Determination of import demand of wheat in Kenya; A time series analysis from 2000 to 2019

Abstract

Trade influences economic growth and entails imports and exports. In Kenya, wheat imports have been expanding with no sign of slowing down and this has become a matter of great concern because the country is losing over 30 billion Kenyan shillings in importing wheat on a yearly basis. This motivated the need to estimate wheat import demand model, which was conducted using secondary time series data from 2000 to 2019. The findings of the study show that there is cointegration in the estimated wheat import demand which captures 98.2% of wheat imports. Therefore, the model can be used to predict the amount of wheat imports in Kenya at any given time to achieve the optimal wheat importation. It was also found that yields, relative prices, ending stock and lagged wheat imports explained wheat expansion in Kenya in the last two decades. Therefore, the study recommends that Kenya wheat imports should be monitored to avoid over importation because, it has adverse effects on the domestic wheat sector.