Local sugar millers left with huge stock on cheap imports

Local factory sales have stalled in the last two weeks as distributors opt for cheap sugar imports.

Data from Sugar Directorate indicates imported sugar is selling at Sh3,700 for a 50-kilogramme bag while locally manufactured sugar is trading at Sh4,000 a bag.

As at of October 16, stocks held by millers had hit a new high of over one year with factories holding 8,000 metric tonnes of the commodity, up from a low of about 3,000 metric tonnes in January.

“Stocks are hardly moving in factories because distributors are now preferring cheap imports to locally produced ones,” says the regulator.

Millers have raised concern saying their commodity has become uncompetitive in the market following the increase in imports.

“We are stuck with huge stocks of sugar that are not moving because we cannot compete with cheap imports out there,” said an official at Nzoia Sugar Company.

READ: Sugar millers allowed to import 150,000 tonnes

The official from western-based miller said when import duty on sugar was waived, distributors opted to procure stocks from outside the country leaving them with huge volumes of unsold stocks. Distributors normally call industry shots.

The Treasury scrapped duty on imported sugar from outside Common Market for Eastern and Southern Market in May following a severe shortage of the commodity in the country that saw a kilogramme of commodity cross the Sh200 mark.

READ: Growers reject State plan to allow cheap sugar imports

Traders and millers imported 300,000 tonnes in August alone ahead of the August 31 expiry of the duty waiver on sugar from Brazil.

Further imports are expected in the coming months following the move by the Treasury last week to extend a duty waiver to millers.
The waiver has been extended for another three months but it restrict the imports to millers.