Price of sugar still high despite increased imports

A shopper picks a packet of sugar at a supermarket. Kenyans are paying dearly for sugar despite increased imports into the country. file photo | nmg 
 

By GERALD ANDAE

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Summary

• The directorate says importers are selling a 50kg bag of sugar at Sh4,800, down from Sh5,800 in April, while locally it is retailing at Sh5,200 on average, from Sh6,000 two months ago.
• Agriculture and Food Authority director general Alfred Busolo says there is adequate sugar in the country but inefficiencies in the supply chain are making consumers pay more.
• Sugar production in the first four months of the year dropped by 28 per cent compared with the same period last year, subjecting consumers to high prices on reduced supplies in the market.

Kenyans are paying dearly for sugar despite increased imports into the country aimed at lowering the cost.

The sector regulator attributes the situation to wholesalers and traders who hoard the commodity.

Close to 200,000 tonnes of sugar have been imported since May this year in a move that has seen both the import price and the ex-factory cost in local mills come down in the past one month. But the benefits of lower cost is yet to reach the consumers.

The Sugar Directorate and the Ministry of Agriculture say a kilogramme of sugar should be retailing at a maximum of Sh120. However, it’s currently selling at an average of Sh180 in most shops.

“We suspect that sugar is being held by retailers and wholesalers. This is what has frustrated our efforts of achieving the Sh120 that a kilogramme of the commodity should be retailing at,” said head of the Sugar Directorate Solomon Odera.

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The directorate says importers are selling a 50kg bag of sugar at Sh4,800, down from Sh5,800 in April, while locally it is retailing at Sh5,200 on average, from Sh6,000 two months ago.

Agriculture and Food Authority director general Alfred Busolo says there is adequate sugar in the country but inefficiencies in the supply chain are making consumers pay more.

“There is enough sugar in the country, which by now should have stabilised the price to Sh120 per kilogramme. But traders have refused to pass these benefits to consumers,” says Mr Busolo.

Local stocks have fallen to 4,000 tonnes as at Thursday this week and the directorate is enhancing imports to cover for the declining stocks.

The country requires a total of 9,000 tonnes at its factories at any given time to stabilise the local price.

In a sugar sector report for the month of April, the directorate said the monthly average price (April 2017) was 51 per cent higher compared with the corresponding month in the previous year, owing to high demand against low supply.

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Sugar production in the first four months of the year dropped by 28 per cent compared with the same period last year, subjecting consumers to high prices on reduced supplies in the market. This pushed a 50kg bag to Sh6,150.

In a report, the sugar directorate says that in the period January to April 2017, production dropped to 172,722 tonnes compared with 238,872 tonnes in the same period last year.

The directorate notes that sugar production has been decreasing in the past four months and attributes the decline to the prevailing cane shortage in most growing zones.

Low stocks have been linked to drought that affected sugarcane development in most of the growing zones.

Kenya produces 600,000 tonnes of sugar annually. It relies on imports to meet the growing demand that currently stands at 900,000.

The country is allowed to bring in 300,000 tonnes of duty free sugar every year from the Common Market for Eastern and Southern African countries.

The directorate had projected a shortage of 1.9 million tonnes of cane by the end of the last financial year that ended on Friday midnight.