Sugar millers cut prices to clear surplus stock

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Sugar's ex-factory price dropped to Sh3,900 per 50-kilogramme bag from a high of Sh4,200 as late as last week even as retailers sold the two-kilogramme packet at Sh260, up from Sh230 at the beginning of the year.
This comes even as the factories are grappling with the slow moving stocks created by competition between imported sugar and the locally produced sweetener.

The price of sugar held by local millers fell by another seven per cent at the start of this week even as consumers continue to grapple with high shelf prices.

The commodity’s ex-factory price dropped to Sh3,900 per 50-kilogramme bag from a high of Sh4,200 as late as last week even as retailers sold the two-kilogramme packet at Sh260, up from Sh230 at the beginning of the year.

The factory price of sugar has been coming down in the past two months, having hit Sh5,000 in September as quoted by the sugar directorate.

“The factory prices of sugar are coming down indicating a stabilised market, which was our objective,” said the head of Sugar Directorate Rosemary Mkok.

The price of the commodity had shot up when major factories (Mumias and West Kenya) closed for annual maintenance, creating a shortage of sugar in the country and prompting the government to order immediate importation.

This comes even as the factories are grappling with the slow moving stocks created by competition between imported sugar and the locally produced sweetener.

Last week, sales at Nzoia Sugar Company had dropped from 20,000 bags to 5,000 bags of 50 kilogrammes in a day.

Nzoia Sugar Company managing director Saul Wasilwa said the factory might be forced to cut the price from Sh4,200 currently to a lower figure to enable the movement of stocks.

“The stocks are hardly moving, and we may have to cut down our prices as the only alternative to improving sales,” Mr Wasilwa told the Business Daily last week.

READ: Consumers face high sugar prices as supply runs low

Market report on sugar from the directorate indicates that the factory had an opening stock of 3,347 on December 4 from 3,372 on December 1.

The government has been importing sugar from neighbouring Comesa countries to bridge the deficit. Kenya only produces 500,000 tonnes of sugar against an annual consumption of 700,000 tonnes.

In October, the Sugar Directorate approved pre-shipment for 12 firms to import a total of 49,100 tonnes of brown/mill white sugar to be shipped in the next four months.

Of the total shipment, 34,600 tonnes is to come from Uganda while 14,500 tonnes will come from Zambia.

Influx of cheap sugar in the market has in the past affected the operations of millers who get stuck with huge stocks in their warehouses, in a move that saw the government cancel the licenses of importers in August last year.