Why sugar prices have hit an all-time high despite imports
A shopper picks a packet of sugar. FILE PHOTO | NMG
What you need to know:
- The Sugar Directorate said it had secured 100,000 tonnes of sugar from the Common Market for Eastern and Southern Africa (Comesa).
- The rising cost will hit household budgets, already constrained by soaring prices of basic commodities, pushing inflation to 11.48 per cent.
- The prices of milk have also increased significantly in recent months, with the long life brand selling at over Sh70 while the fresh one is retailing at Sh65 for a half litre packet.
Greedy traders are to blame for the woes that sugar consumers are going through, the national directorate has said.
It added that the Sh380 per 2kg packet that buyers are paying is a result of hoarding by traders, hoping to cash in on an artificial shortage.
The Sugar Directorate said it had secured 100,000 tonnes of sugar from the Common Market for Eastern and Southern Africa (Comesa) in a bid to force millers to release whatever stocks they may be holding.
Head of Directorate Solomon Odera said the sugar that is currently in the market does not match the figures from imports and production by millers, implying that it is being held somewhere in the value chain.
Artificial shortage
“When we compare the quantities coming in as imports and what has been produced locally, it is evident that some traders are not releasing their stocks to the market so as to create an artificial shortage and maximise on profits,” said Mr Odera.
He said the directorate had issued traders with permits to bring in more sugar from Zimbabwe and Swaziland. The two countries had a good crop that is being milled.
Kenya is a sugar deficit country and is allowed to import duty free sugar from Comesa, with an annual quota of 350,000 tonnes.
This comes amid shortage of the sweetener in factories owing to low production by millers, hence the sharp rise in the price of the commodity on the shelves.
Sugar has been retailing at an average of Sh290 per 2kg packet since January before shooting to the current levels.
Household budgets
The rising cost will hit household budgets, already constrained by soaring prices of basic commodities, pushing inflation to 11.48 per cent.
The prices of milk have also increased significantly in recent months, with the long life brand selling at over Sh70 while the fresh one is retailing at Sh65 for a half litre packet.
The price of a 2kg packet of maize flour remains high despite a marginal decline to an average of Sh130 currently.
The Sugar Directorate said the shortage was at first due to severe drought that affected production in the major growing zones.
“Sugar is scarce following the recent drought that affected production,” said Mr Odera.
He said they project a shortage of 1.9 million tonnes of sugarcane by the end of this financial year.
A sugar sector report for February indicates that production declined from 126,362 tonnes registered last year to 104,907 tonnes in the period under review.
The price of sugar increased by 17 per cent in February, compared with the same period last year, the highest rise in the past five years.
A status report from the Sugar Directorate indicates that the wholesale price of sugar in February 2017 was at an average Sh5,352 per 50kg bag, compared with Sh4,432 in the same period last year.
