Low Shilling Performance Pushes up Feed Miller Production cost
The Kenya Shilling weakening is pushing up the cost of production for animal feeds as on Wednesday, the US dollar traded at Sh115.80 compared to ShSh115.74 the previous week which has affected millers’ work, and the secretary-general soon not afford key ingredients.
Martin Kinoti, secretary-general Association of Kenya Feed Manufacturers (AKEFEMA) says countries within the region including Uganda, Zambia, and Malawi are now quoting prices of commodities by the dollar, rejecting the Kenyan shilling.
Kinoti says they are importing vitamins to manufacture animal feed which are now being sold by the dollar or Euro. The shilling value depreciating has made the landed cost increase, yet we cannot pass the increase to farmers.
The Central Bank of Kenya has downplayed the currency depreciation, saying the shilling remained stable against major international and regional currencies which apparently is detrimental to the business in Kenya.
Meanwhile, the shilling has depreciated highly in percentage since last year and by 2.1 percent since January.
Zachary Munyambu, the coordinator of Kiambu Poultry and Pig Feed Millers said the high cost caused by the shilling depreciation has affected production so much that the mill is on the verge of closing down.
The mill is said to produce 300, 70kg bags of chicken feed daily and is losing customers due to the high cost of feeds which has gone up by an average of Sh400 in a span of one month.
“The cost of producing a bag of layers’ mash was Sh650 months ago, now the price has risen to Sh1,000 per bag. This is just the investment cost of one bag, imagine producing 1,000 bags daily,” Munyambu said, adding that most millers have opted to downsize production.
Wonder Feeds Limited which produces 80 tonnes of animal feeds that include layers’ mash, growers mash, broiler finisher, economy dairy meal, and early calf weaner said production cost has increased by an average of Sh300 weekly per bag over the past months.
Jane Wairimu, accounts officer at Wonder Feeds told the Star that the miller is now opting for countries with cheaper raw materials to evade cut on production cost.
Jubilee Feeds, a major animal feed manufacturer said it has equally been affected by the rising cost of production in recent months.
Since the maize price has shot to Sh4,200 per 90 kg bag from less than Sh3,000 in the same period last year.
All these delays are aligned with publishing changes to genetically modified organisms (GMO) rules governing the importation of yellow maize in the Kenya Gazette are hampering the importation of the produce by millers.
As the government announced last month that it had lowered the requirement on the purity of yellow maize to be imported by processors to 99.1 percent from 100 percent, meaning that imports would be allowed to have traces of GMO.
However, the notice has not been published nor other measures taken to resolve the crisis in the sub-sector for almost a year.
Several millers have avoided importing the produce under the current total GMO ban for fear that the shipments will be confiscated which would be a totally huge loss for them.
Kinoti added that feed millers remain hopeful that the government will publish the rules this week to allow the millers to source the raw materials readily available in the global market.
He said millers are currently at the mercy of Rift-Valley farmers who are holding on to their maize anticipating the price of a bag to cost Sh5,000 in the next few months as the hunger and starvation keep teasing at wreaking havoc.
Kinoti noted solemnly that this is a hopeless situation but he hopes the government will act by this week.