Henry Ouma buys sugar at the Tuskys Beba Beba branch on Mondlane Street in Nairobi. PHOTO/FILE
By GERALD ANDAE, gandae@ke.nationmedia.com
In Summary
- Sugar is now priced at an average of Sh145 per kilo despite the recent surge in imports to cover up for the shortfall resulting from decline in local output.
- Some 15,000 tonnes of sugar have been shipped in this month alone to prevent a shortage that is causing prices to rise besides the 9,000 tonnes imported last month.
The price of sugar has risen to a new peak buoyed by
heightened activity from industry cartels out to mint cash ahead of next
year’s general election.
A survey of retail outlets throughout the country indicates
that sugar is now priced at an average of Sh145 per kilo despite the
recent surge in imports to cover up for the shortfall resulting from
decline in local output.
At Nakumatt Supermarkets, a kilogramme of branded
sweetener has shot to Sh145 from Sh135 early last week and Sh125 last
month, indicating the speed with which prices are rising. The same
quantity of sugar is priced at Sh135 at Tuskys and Naivas outlets.
The acute shortage has, since last week forced
Nakumatt to start rationing the commodity on the shop floor restricting
customers to purchasing only one two-kilogramme packet of sugar.
A letter sent to branch managers says the decision is informed by the acute shortage of the sweetener in the country.
“Following the prevailing shortage of sugar, please
note that prices for this commodity continue to fluctuate every day, we
would like to strongly recommend that there should be no bulk purchases
of this product, therefore, have the customers understand that we are
only doing a maximum of one per shopper,” reads the letter.
Solomon Odera, the head of sugar directorate,
described the shortage of sugar and the resulting price increase as
artificial, pointing to the huge stocks that distributors are holding
on to in various stores around the country.
“If you look at quantities that have been released
to the market, both imports and local stocks, you will realise that
distributors are withholding sugar. This is because what they take from
factories and from imported consignments is not reflecting in the
market,” said Mr Odera.
Some 15,000 tonnes of sugar have been shipped in
this month alone to prevent a shortage that is causing prices to rise
besides the 9,000 tonnes imported last month.
The directorate issues permits for importation of
not more than 10,000 tonnes every month to supplement local stocks in an
ever expanding domestic market.
Locally-produced sugar stocks declined to a low of
5,000 tonnes by close of last week, against the required 9,000 tonnes at
any given time, mainly due to poor performance of local millers.
On Monday, the directorate said it had written to
millers requesting details of their distributors to monitor the
quantities that they are holding at any given time.
The regulator said this will enable it to quickly
diagnose any supply challenges within the distribution network as well
as plan for imports based on local needs.
“We currently have difficulty telling how much
sugar is held by these distributors because we do not have information
on what their holdings are at any given time,” he said.
Agriculture and Food Authority director- general
Alfred Busolo, however, said the agency was in talks with Nakumatt to
establish why it is the only retail shop that is rationing the
commodity.
“We want to understand why they are rationing sugar when it
is evident that they do not want to create shelf space for brands from
local millers,” said Mr Busolo.
Mr Busolo accused Nakumatt of creating an
artificial shortage to push for own-branded product, commonly referred
to as Blue Label and is mainly of repackaged imported sugar.
Nakumatt managing director Atul Shah said the
retail chain is not stocking sugar from local factories because they do
not get stocks.
“As you all know there is a shortage of sugar from
the factories and we have hardly been getting stocks from local millers
for stocking,” said Mr Shah.
Global sugar prices have been rising in the past
six months hitting the 50 per cent mark by mid this month, pointing to a
possible continuation of cost inflation in the coming weeks.
A tonne of sugar from the Common Market for Eastern
and Southern Africa (Comesa) rose from $500 (Sh50,000) in March to $750
(Sh75,000) currently, making the imports more expensive than the
locally manufactured sugar, for the first time.
Consumption of sugar in Kenya has been growing in recent years, saddled by population growth and changing lifestyles.
Statistics from the sugar directorate indicate that
consumption stood at 889,233 tonnes in 2015 from 860,084 tonnes the
previous year.
Kenya is a sugar deficit country and relies on Comesa member states to bridge the annual deficit.
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