Government assurance as war pushes up wheat prices

Dar es Salaam. With the ongoing war between Russia and Ukraine having adverse effects on global wheat supplies, the government says it is taking measures to address any price surges, or shortages that may result from the conflict.

The Minister for Agriculture, Mr Hussein Bashe (pictured), said although the country currently has sufficient supplies, the government has been holding meetings with individual importers to discuss price movements in the market.

The Citizen has learnt that in addition to meeting with importers, the government also plans to involve producers and farmers.

“Among the things we have agreed upon is that they should continue to set fair prices. As we continue to monitor global prices, we don’t expect them to inflate prices locally,” Mr Bashe said.

Data from the National Bureau of Statistics (NBS) shows that Tanzania’s annual domestic wheat consumption is estimated at more than 1 million tonnes per year, while total annual production stands at around 93,184 tonnes. This means that Tanzania imports about 90 percent of the wheat it consumes.

“We import an average of 800,000 tonnes annually, and while some is used locally, some is processed and exported to neighbouring countries,” Mr Bashe said.

He added that Russia and Ukraine – along with the United States and Canada – were Tanzania’s major sources of wheat.

“As a country, we have also initiated efforts to increase wheat production locally in partnership with the private sector. For instance, we have already distributed over 200 tonnes of quality seeds to farmers in the northern regions,” he said.

Apart from ensuring the availability of improved seeds, the minister said the government also plans to propose a memorandum of understanding (MoU) with importers that would ensure they fully supported the initiative to boost local production.

“We want them to agree to buy all locally produced wheat, and only import to bridge any deficit because when farmers are assured of a reliable market and stable prices for their produce it stimulates production,” he said.

What importers say

Bakhresa Group corporate affairs director Hussein Sufian told The Citizen yesterday that the war in Ukraine was driving up wheat prices, and threatening to increase the cost of living.

This paper learnt that wheat prices have almost doubled from 2020 levels to more than $480 per tonne, with the additional cost being passed on to the consumer.

Trade through the Black Sea has been suspended as a result of the war in Ukraine, pushing up grain prices.

As a double whammy, continuing sanctions on Russia have already paralysed international commercial transactions with that country, including those involving wheat.

Increase in transport costs as result of higher oil prices are making the situation even more complicated.

“The war has made the situation worse. Wheat prices have been skyrocketing since 2020, triggered by the Covid-19 pandemic that caused global supply challenges,” noted Mr Sufian.

Higher wheat prices means higher prices of wheat products, including wheat flour, bread, buns (maandazi), chapatis, scones, cakes, pasta, and biscuits.

“Prices of wheat flour have started to increase, though slightly,” said Mr Sufian.

Following the outbreak of the Russia-Ukraine war, Tanzania now purchases wheat from the US, Canada, Argentina, Germany and Australia as alternative sources.

However, factoring in the distance and transportation costs aspect, Mr Sufian said it was costlier to purchase wheat from, say, the US and Australia than Russia and Ukraine.

Speaking on condition of anonymity, a member of the Tanzania Grain Millers Association (Tangrama) said the conflict had put them in a precarious situation.

As part of remedial measures, he asked the government to review import duty on wheat.

“We request for stay of application of CET (common external tariffs) rate on wheat grain to zero