Sugar Board may weed out distributors to lower costs

A tractor transports sugarcane. KSB plans to remove distributors from the supply chain. FILE 

By GERALD ANDAE, gandae@ke.nationmedia.com

In Summary

• Kenya Sugar Board says wholesalers should buy commodity directly from factories.
• KSB chief executive officer Rosemary M’kok said this would bring retail costs closer to the ex-factory prices.
• This comes amid fear that industrial sugar importers had dumped the commodity into the market, explaining the price reductions seen recently.

 

The Kenya Sugar Board (KSB) is considering removing distributors from the supply chain to lower the cost of the sweetener. KSB chief executive officer Rosemary M’kok said this would bring retail costs closer to the ex-factory prices.

“The only way to make the consumer prices realistic is by eliminating middlemen and allowing the chain stores and wholesalers to acquire the commodity directly from the factories,” Ms M’kok said.

This comes amid fear that industrial sugar importers had dumped the commodity into the market, explaining the price reductions seen recently.

Agriculture principal secretary Sicily Kariuki said there were discrepancies in the records of some industrial importers, suggesting some imports could be diverted into the market.

“We have observed some differences from what is imported and what is documented. We are going to be very careful this time around when we issue licences to importers,” said Ms Kariuki. Manufacturers claim the influx of cheap sugar has affected the ex-factory price.

“From all indication, the prices have been affected by sugar that is coming into the country without being regulated,” Nzoia public relations officer Joseph Kawa said. The factory has dropped its ex-factory price from Sh3,800 for a 50-kilogramme bag to Sh3,600.

The drop in prices is taking a toll on farmers, with factories reducing producer prices.

Farmers supplying their crop to West Kenya and Butali sugar factories are currently being paid Sh3,700 per tonne of cane, down from Sh4,000 despite protests from farmers.

A tonne of cane yields 100 kilogrammes of sugar at optimal operations.

Mr Kawa said lack of effective mechanisms to check the sugar that is entering the country was hurting local millers who could be left with unsold stocks.

KSB said it would review the stocks of sugar in the country before issuing licences to importers, whose registration started last month.

READ: State seeks applications for sugar import licences

Registration closes Monday with Ms M’kok noting that the number of importers had gone down compared to previous years.

“From July last year to this month, we only had nine importers who brought in sugar for domestic use as opposed to 27 in the same period during the previous financial year,” said Ms M’kok in an interview.

She said the falling prices of the commodity had made the imports less attractive.