Importers have difficulty getting orders from Comesa. Photo/FILE
Frustration is piling up in the sugar industry as traders struggle to process duty-free supply orders, nearly two weeks after the State conducted a repeat auction of import rights to help mop-up maximum volumes from the Common Market for Eastern and Southern Africa (Comesa).
Figures by the Agriculture ministry showed that the importers have managed to ship in just 12,000 tonnes of sugar out of the 200,000-tonne quota allocated during the repeat auction.
This signals the difficulty in securing orders in the wake of a global rally in prices of the commodity. Only four importers have processed orders — partially.
Data show that producers in the Comesa could be diverting supplies to more lucrative global markets where prices have rallied to record high on the effects of foul weather in key growing nations such as Brazil and India. This has left nations dependent on Comesa.
The Agriculture ministry however remained optimistic that the supply situation “would improve in due course” and help stabilise prices locally.
“The inflow is better than it was previously and we are hopeful that the traders would be getting more volumes to the market,” Agriculture PS, Dr Romano Kiome told Business Daily.
The State is also banking on local millers such as Mumias and Chemelil that have just come out of an annual factory maintenance break, to boost national stocks and help correct prices of the commodity that rallied to highs of more than Sh100 a kilo only last month.
At the repeat auction in Nairobi late last month, the Kenya Sugar Board (KSB) responded to a directive by Agriculture minister William Ruto and doubled the number of 2010 import licences to 40 with a combined allocation of 200,000 tonnes.
This was aimed at improving the inflow of shipments from the bloc after it emerged that the firms that had been granted the task had only managed to secure 4,500 tonnes.
And to guard against complacence, the bidders were only allowed to make “sizeable offers” with the largest beneficiary landing rights to ship in 10,000 tonnes while the lowest won a deal to bring in 1,500 tonnes of duty-free sugar from Comesa.
“We now expect the import performance rate to improve with the entry of new players. Most of those who had initially won the bids failed to perform as per the contract” KSB chairman Okoth Obado said after the repeat auction.
More misery
But two weeks later, the importers are still struggling to make head way — a situation that could spell further misery for consumers who may have to continue paying high prices for some time.
Faced with this dilemma, Mr Ruto told Parliament the government was contemplating allowing importers to ship in 60,000 tonnes of duty-free sugar over the next six months to help tame the current shortage.
Such plans, however, drew protest from the Comesa secretariat on grounds that it would be in breach of a deal reached in December 2007, allowing Kenya to enjoy preferred treatment on sugar.
A mission team from Comesa, while on a visit to Nairobi last month , told KSB and millers that it could be forced to lift the special safeguards if the government implemented such plans.
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