The edible oil manufacturing sub-sector of the Kenya Association of Manufacturers, last week (3 July) released a statement urging government support for its continued growth. Through a new initiative dubbed ‘the Agriculture for Industry (A4I) Initiative’ the sector called for a collaboration with national and county governments in the identification of suitable zones for sunflower and palm fruit cultivation.

In particular, members of the sector made reference to the two percent Nut and Oil Crop Development (NOCD) levy already being contributed by the sector to the Agriculture and Food Authority (AFA) that can be used to develop palm, soya and sunflower farming as was initially envisioned. They noted that although it would take about seven to eight years before the first fruit crop is harvested, the government would be supporting backward integration and the cultivation of oil palm in Kenya and the land allocation for industry players would enable them to invest, develop infrastructure and create jobs through the public-private partnerships framework.

Currently, the sector is involved in converting Crude Palm Oil (CPO), Crude Sunflower Seed Oil, Crude Soybean Oil, and Crude Corn Oil into highly value-added products, such as edible cooking oil, vegetable fat, and margarine. These products are then used in the production of other edible goods feeding into the confectionary and baked goods sectors. The industry provides employment for over 10,000 individuals directly and supports another 100,000 jobs in its broader value chain and an additional 32,000 jobs in related sectors. In 2022, the sector paid over KES 40 billion to the Kenya Revenue Authority (KRA) and the AFA in direct taxes, along with other costs, which account for approximately 22 percent of the cost price of cooking oil.

Comprising 13 local companies with a combined processing capacity of over two million metric tonnes (MT) per year, the industry surpasses the current market demand of 800,000 MT. Over the past five years, the sector has witnessed remarkable growth, with more than 25 percent of the current investments made during this period, highlighting its commitment to local economic development.

The initiative comes as a result of price trends in the local market that are closely tied to global market forces and foreign exchange rates, specifically the prices of CPO. As these prices decrease from their peak levels in recent years, end consumers can expect falling prices, driven by intense competition and international market dynamics.

The sector noted several government efforts to ensure a level playing field such as the stay of application of the tariff on ready-made refined imported oils from outside EAC and COMESA at 25% or USD 500 / MT whichever is higher in the EAC CET but requested the government to retain this at 35% as this is a finished good category. This would safeguard the interests of all stakeholders and the general public.