Sugar millers stocks shoot through the roof on cheap imports

Factory sugar volumes have piled to a new high as millers grapple with unmoving stocks due to high supply of cheaper imports.

The Agriculture Food Authority (AFA said the volume held by millers has currently gone up to 12,000 tonnes, surpassing the optimum level of 8,000 tonnes millers are required to hold at any given time.

Imported sugar is selling at an average of Sh3,750 for a 50 kilo bag against Sh4,250 the local produce is selling at.

AFA director general Alfred Busolo said the stocks are expected to go down once the price of sugar goes up as most millers do not want to offload at the lower price.

“The stocks have been at 12,000 tonnes, which is over the optimum level by 4,000 tonnes, but we expect the level to go down once the factory price goes up,” said Mr Busolo.

Mr Busolo said some of the millers are selling a 50 kilo bag of sugar at lower than the recommended price in order to meet their financial obligations.

READ: Kenya’s duty-free sugar imports triple

“There are millers who solely rely on sugar sales for their operation needs and that is why some are selling at lower price in order to get funds for their operations,” he said.

This has seen some of the millers default in paying farmers as they lack cash.

Most of the State-owned millers rely on sugar as their main source of income and any delay in sales affect their operations.

There has been high competition between imported and local sugar in recent months with distributors opting for cheaper imports.

The State Sugar Pricing Committee cut the ex-factory price of sugar last month from 4,700 to Sh4,250 for a 50 kilogramme bag.