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Rising cooking oil prices provide lucrative opportunity for value-added sunflowers

According to the Agriculture and Food Authority (AFA), Kenya imported over 90 per cent of its total edible oil requirements– 734,759 metric tons (MT) worth Sh120.69 billion in 2022. 

This overreliance on imports leaves the country exposed to high prices at the retail level; in just four years, the price of a liter of cooking oil has risen 70 per cent to Sh340. 

According to a statement made by the Kenya Association of Manufacturers (KAM) Chairman Rajan Shah last year, the increased cost of edible oils has been largely driven by external and some internal factors (over-taxation) that make the cost of producing finished edible oils in the country extremely high. 

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Going forward Kenya is likely to be affected by strained palm oil supply from the world’s two largest producers, Indonesia and Malaysia, and where the country sources 95 per cent of its imports. The global supply chain has also been scuttled by the ongoing Russia – Ukraine conflict and Red Sea crisis which has disrupted trading and hiked freight rates on the main maritime route for Kenya’s oil.

As part of its ambitious five-year Edible Oils Project, President William Ruto is looking to entirely do away with the country’s high edible oil import bill.

“We are focusing on forging partnerships with county governments. Last year, we provided sunflower seeds because edible oil is one of the big tickets that is consuming our foreign exchange and we plan to reduce the purchase of edible oil where we spend close to a billion dollars every year by 50 per cent in the next three years and five years eliminate importation of edible oil into Kenya.

We believe that sunflower, granola, soya, and palm oil, once rolled out fully, will give us the requisite amount to reduce and eliminate eventual importation into Kenya,” said the president on Monday (4th, March 2024) during the signing of the Sh46 billion County Government Additional Allocation Bill at State House, Nairobi.

As a first step, the Ministry of Agriculture distributed 70,000 metric tonnes of free sunflower seedlings in 24 counties worth Sh980 million to farmers in October of last year.

The initiative is looking to increase sunflower acreage to 200,000 acres from the current 4,000 acres by the end of 2024.

To this, AFA’s Nuts and Oil Crops Directorate noted that the country could cultivate and locally process most oil seeds such as sunflower, groundnuts, soya beans, simsim, castor rapeseed, and coconut.

Previously farmers had been unmotivated to grow sunflowers because of low offtake prices and cheap importation of crude oil. The rising cooking oil costs have however provided a rife opportunity for savvy farmers to bank on.

AFA highlighted sunflower farming as having the lowest bar of entry for cottage-level oil production.

The National Irrigation Authority (NIA), estimates sunflower production cost per 1.5 acres at Sh22,200 with an assured yield of at least 1,200 kilogrammes. 

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The crop takes just three to four months to mature. This means that depending on the variety, growing conditions, and agronomic practices, two to four harvests of the crop a year are feasible.

Through value addition, one acre of sunflowers can earn more than Sh200,000 per harvest. 

Per global market researcher, Fortune Business Insights, the global sunflower oil market is estimated to grow at a rate of 6.12 per cent annually between 2021 and 2028 to reach $29.59 billion from $19.53 billion.

Kenya Investment Authority (KenInvest), estimates the country’s edible oils market generated Sh76.2 billion in revenue in 2023. This is expected to nearly double by 2028, to reach Sh144.8 billion.

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