The Chairman of the edible oil Sub-sector of Kenya Association of Manufacturers (KAM), Mr. Abdulghani Alwojih, who is also the General Manager of Golden Africa Kenya Limited, one of the leading edible oil refineries in the region, clarified a number of major challenges responsible for the hike.
The COVID pandemic greatly affected the two greatest producers of Crude Palm Oil Globally; Indonesia and Malaysia, which had to lockdown the country crippling harvesting and milling activities. This caused a fall in the supply amidst steady demand resulting in an inevitable price hike.
The sustained high cost of Fuel was also sighted, as raw material especially Crude Palm Oil, is transported by tankers from Mombasa terminal storages to the refineries in the inland. This increases the cost of transport and hence cost of Production.
This high fuel cost has also driven up the cost of electricity, with obvious expected high cost of production.
The forex condition in the country especially against the dollar has greatly increased the cost of importing raw material. The dollar now selling at 115 ksh. from 103 six months ago- slightly over 10% increase
The increased demand for cargo containers due to lockdowns cutting the cycle of containers in and out of countries, this has greatly increased the cost of freight.
Working within COVID protocols has also increased the cost of doing business in provision of sanitizers, masks, and increased transport resources due to social distancing.
Multiple taxations from the government have also increased e.g. The introduction of a 10% duty on plastic containers; The ministry of Agriculture is also to enforcing a 2% levy on all crude Palm oil (and other crop nuts), County and National government taxations on the same aspects.
The manufacturers have taken an empathetic approach to not pass the full effect of these compounded factors to the consumers understanding the hard-economic times and hence reduction in purchase power of Kenyans. This is also in a bid to keep employment for the people depending on the sector.
He says the private sector seeks government support help cushion Kenyans further from the effects of the global economic downturn.