomes earners. Rajeev Kumar, the general manager of United Millers in Kisumu said they are selling the 800grammes bread at Sh27.
"The country has gone through tough times recently. There is no money; very soon there will be no food. We will not pass on the cost of raw materials to our customers. We intend to make our bread affordable," he said.
The price increase comes after the recent demonstrations in some parts of Africa over high food and fuel costs in recent months. Escalating food prices have sparked riots across the world in what is quickly becoming a global food crisis.
In Africa, violent protests against food price increases have hit Senegal, Burkina Faso, Cameroon, Mozambique and Somali in the last two months.
Surging food prices due to global supply concerns and heady world futures markets have posed a risk to poor economies, especially in Africa, where food accounts for a large part of household spending and imports.
In Kenya, wheat prices have continued to climb steadily. Local bakers said the price of wheat flour had more than doubled in the last 12 months. The bakers said increasing the price of bread was intended at cushioning them from the high cost of raw materials.
Wheat prices have risen from an average of Sh1,800 per 90kg in 2007, to Sh2,300 per 90kg bag - pushing up the cost of products.
Kenya, Uganda and Tanzania - all members of East African Community- levy wheat imports at different rates. While Uganda has a zero tariff, Tanzania and Kenya tax the imports at 10 and 35 per cent respectively. The rates were negotiated under the EAC Customs Management Act and will be in force until 2009.
Agriculture permanent secretary Romano Kiome recently said import duty on raw wheat will remain at 35 per cent to protect local small scale growers against possible flooding of the domestic market from neighbouring countries.
The increase in the price of basic foodstuffs such as bread is expected to fuel inflation further. The Kenya National Bureau of Statistics states in its May report that a sharp rise in the prices of food items pushed Kenya's inflation to 26.6 per cent last month, up from 21.8 per cent in March from 19.1 per cent in February.
Food and non-alcoholic drinks make up 50.5 per cent of the goods used to measure inflation. The bureau collects data every second and third week of the month from shops in 13 towns in the country. Its basket is intended to represent the spending behaviour of urban Kenyan households.
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