Wheat Report

An Expert's View about Agriculture and Animal Husbandry in Kenya

Last updated: 29 Jul 2011

U.S. wheat exports to the Kenyan market reached 85,000 metric tons during marketing year (MY) 2011 (July 2010 to June 2011).

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 7/12/2011 GAIN Report Number: Kenya Post: Nairobi Kenya Wheat Report Report Categories: Grain and Feed Approved By: Souleymane Diaby Prepared By: Souleymane Diaby and Carol N. Kamau Report Highlights: U.S. wheat exports to the Kenyan market reached 85,000 metric tons during marketing year (MY) 2011 (July 2010 to June 2011). FAS/Nairobi forecasts record quantities of U.S. wheat imports for MY 2012 as the Government of Kenya (GOK) recently waived the 10 percent ad-valorem tariff to address increasing food and fuel prices. Executive Summary: On June 8, the GOK announced a continuation of its tariff-abatement policy on imported foodstuffs (corn, wheat, and rice). Under the new abatement, 18 Kenyan registered millers will be allowed to import wheat duty free for one year beginning on July 4, 2011. As a result, FAS/Nairobi expects that Kenya will import record quantities of wheat commercially through this marketing year. Subsequently, the MY 2012 import forecast has been revised upward, slightly more than the MY 2011 estimate. Despite the GOK?s efforts to eliminate the duty on imported wheat, Kenyan consumers continue to pay high prices for wheat flour and wheat-based products. Local retail prices of wheat flour increased 19 percent from January 2010 to January 2011 to $1.54 per 2 kilogram packet, and have continued to rise. General Information: Kenya Wheat Production, Supply, and Distribution Table Wheat Kenya 2009/2010 2010/2011 2011/2012 Market Year Begin: Jul Market Year Begin: Market Year Begin: 2009 Jul 2010 Jul 2011 USDA New USDA New USDA New Official Post Official Post Official Post Area Harvested 120 125 120 140 120 110 Beginning Stocks 201 201 609 334 529 275 Production 220 225 225 252 225 200 MY Imports 1,246 909 800 740 700 830 TY Imports 1,246 909 800 740 700 830 TY Imp. from 66 19 0 85 0 100 U.S. Total Supply 1,667 1,335 1,634 1,326 1,454 1,305 MY Exports 8 1 5 1 0 1 TY Exports 8 1 5 1 0 1 Feed and 0 0 0 0 0 0 Residual FSI Consumption 1,050 1,000 1,100 1,050 1,150 1,050 Total 1,050 1,000 1,100 1,050 1,150 1,050 Consumption Ending Stocks 609 334 529 275 304 254 Total Distribution 1,667 1,335 1,634 1,326 1,454 1,305 1000 HA, 1000 MT, MT/HA Data sources: 2010 and 2011 Area and Production data-Ministry of Agriculture 2010 and 2011 Trade Data ? Global Trade Atlas 2012 Area, Production, Trade data ?FAS Nairobi Estimates Production: FAS/Nairobi forecasts a decrease in production and area harvested in MY 2012 attributed to delayed onset of the long rains, switch to barley farming by some of the wheat farmers, and the wheat rust (Ug99) problem. Consumption: Measured in dietary energy consumption, wheat ranks second behind corn as a staple food. According to the Food Agricultural Organization (FAO, 2009), Kenyans obtain 183 kilocalories from wheat per day, compared with a regional average of 78. They mainly use wheat flour to make pan breads, chapatis, and for home-use baking. The graph below shows dietary energy consumption within East Africa, including wheat. Trade: Kenya will be increasingly dependent on imports for the next few years to meet growing local demand. Kenyan wheat importers source most of their products from the Black Sea region, Canada, and the United States. During the first nine months of MY2011, Kenya imported about 640,000 metric tons, with the United States supplying 13 percent of the total. The graph and table here below shows Kenya?s wheat import volumes and sources of the imports. Data Source: USDA/FAS Kenya Wheat Trade Matrix UDG: Wheat, Group 60 (2007) Year Ending: June P Quantity (Metric Tons) artner Country 2008 2009 2010 July 2010 to March 2011 World 528,704 564,210 909,326 639,772 Ukraine 115,056 155,767 535,672 173,831 Russia 129,194 193,789 228,111 119,971 Germany 0 23,090 33,039 15,760 Australia 0 12,300 28,500 4,379 United States 24,175 31,779 18,828 83,868 Canada 10,750 15,500 17,375 23,000 Lithuania 0 0 12,000 2,203 Poland 0 29,220 10,999 0 Estonia 0 0 6,500 18,496 Argentina 211,500 81,509 0 33,497 Brazil 0 17,250 0 61,512 India 0 0 0 7,121 Pakistan 0 0 0 27,500 Paraguay 0 0 0 29,088 Uruguay 0 0 0 38,441 Others 38,029 4,006 18,302 5 Data Source: Global Trade Atlas (GTA) Stocks: Due to storage constraints as well as carrying costs incurred such as fumigation, security, etc., most flour millers hold stocks that can sustain the mill for one to two months. Traders and some wheat farmers hold the rest of the stocks. Most of the mills operate at an average daily milling capacity of 90 to 550 metric tons. Policy: The GOK?s tariff-remission scheme favors registered millers; traders continue to pay 35 percent ad- valorem tariff on wheat. In addition, imported wheat is subject to port surcharges (equal to about 16 percent of the Cost, Insurance, and Freight (CIF) value). A 16 percent value added tax is applicable to imported wheat flour. Marketing: U.S. Wheat Associates has remained active in Kenya, providing training opportunities and trade servicing for the Kenyan (and east African region) wheat-milling industry.
Posted: 28 July 2011, last updated 29 July 2011

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