Kenyans to Pay More for Imported Food Products due to Israel-Iran Conflict

By Harrison Kivisu

Email, thecoastnewspaper@gmail.com

Kenya’s foodstuff imports are set to go up over the escalating conflict between Israel and Iran due to expected freight costs at the Port of Mombasa in weeks to come.

According to the Shippers Council of East Africa disruptions of shipping routes could lead to increased costs for imports especially foodstuffs such as rice and maize.

“Any disruption in the Strait of Hormuz could have a severe effect on Kenya, which relies heavily on oil imports from the Gulf,” said Agayo Ogambi, chief executive officer of the Shippers Council of Eastern Africa.

Higher production costs in Kenya can make local food products more expensive. Factors like fertilizer and input costs, transport constraints, and climate change can contribute to these increased costs.

Some specific imported food products that may be affected include wheat, rice, and maize, with Kenya importing $670.9 million worth of wheat and $392.4 million worth of rice in 2023 and palm oil at $838.9 million worth in the same year.

About 20 million barrels of oil flow through the Strait of Hormuz daily (US Energy Information Administration) Ogayo hints that there’s a 15% increase in bunker prices in the last two weeks

The conflict is expected to lead to a shift in shipping routes, resulting in additional costs that will be passed on to consumers.

“Kenya’s heavy reliance on imports at Mombasa port makes it particularly vulnerable to disruptions in global shipping. This may translate to consumers digging deeper to their pockets to finance cost of living,” he added.

The country’s imports include not only food products but also fertilizer, which is essential for the agricultural sector.

With freight costs expected to rise, Kenyan consumers and businesses may face significant challenges in the coming weeks.

The shipping industry is bracing for potential disruptions and increased costs.

“Very tough times ahead,” the CEO warned.

As the situation continues to unfold, Kenyan consumers and businesses will need to prepare for potential price increases and disruptions to imports.

Kenyans may face higher costs for imported food products due to several factors, among them being market fluctuation.

Statistics indicate that staple food prices in sub-Saharan Africa have surged by an average of 23.9% in 2020-22, partly due to global factors and the region’s heavy reliance on food imports.

Kenya’s dependence on imported food products like wheat, palm oil, and rice makes it vulnerable to fluctuations in global prices. A one percent increase in net import dependence can lead to a 0.2% increase in local prices.

Depreciation of the Kenyan shilling against the US dollar can increase import costs. A one percent depreciation in real effective exchange rates can lead to a 0.3% increase in prices of highly imported staples.

Natural disasters, wars, or trade wars can disrupt global supply chains, leading to price increases.

For instance, the Israel-Iran conflict may impact shipping routes and costs.

Imposition of tariffs on imported goods can increase costs. Tariffs are used to protect local industries, generate revenue, and negotiate trade agreements.