Consumers face expensive sugar as millers start raising prices

Consumers face expensive sugar after millers started increasing factory prices of the sweetener in response to a shortage, hurting family budgets already squeezed by high flour and petrol prices.

The cost of a 50-kilogramme bag of sugar at the factory rose Sh350 last week to Sh4,600 and millers forecast the commodity will maintain an upward trend.

This sets the stage for a rise in consumer sugar prices that have remained little changed for nearly two years as households experience double-digit rise in petrol and staple maize flour prices.

Two-kilogramme packet of maize flour has increased Sh20 to Sh105 while new taxes have pushed the cost of diesel, which is mainly used to power trucks and buses, from Sh76.70 in January to Sh83.24.

These commodities have a direct bearing on inflation that rose 5.8 per cent last month from five per cent a month earlier, meaning the general rise in the prices of essential items could exert additional pressure on the cost of living measure.

The volume sugar at the factories has dropped to a low of 4,494 tonnes against the optimum 9,000 tonnes, piling pressure on prices.

The shortage has been attributed to poor performance of the factories and the closure of some millers that are undergoing maintenance.

“The volumes are low at the moment and this is what has pushed up the factory gate price of sugar,” said head of Sugar Directorate Andrew Osodo.

He said the market forces of demand and supply are playing out at the moment, noting that high demand for the sweetener has sparked an increase in price.

But consumer sugar prices have remained at Sh120 per kilogramme since 2015 following stable supply of the commodity in the country.

Muhoroni and Kwale factories have currently closed for maintenance while Mumias Sugar, Kenya’s largest miller, is performing poorly.

The miller cut down its production hours a fortnight ago and it is currently milling twice a day due to cane shortage.

READ: Mumias criticised over low sugar price

The sugar shortage in the country has seen the regulator increase the volume of the commodity to be imported by issuing additional licences. 

The Agriculture and Food Authority (AFA) — is evaluating the applications of new importers and plans to increase the amount of sugar that each company can bring into the country.

The import quota is currently between 500 and 1,000 tonnes of brown (table) sugar, which is largely used for domestic consumption.

Import permits remain active for 45 days. Kenya can import between 12,000 and 15,000 tonnes of sugar every month from Common Market for Eastern and Southern Africa and East African Community member states.

“We don’t produce enough sugar so we must import. We have had cases where millers don’t pay farmers on time, and farmers are not motivated to plant cane,” said Alfred Busolo, AFA director-general.