27 November 2009

Nairobi — The country will take over two months to plug the wheat deficit created after two vessels with 75,000 tonnes were hijacked by pirates early this month, millers said on Friday.

Negotiations for the release of the vessels is going on between the ship owners and pirates but the sum they are asking is "colossal", said Cereal Millers Association spokesman Munir Thabit.

MV AL Khaleeg and MV Delvina were hijacked in late October and early November respectively each carrying 35,000 tonnes of wheat for local and Uganda millers.

"It is expected the figure will go down but this will take three to four months based on the previous pattern," Mr Munir, also the financial director at Mombasa Maize Millers said, without disclosing the figure for fear of compromising the ongoing negotiations.

Two more wheat vessels arrived at the port this week with about 75,000 tonnes, which is a major relief for millers who were afraid of closing down their plants, Munir said. Fountain v and Go Star brought in 38,000 and 37,300 tonnes of wheat respectively.

"The new arrivals are a relief but since the wheat being held is part of the planned arrivals, it will take us some time before we resume normal operations as it takes over two months to order and bring fresh grains in the country," Munir added.

The cost of insurance has also gone up by huge margins. Pirates have become sophisticated lately and are able to attack vessels at a wider range and as far away as Seychelles. Therefore, the use of the longer Cape of Good Hope route in South Africa is no longer effective.

The failed arrivals affected wheat flour production by 30 percent according to the affected millers.

To avoid plunging the country into a food crisis due to piracy, millers have proposed the establishment of buffer stocks near the port with a consortium of investors having already presented their proposal to the government according to Mr Munir.

This will allow the vessels to offload the grains directly to the silos for storage purposes at a lower cost.

The proposal is expected to spark an already raging and unresolved controversy between Grain Bulk Handlers Limited who enjoy a grain handling monopoly and the new investors who will be seeking a leeway from Kenya Ports Authority to construct a conveyor belt from the port.

Although GBHL has storage silos with a capacity to handle 135,000 tonnes of grains, it cannot be used for long term storage since it operates as a discharge terminal for many users.

Millers, according to Munir, are lobbying for the need to create a buffer stock to last the country for at least three to four months.

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