The government and manufacturers of cooking oils are headed for a major showdown over the high cost of the product despite lower prices on the international market.

Cabinet Secretary for Investment, Trade and Industry Moses Kuria has hit out at manufacturers for alleged fleecing of consumers with sky-high prices, saying he will break the cartels.

The CS discussed with Afrexim Bank in Cairo, Egypt, last week how Kenya National Trading Corporation (KNTC) could be supported to guarantee sufficient importation of key commodities including grains, edible oils and fertilisers.

The move is part of government efforts to reduce the cost of commodities and lower the cost of living. However, the move has rubbed manufacturers the wrong way.

Kenya Association of Manufacturers (KAM) in a communique to its members on Friday said it would push for talks with the government regarding the plan to revamp KNTC and give it an additional mandate. “From our perspective, this move will promote unfair competition,” it said in the statement which also questioned the government’s commitment to value addition.

Value addition

However, Kuria on his official Twitter handle said importing edible oil in containers and repackaging the same in 20-litre jerrycans does not meet the threshold of value addition and manufacturing.

 “Until such a time and when we will have a fully vertically integrated edible oils industry, the government will continue taking measures to protect consumers from powerful cartels that continue to fix high retail prices and raise the cost of living,” Kuria said.

“To these cartels and their hirelings, I have this to say, in the previous ministers you found your match. In me, you will meet your Waterloo. Don’t try me,” the CS was quoted as saying by a local television station. The government has said it will work with local farmers to support the local production of raw materials in order to build a local value chain for the edible oils industry.

Since the beginning of the pandemic, Kenya’s dependency on food imports has been fully exposed with the country relying too much on imported food at a time when exporters were moving to curtail exports. Tanzania and Uganda reduced their maize exports in favour of their local market even as Indonesia and Malaysia stopped palm oil exports.

This was compounded by a lack of wheat exports from Ukraine due to the invasion by Russia, wheat prices more than doubled and have stubbornly remained over Sh180 for the 2kg packet compared to Sh110 before. Manufacturers have challenged the government to reduce the cost of doing business such as lower import duty on palm oil imports which they said stands at 35 per cent to enable them to cut prices.

President William Ruto’s administration is facing criticisms for failing to reduce the cost of living nearly six months after taking office despite having campaigned on the promise.

Menengai Oil, Kapa Oil, Pwani Oil and Bidco are some of the biggest players in the industry with crude imports of up to Sh60 billion a year according to Treasury data.

The cost of imports has been on a decline in the last two months, heralding a period of lower inflation expectations, but manufacturers are yet to cut local prices.

The price of palm oil, maize, wheat and fertilisers is on a downward trend according to World Bank data. “Prices of palm oil, fertilizer-DAP, and wheat have declined with the easing of international supply chain disruptions,” CBK said in the background information for the MPC media briefing. Palm is used predominantly in Kenyan households and is a key cooking ingredient, and a fall in prices should be reflected in the quality of life of poor Kenyans.

For instance, the price of one tonne of palm oil dropped from Sh212,000($1,717) in May last year to Sh116,000($940). The conversion is based on an exchange rate of Sh124 for one dollar.

Local shop

The price of 20 litres of Fresh fri cooking oil at Naivas is still going for Sh5,000, nearly the same price it was the mid-last year. The prices of wheat dropped from Sh64,728($522) per tonne in the month of May last year to Sh47,876($386) in December last year. At the local shop, the cost of bread, which is a major ingredient of breakfast in most homes, rose to Sh60 a piece mid-last year and has not budged an inch since then.

Wheat is used in the making of bread which is a mainstay of Kenyans breakfast especially in urban areas. The cost of fertilizer has also dropped by 25 percent in the same period under review which translates into lower farm input costs.