Ex-factory sugar price cut signals relief for buyers

A man shops for sugar. FILE PHOTO | NMG
A man shops for sugar. FILE PHOTO | NMG 

The Sugar Pricing Committee has cut the average ex-factory price from Sh4,700 to Sh4,250 per 50 kilo bag after reviewing the cost of buying cane from farmers, with retail prices recommended to fall.

This should bring the ex-factory price per kilo of loose sugar to Sh85 and Sh100 for the branded one, which might bring some relief to consumers.

Following the cut, the committee has recommended a consumer price of Sh100 per kilo for loose sugar while the branded type should retail at Sh115.

“Ex-factory price for sugar (loose) shall be Sh4,250 per 50kg bag, which translates to ex-factory price of Sh85 per kilo. The recommended retail price shall be 100 per kilo,” said the committee.

The team also set the price at which millers will buy seed cane from farmers, in a move meant to end exploitation by factories which have been buying the seedlings at the same price as cane for milling.

Millers are required to pay farmers Sh4,700 a tonne of seed cane for the current season. To benefit from this price, contracted farmers will be required to possess a Kenya Plant Health Inspectorate Service (Kephis) certification before they distribute seed cane for planting.

The Sugar Directorate has also warned millers against harvesting seed cane for milling.

Some millers have been buying immature cane as the raw material shortage bites.

“When seed cane is harvested whether mature or not, it is farmers who lose because they are paid the same price as the ordinary cane for milling,” said the directorate.

The pricing committee last week cut the price of a tonne of raw cane from Sh4,025 to Sh3,700 following a push by millers. The price is pegged on the retail price of sugar.

There has been a decline in the shop price of the commodity since August last year.