Edible oils, commonly referred to as animal or vegetable fats and oils are fatty liquids extracted from vegetables and or animal tissues. While palm oil is the most common edible oil, other edible oil products include Sunflower oil, Rapeseed (Canola) oil, Soya bean oil, Olive oil, Castor oil, copra and Coconut oil. The edible oils manufactured in Kenya include sunflower oil, corn oil, soya bean and palm oil.
The Kenya’s edible oil sector is poised for an era of remarkable growth, driven by a surge in domestic demand and favorable global trends. With a projected population of 58.9 million by 2025 and a burgeoning middle class, the demand for edible oils in Kenya, particularly in processed foods, is skyrocketing. This presents a golden opportunity for Kenyan edible oil exporters and farmers to expand their businesses, innovate, and tap into a lucrative market.
Kenya's edible oil consumption is estimated to surpass 900,000 MT annually, with only 80,000 MT produced domestically. This vast production deficit, amounting to 820,000 MT, is primarily bridged through imports, mainly from Malaysia and Indonesia. This heavy reliance on imports presents a significant opportunity for Kenyan exporters and farmers to step up production and meet the growing domestic demand.
The global appetite for vegetable oils is on the rise, fueled by factors such as population growth, increasing incomes, and urbanization. This trend is further amplified by the upswing in biofuel production and the impacts of climate change. Kenyan exporters can capitalize on these global trends by diversifying their export markets and exploring opportunities in biofuel production.
Kenyan edible oil exporters can further enhance their competitiveness by embracing innovation and value addition. Exploring new product offerings, such as healthier oils and specialty oils, can cater for the evolving preferences of health-conscious consumers. Additionally, establishing robust relationships with local farmers can ensure a consistent supply of high-quality raw materials, reducing reliance on imports and strengthening the local value chain.
To fully harness the opportunities in Kenya's edible oil sector, exporters and farmers must collaborate effectively and strategically position themselves for success. Exporters can play a pivotal role in supporting farmers by providing access to affordable inputs, technical expertise, and market linkages. Farmers, in turn, can contribute to the sector's growth by adopting sustainable farming practices, improving crop yields, and diversifying their oilseed production.
The Kenyan government has been actively supporting the growth of the edible oil sector through various policies and initiatives. Notably, the government has allocated significant funds and launched projects to promote local production of edible oil seeds, aiming to reduce the country's reliance on imports of raw materials and enhance self-sufficiency.
Initiatives to support growth of the Edible oil sector
Financial Support: The State Department for Crop Development plans to spend over KSh 42 million to support farmers planting edible oil crops in the Coastal regions of Mombasa, Tana, and other areas. Additionally, in the 2023/24 financial year, the government has allocated KSh 134 million to the Edible Oil Crops Promotion Project, tapping county governments to procure planting material and build the capacity of local farmers.
Project Implementation: A five-year project, the Edible Oil Crop Promotion Project, has been rolled out to promote the production of edible oil crops, particularly sunflower, in 24 counties across Kenya. The initiative aims to raise local production of edible oils from the current 6% to at least 50% by increasing the area under edible oil crops and providing training and seeds for planting.
Trade Trends for Edible oils
In 2022, the total world exports of edible oils stood at $172.5 billion with the leading exporters being Indonesia and Malaysia who exported 20.4% and 13.7% of the world’s total exports of edible oils respectively. The leading world importers of edible oils were India, China and United States of America at 12.0%, 8.5% and 8.0% of the World’s total imports of edible oils respectively.
In 2022, Africa’s exports of edible oils amounted to $4.1 billion accounting for 2.4% of world’s total exports of edible oils. The leading African exporters were Tunisia, Cote d’Ivoire, South Africa, Morocco, Djibouti & Kenya, together accounting for 1.7% of world total exports of edible oils.
In 2022, Kenya was ranked 36th world importer of edible oils, with her imports of the product amounting to $1.2 billion. The Country was ranked 6th in Africa and 59th in the world for exporting edible oils valued at $0.3 billion, accounting for 0.2% of World Exports and 7.5% of Africa’s exports of edible oils. The lead export destinations for Kenya’s edible oils were Uganda (39.9%), Rwanda (14.7%), Tanzania (7.4%), Ethiopia (5.2%), Spain (4.4%), South Sudan (3,6%) and Djibouti (3.6%).
Africa, especially East African Community (EAC) are the most opportune markets for Kenya’s edible oils. Kenya’s market share for edible oils in EAC in 2022 stood at 57.4% while her market share in Africa stood at 1.9%. Kenyan exporters have opportunity of leveraging on the favourable terms of trade created through the Country’s membership to EAC and African Continental Free Trade Area (AfCFTA) to access the 13.5 billion people African market.
A Bright Future for Kenya's Edible Oil Sector
The edible oil sector in Kenya stands at the precipice of immense growth and prosperity. With a favorable domestic market, supportive global trends, and a commitment to innovation and collaboration, Kenyan exporters and farmers are poised to reap the rewards of this burgeoning industry. By harnessing the opportunities that lie ahead, Kenya can transform itself into a major exporter of edible oils, generating employment, boosting economic growth, and ensuring food security for its growing population.