Sugar. Kenya remains a sugar importer and is struggling to boost output as its consumption continues to outpace production. In 2010, consumption was 772,731 tonnes, and the regulator projected demand would grow to 794,844 tonnes by 2012.
Sugar reserve levels have hit the lowest point in two years raising fear of an imminent shortage of the commodity.
According to reliable sources at the Kenya Sugar Board (KSB), the commodity’s stock that was slightly below 4,000 tonnes last month have dipped to 1,500 tonnes. This is against the country average daily consumption of 1,400 tonnes.
Mill stocks have been on a downward trend since January. At the beginning of the year the stocks stood at 16,500 tonnes, but dropped to 11,800 tonnes in February while in March and April they plummeted to 9,200 tonnes and 3,900 tonnes respectively.
The trend is attributed to the delay in shipping in of this year’s quota to cover for the deficiency. Kenya consumes an average of 770,000 tonnes of sugar, but can only produce 500,000 metric tonnes.
The 270,000 tonnes deficit is covered for by imports from the Common Market for Eastern and Southern Africa (Comesa) — duty free.
“With stocks of less than 2,000 tonnes, the market is treading on dangerous grounds, leading to hoarding and increase of prices as has been witnessed,” said a KSB official who requested anonymity because he is not authorised to speak for the firm.
A spot check confirmed that prices of sugar in several parts of the country have gone up by Sh1,000 per 50 kilogramme bag. In most outlets in Nairobi a 50kg bag is trading at Sh3,800, in Coast province it retails at Sh3,600, while in the Rift Valley region our survey indicates that the same bag is being sold at Sh4,000.
Such a scenario was witnessed in May 2007 when sugar stocks hit a bottom of about 1,890 tonnes leading to an acute shortage of the commodity.
However, KSB CEO, Rosemary Mkok, sought to dismiss fears of a shortage looming in the market.
Weekly survey “We conduct a weekly survey and we know that currently mills’ reserve is stable and there is no cause for alarm,” she said, adding that the rise in prices was due to soaring transport costs.
KSB chairman Okoth Obado (pictured) said adverse weather conditions due to heavy rains in most cane growing zones had impeded movement of harvests but the situation was fast improving.
“There is no cause for alarm because even the rains that threatened cane transport is coming to an end and operations will soon be back to their optimal levels. Hitches in transportation of cane only caused minimal effects though,” he said.
The current sugar problem is compounded by the fact that the country has not serviced its annual shortfall that it imports from Comesa region following a court order obtained by a local importer opposed to the newly gazetted sugar import regulations by the government.
The measures by the Ministry of Agriculture, which sought to auction the annual Comesa quota and make KSB approve every individual consignment, is opposed by an importer on grounds that they are prohibited under Article 49 of the Comesa Treaty.
The case filed by Mat International is due for hearing on Friday (today) with optimism that the impasse could be resolved soon in order to save consumers from the anticipated price rise.
“The fact is, mills closing stocks have continued to decline since January when we had the biggest drop. Even though, in May we traditionally witness such (a trend),” said the source.
Officials at Kilimo House, however, told Business Daily that the stringent measures on the Comesa imports would not be relaxed because the price climb on the commodity was only temporary.
“We are aware of intense lobbying by some traders in Mombasa to have import regulations relaxed. They are seeking to use a slight rise in the price of sugar to front their case, but we won’t allow them to have their way,” said the official.
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