Corporate News
A shopper at a supermarket’s sugar section. Nakumatt has been accused of
using the artificial sugar shortage it has created to cause panic
buying whose impact is to drive up retail prices. PHOTO | FILE
By GERALD ANDAE, gandae@ke.nationmedia.com
In Summary
- The Sugar Directorate says in a letter to Nakumatt that the retailer is using its dominant position in the market to earn ‘‘unjustified abnormal profits’’ from sugar.
- A kilogramme of sugar is now retailing at Sh145 at Nakumatt, up from Sh125 two months ago on account of an acute shortage that the regulators now say does not exist.
- A consumer lobby group accused the supermarket of using the artificial sugar shortage it has created to cause panic buying whose impact is to drive up retail prices.
- Nakumatt has been rationing sugar in its shops, restricting customers to a maximum one two- kilogramme packet.
An acute sugar shortage in the domestic market and
the resulting surge in retail prices have put Nakumatt Supermarkets in
the eye of regulators who have launched investigations into the retail
chain’s dealings in the sweetener.
The Sugar Directorate, yesterday fired a letter to Nakumatt,
accusing it of hoarding and rationing sugar to create an artificial
shortage in order to increase prices.
The agency, which is the sector regulator, says in a
letter to Nakumatt that the retailer is using its dominant position in
the market to earn ‘‘unjustified abnormal profits’’ from sugar.
“It has come to our attention that Nakumatt
supermarket through its retail outlets is engaging in unfair trade
practices by way of hoarding and rationing distribution of sugar,” the
letter says.
“The supermarket is exposing consumers to
unjustifiable cost of acquiring sugar, limiting the distribution of the
commodity and negating the spirit of effective competition in the
market.”
A kilogramme of sugar is now retailing at Sh145 at
Nakumatt, up from Sh125 two months ago on account of an acute shortage
that the regulators now say does not exist.
At Sh145 per kilo, Nakumatt is the most expensive
supermarket to buy sugar from compared to competitors such as Tuskys and
Naivas, which are selling the same commodity at Sh135 per kilo.
The Competition Authority of Kenya (CAK) entered
the fray with the launch of investigations into the alleged
uncompetitive market behaviour.
The Sugar Directorate had requested the competition watchdog to investigate the retail chain for anti-competitive behaviour.
CAK director- general Kariuki Wang’ombe said that
there were elements of market distortion in the sugar affair and on
which action will be taken once investigations are complete.
“We have received complaints from the regulator. We
are carrying out investigations in the next three days before offering a
verdict. The allegations referred to by the directorate amount to
market distortion,” said Mr Wang’ombe.
A consumer lobby group accused the supermarket of
using the artificial sugar shortage it has created to cause panic buying
whose impact is to drive up retail prices.
“I am not certain on the amount of stocks in the
country, but if the regulator says we have enough, then the only
conclusion we can reach is that some hoarding has taken place to create
panic buying, leading to even higher prices,” said Stephen Mutoro, the
secretary- general of Consumer Federation of Kenya.
Mr Mutoro said it was unfair for Nakumatt to ration
sugar and force their loyal customers to buy the commodity at
exorbitant prices.
Nakumatt has been rationing sugar in its shops, restricting customers to a maximum one two- kilogramme packet.
The retailer's management last week issued a circular to all its
outlets asking them to limit the amount of sugar each customer can buy.
“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,” the retail chain said.
The supermarket’s managing director, Atul Shah,
declined to comment on the issue insisting he was still studying the
Sugar Directorate’s letter.
“I will not comment on the matter right now. We are still studying the details of the letter,” said Mr Shah.
Local stocks of sugar have been declining in the
last couple of months, on the account of low output by millers, forcing
the Sugar Directorate to increase imports by 67 per cent to cover the
fall in domestic production.
As of last week, the directorate said it had
allowed importation of 15,000 tonnes of sugar, up from 9,000 tonnes last
month, but the impact of the increment is yet to be felt on the retail
market.
The agency’s latest report indicates that the
stocks had grown to 9,000 tonnes as of Monday, which is the minimum
quantity required at any given time to contain a possible rise in
prices.
“There has been significant improvement in output
from local millers in the past few days with stocks rising to 8,927 as
at Monday,” said Mr Busolo, the director-general of Agriculture and Food
Authority, adding that the agency was closely monitoring factory output
and would allow additional importation to curb dumping of sugar.
The directorate issues import permits to traders that remain active for 45 days.
Kenya imports its sugar from the Common Market for
Eastern and Southern Africa (Comesa) and East African Community member
states.
The imports are currently being trucked from Uganda or brought in as shiploads from Madagascar, Malawi and Zambia.
No comments :
Post a Comment