Kenya: Cooking oil prices triple as palm costs rise 33%

Prices of crude palm oil have jumped by 33% due to the Ukrainian crisis, as sector players initiate efforts to urge the government to contain a further rise in cooking oils.

Manufacturers of cooking oil are now buying palm oil, the main raw material at between $1760 (Sh200,534) per metric tonne and $1980 (Sh225,522) after the escalation of Ukraine-Russia conflicts last month.

Before the conflict, the commodity retailed at $1490 (Sh168,578) per tonne, having more than doubled from $700 per tonne before the onset of the pandemic in March 2020.

The price jump driven by the pandemic was attributed to export restrictions by Indonesia.

“Locally, Covid-related factors had already caused a jump in the price of a 20-litre Jerrycan from Sh2,200 to Sh4,500 in under two years. After the invasion, the price shot up to Sh5,100 in under a week,” said edible oils subsector chairman, Abdulghani Alwojih.

“This rise is set to have an upward ripple effect in the prices of basic commodities and food businesses.”

Now it costs twice as much to buy a litre of cooking oil compared to petrol, and a fresh round of increases will hurt consumers.

Firms say the price rise led to a surge in demand for solid fat which is cheaper than liquid oils.

They are calling for the scrapping of the 3% railway development levy (RDL) and import declaration fee (IDF), to cushion consumers from further strain in their budgets and prevent a rise in repackaged food such as bread and food at eateries.

“To cushion Kenyans from the full brunt of the price hike, sector players have agreed and taken a raft of urgent measures, including selling at cost,” added Mr. Alwojih.

“There is still much that can be done especially from the government, for instance, by scrapping the 3% RDL and IDF; review the cost of fuel and electricity among other possible interventions.”

Kenya is a large importer of vegetable oils such as sunflower oils, soybean, corn oil and commonly used crude palm oil mainly from Malaysia and Indonesia, which produce more than 90% of global supplies.

Cooking oil is also bought in bulk for industrial use in the making of detergents and food stuffs such as bread.

Weak production over the last six months in Malaysia due to labour shortages coupled with flooding has seen Kenya depend on the Indonesia’s palm oil.

Soybean oil supplies have been affected by the two-year drought in Argentina and Brazil due to La Nina.

Ukraine, which accounts for 76% of global sunflower oil exports has cut its supplies.

The disruption of alternative oil supplies – sunflower and soybean oil has fuelled a rally on palm oil form Indonesia.

As result, Indonesia is enforcing a 20% retention of all planned oil exports to be sold in the domestic markets to control their prices, affecting import volumes to Kenya.