Agriculture and Food Authority director-general Alfred Busolo. PHOTO | SALATON NJAU
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Agriculture and Food Authority director-general Alfred Busolo links forecast to declining local production and expensive imports.
The agriculture regulator has forecast high sugar prices following declining local production and expensive imports, piling pressure on household budgets.
Agriculture and Food Authority (AFA) director-general Alfred Busolo said high international prices on imports and low output at local factories have led to a sharp rise in consumer prices in the last couple of months.
Sugar stocks held by millers have declined from 8,000 tonnes mid last month to 6,700 as of Monday, pointing to declining supply amid high demand.
A kilogramme of sugar is currently retailing at between Sh135 and Sh145 depending on the brand, up from Sh110 in the last three months. It last traded at this level in 2012.
“The sugar situation right now is not good because of declining factory production against increasing consumer prices,” said Mr Busolo.
The shortage has seen the factory price rise to an average of Sh5,400 per 50kg bag from Sh5,200 early last month.
Mr Busolo said that international prices of the commodity had nearly doubled from Sh32,000 per tonne in May to the current Sh60,000.
“We rely on imports to bridge our production, but when the global price is high it means our local prices too will be high,” he said.
A 50 kilogramme bag of imported sugar costs Sh5,475 in Nairobi, almost at par with locally produced sugar.
This has discouraged importers. High sugar prices has been witnessed in years preceding Kenya’s general elections. In 2011, just a year before the elections, a kilogramme of sugar retailed at Sh173, the highest price ever.
In August, the International Sugar Organisation (ISO) released its first full-scale forecast for 2016/2017 which indicated a looming shortage.
AFA said that sugar demand has been rising amid population growth and falling production.
At the moment demand stands at 900,000 tonnes per year against annual production of 650,000 tonnes.
Supermarkets are not getting enough stocks from factories as millers protest delays in repaying their debts, creating a deficit in major retail outlets. Millers want supermarkets to reduce the number of days they take to pay them for supplies from 90 to less than 30.
Kenya Sugar Millers Association argues that staying with their money for more than 90 days affects financial flow, hampering payment of farmers.
The association says sugar is a first moving commodity and it shouldn’t take retail stores more than 90 days to clear their debts.
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