Kenyan consumers are grappling with skyrocketing prices of essential food inputs such as fertiliser and cooking oil, driven in large part by uncompetitive market practices and excessive profit margins imposed by dominant traders.  

The revelation comes from a sweeping investigation by the Common Market for Eastern and Southern Africa (COMESA) Competition Commission (CCC), which has sounded the alarm on dysfunctional agricultural markets across Eastern and Southern Africa. 

The Commission’s latest research, which scrutinised pricing dynamics in Kenya and neighbouring states, shows that fertiliser prices in the country remain inflated far above international benchmarks—even as global costs decline.  

“Freight and logistics are not the cause of high fertiliser prices in the region,” the report states.

Instead, “excessive margins by traders” have kept prices artificially high, with final consumer prices reaching over $1,000 per tonne in Kenya, compared to fair prices around $600. 

For instance, the report highlights that the import prices of Urea, which is primarily used to provide plants with a readily available source of nitrogen, a key macronutrient for growth and development, are $330 a tonne.  

After transport, warehousing, bagging, insurance, etc and a profit margin of 20 per cent for dealers, final prices should not exceed $600. However, farmers get it at $824 a tonne. 

As a result, Nairobi and Dar es Salaam have the highest maize prices in the entire Comesa region of 21 countries, making life hard for average consumers.

Currently, two two-kilogram packets of maize flour are going for over Sh160. 

Kiambu-based fertiliser suppliers Ocean Agriculture, however, claim that the market is very competitive and dealers cannot add higher margins.

“Prices are high, especially for smallholder farmers. It is mostly because of high handling costs and high raw material costs. Farmers prefer imported ones because locally made fertilisers do not provide documentation on the process of manufacture and ingredients,” says Lydia Kale, Import manager at Ocean Agriculture. 

This price distortion, the study warns, undermines government subsidies meant to cushion small-scale farmers.

“Government subsidisation programmes are rendered ineffective,” the report found, pointing to a 53 per cent markup over fair prices in Nairobi alone. 

Vegetable oil markets paint a similar picture. Despite relatively low input and processing costs, Kenyan consumers pay up to $3 per litre of cooking oil, more than double what cost structures would suggest is reasonable.

The CCC’s analysis shows the gap between raw input costs and retail prices is stark, especially given that “vegetable oil is largely imported crude oil refined locally.” 

High food prices 

“These markets are not working well,” said Willard Mwemba, Director and CEO of the CCC, during the presentation of the findings.

“Farmers are becoming poorer while merchants grow richer. The poor suffer the most from high food prices.”

Kenya’s market for agricultural inputs and outputs is characterised by limited competition, inadequate market data, and a high concentration of power among a few dominant players, the Commission found.  

A concerning phenomenon dubbed “Rocket & Feather” pricing—where prices shoot up rapidly but fall very slowly—was observed in Kenya’s fertiliser and vegetable oil markets, to the detriment of end-users.

A spot check by Business Hub, for instance, revealed that fertiliser varieties like DAP, Urea and NPK go for Sh1,500, Sh4,500 and Sh1,600 per 50kg bag, respectively.