Millers are not getting clearance forms for wheat imports as the Kenya Revenue Authority (KRA) takes decisive action to enforce a ban on imports as recently directed by President William Ruto.
This move may have significant financial implications, with potential repercussions for consumers in the country that relies on imports for up to a third of local wheat requirements.
Business Day Africa has learned that KRA has ceased the issuance of the C60 form—a crucial document employed by the Treasury for the expeditious clearance of imported raw materials under the duty remission scheme.
This unfolding scenario transpires in the backdrop of millers grappling with a severe wheat shortage owing to the limited availability of locally sourced grain.
President Ruto’s unexpected pronouncement last month, imposing an immediate ban on all foreign wheat imports, has left millers in a state of disarray.
President Ruto’s rationale for this decision was to safeguard the interests of local farmers against the encroachment of cheaper foreign imports.
Nevertheless, millers find themselves in a precarious position, with some already depleted of stock and those still possessing reserves finding them insufficient to endure the upcoming December festivities.
Bimal Shah, Chief Executive Officer of Broadways Limited, voiced concerns regarding the impending price surge in wheat products.
“Some mills have stocks, some don’t. Prices of wheat products will shoot up in the coming days,” said Mr Shah.
Shah’s estimations reveal that the available local wheat supply stands at a mere 5,000 tonnes, a far cry from the 30,000 tonnes required between now and December.
Millers contend that they have already acquired their local quotas, in some cases even doubling their allocations. This underscores their position that there is no justifiable reason for the government to curtail their wheat imports.
Processors currently grapple with higher costs associated with local wheat, exacerbated by an additional Ksh200 per bag for transportation from Narok to Nairobi, thus pushing the price per bag to Ksh5,400.
On the international stage, a tonne of wheat commands a price of Ksh39,000, indicating that a 90-kilo bag costs Ksh3,545 upon landing in Mombasa.
In the context of the local wheat purchase program established by the Ministry of Agriculture, millers are mandated to disburse Ksh5,200 per bag in the ongoing season.
The government allocates quotas to millers based on their milling capacity, and only upon exhausting these allocations are they eligible to receive import permits.
It is worth noting that Kenya consistently operates as a wheat-deficient nation, reliant on imports to satisfy domestic requirements.
Millers and traders collectively contribute up to 70 percent of the total demand, making this situation an integral aspect of Kenya’s financial landscape, with ramifications that extend well beyond the wheat industry.
gandae@businessdayafrica.org