Nairobi / KE. (aa) The Bakers Association of Kenya is crying foul over the increase of excise duty on imported wheat, AllAfrica reports. Over 20 bread manufacturing companies have urged the Finance minister to either reduce or abolish the 35 percent excise duty levied on the imported hard wheat used to bake bread.
The association´s chairman Bimal Shah of Broadway´s bakeries in Thika and Secretary Sailen Lamji of Mafuko Industries in Meru say the duty is hurting the baking industry. «Some bakers have cut their operating capacity by 30 percent after flour prices rose following the implementation of duty levied on imported wheat», Lamji explains.
He says the new duty would lead to closure of some bakeries. The bakers warned that close to 20.000 workers are likely to lose their jobs if some bakeries close down. «We have already started the process of laying off some of our workers. About 50 are likely to go home», says Lamji.
The bakers also noted that the cost of other raw materials including sugar and fat had gone up, forcing the recent increase of bread prices by two KES. They have also petitioned the Kenya Association of Manufacturers to intervene and have excise duty levied on other materials like polythene wrappers, sugar, fat, and yeast should be exempted from tax. «The operation costs have increased, but consumption of bread has drastically reduced due to increased prices», explain the bakers.
They noted that the woes facing the industry had been worsened by a 50 percent price increase of baking flour in the international market due to rising demand, leading to shortage of the commodity. Most of local millers import wheat from Australia, Canada, United States and Argentina, which is then mixed with the locally produced wheat to produce flour for baking.
The bakers further warned bread retailers against taking advantage of the situation to arbitrarily increase the prices of bread. They say the recommended price for 400 gram bread is 26 KES, noting that some unscrupulous retailers had increased the price to 30 KES (Source).