State eyes edible oils to cut import costs and save forex
By John Otini, February 16, 2023Kenya has set its sights on boosting domestic production of edible oils in order to reduce the country’s heavy reliance on imports and save on foreign exchange.
According to the Budget Policy Statement released yesterday, edible oils, primarily palm oil, are the second largest import item after petroleum, with the country spending about Sh60 billion a year before the recent price surge, which pushed the import bill to over Sh90 billion.
Crop production
In a bid to address this situation and turn around the country’s economy, the government said it is targeting an increase in domestic oil crop production from 5 per cent to 25 per cent. “As part of its economic turnaround plan, the government targets to increase domestic oil crops production,” Treasury said, noting that move will also spur employment.
Last year, palm oil prices surged even as exporting countries cut their exports to protect their local consumptions further pushing up prices in Kenya and causing shortages. This was compounded by shortages in wheat and crude oil resulting in a crisis.
To achieve this goal, the government will be taking several steps to support the development of oil cottage industries, as well as providing critical infrastructure such as Common Manufacturing Facilities (CMFs) and processing machinery for small industries.
Additionally, existing processing capacity will be expanded to ensure that local industries can meet the needs of the domestic market.
“The government will attract investment to support oil cottage industries; provision of CMFs and processing machinery for small industries,” read the BPS.
Economic growth
The move towards increased domestic production of edible oils is expected to have significant benefits for the country. Not only will it reduce the country’s dependence on costly imports, but it will also boost local agriculture and stimulate economic growth.
With increased investment targeting the sector, the government hopes to create new opportunities for farmers and entrepreneurs, who will be able to take advantage of the increased demand for domestic production of edible oils.
One of the key priorities for the government will be to attract investment to support thea growth of the sector. This will be achieved by creating a favourable environment for investment in the industry, providing incentives for businesses to invest in the production of edible oils, and encouraging the development of local processing facilities.
By reducing its reliance on costly imports and investing in the development of the local industry, Kenya will be able to create new opportunities for farmers and entrepreneurs, while also providing greater food security for its citizens.
With the right support and investment, the country’s edible oil sector could play a significant role in driving economic growth and transforming the country’s fortunes.
Kenya imports a lot of vegetable oils, including soybean, corn, and the widely used crude palm oil, primarily from Malaysia and Indonesia, which together account for more than 90 per cent of the world’s supply. Cooking oil is also bought in bulk for industrial use in the making of detergents and foodstuffs such as bread.
The shortage of cooking oil, and other food products such as maize, and wheat has again brought to the fore Kenyans’ chronic food shortage and over-dependency on imported food despite a galore of locally grown alternatives such as potatoes, and sorghum among others.