Kenya. Wheat Annual. Mar 2015 April 17, 2015

FAS/Nairobi forecasts a modest increase in wheat production in Kenya the MY 2014/2015. Recycling of seeds by farmers, high prevalence of the wheat stem rust (Ug99) and erratic weather are the major contributors to low yields.

Wheat: Production, Supply and Distribution (PSD) Table

Sources of data: GOK – GTA – otherwise FAS/Nairobi Estimates

Notes on PSD Table:

• Wheat production in MY 2013/2014 and 2014/2015 was significantly affected by drought conditions and increased incidence of wheat stem rust.
• Consumption in MY 2013/2014 and 2014/2015 would have been higher were it not for a decrease in demand for high grade wheat products due to the security related depression in the tourism sector.

Overall wheat consumption in Kenya is expected to continue increasing due to demand growth in the various wheat based products categories mainly bread, pasta, biscuits and breakfast cereals. Urbanization, increased incomes, and a robust food service sector have fueled the demand growth. A limited amount of wheat is also used as a raw material for feed manufacturing.

Currently there are about 150 registered bakeries operating in Kenya. Considerable home-baking, both for household production and sale, also takes place. In addition, all the leading supermarkets chains are opening baking units within their stores and consumers are increasingly opting for the freshly baked bread and related products. According to Euromonitor, Kenya's consumption of baked products is expected to increase at a constant Compound Annual Growth Rate (CAGR) of 5 percent in the next five years.

The breakfast cereals and the biscuits categories have also grown driven mainly by demand by the expanding middle class. Although there are substantial imports in this category, local manufacturers have expanded their product portfolio contributing to overall wheat demand.

Domestic wheat production meets less than a third of the wheat demand creating the need for importation. The bulk of the wheat imports are from the Black Sea region (Russia, Ukraine and Kazakhstan), Pakistan, Brazil, Argentina, and Australia. Imports from the US are mainly for the Food Aid Programs. Competitive pricing and cost of transportation are a major consideration in wheat import decisions. Post forecasts an increase in wheat imports in the MY 2015/2016. Imports into Kenya by registered millers are charged a 10 percent ad-valorem tariff; otherwise imports face the EAC external tariff of 35 percent