Sugar prices rally as stocks plummet
Thursday May 18 2023
Kenya’s weekly optimal stock of sugar has dropped by 80 percent on the back of diminished production by factories and expensive imports, pushing up retail prices to a historic high.
The Sugar Directorate says they are now recording weekly stocks of 4,000 tonnes against the required optimum of 20,000 tonnes in order to meet the daily requirement in the country.
Read: Prices of sugar up by 18pc on shortage
The shortage in supply has pushed the cost of sugar to Sh420 for a two-kilogramme packet from Sh300 at the beginning of last week.
Head of the directorate Jude Chesire says the deficit has been occasioned by low production at the factory level that has seen some of the millers scale down on milling due to a severe shortage of raw material.
“Our weekly opening stocks are now at 4,000 tonnes against normal average stocks of 20,000,” said Mr Chesire.
Mr Chesire said despite the Treasury issuing a waiver on duty in December last year, the quantities that have been shipped into the country have not lowered the cost because they are landing at an exorbitant price in Kenya owing to a global shortage and the weakening of the shilling against hard currencies.
A tonne of sugar is now landing in Mombasa at Sh121,000 up from Sh85,000 at the end of last year. The government has been using imports as a stop-gap measure to protect consumers from exorbitant prices.
He said so far 88,000 tonnes have been received in the country out of the 100,000 tonnes that have been authorised under the tax remission scheme.
The official said the situation is expected to persist in the next one month but they are projecting a slight reprieve when the sugar from regional countries such as Mauritius and Zambia is expected in the market with the onset of harvesting in these two countries.
However, that may not automatically bring down the cost of the sweetener owing to high international prices that may see these countries opt to sell their sugar to Europe where it will fetch more due to high demand.
According to the regulator, in the European market, prices are higher by at least $20 per tonne compared to those in the region.
Currently, there is a huge shortage of sugar in the Common Market for Eastern and Southern Africa (Comesa) forcing Kenya to seek the commodity outside of the regional bloc in order to cushion consumers from the high cost of the commodity.
Read: Cheap sugar imports from India, Madagascar cool prices
The directorate had in January warned that Kenya could fail to secure sufficient stocks of sugar at the international market even with the opening of duty-free imports owing to high prevailing global prices and a shortage of the commodity world over.