Commodities

Sugar prices decline 14pc after imports ban-induced rise wanes

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Agriculture Cabinet secretary Peter Munya. FILE PHOTO | NMG

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Summary

  • The cost of sugar has dropped by 14 per cent within a month as the market corrects the price increase that had hit consumers following a ban on imports.
  • The wholesale sugar price dropped from Sh5,500 for a 50-kilogramme bag to Sh4,700.
  • Subsequently, ex-factory prices have declined from Sh5,000 for a 50-kilogramme bag to Sh4,100, an indicator that normal supply has resumed in the market.

The cost of sugar has dropped by 14 per cent within a month as the market corrects the price increase that had hit consumers following a ban on imports.

The wholesale sugar price dropped from Sh5,500 for a 50-kilogramme bag to Sh4,700.

Subsequently, ex-factory prices have declined from Sh5,000 for a 50-kilogramme bag to Sh4,100, an indicator that normal supply has resumed in the market.

An official from the Sugar Directorate said the market corrected itself without any intervention from the regulator.

“Maybe there were people who were hoarding the commodity after the ban on imports was announced, but after realising that nothing was forthcoming, they opted to release the stock to the market,” said the official who requested anonymity.

Consumer prices too have dropped in retail outlets with a two-kilogramme packet retailing at Sh220 on average from Sh230 a week ago.

The Sugar Directorate had said there was unexpected interruption at the market and they were investigating to find out exactly what happened along the value chain leading to a sharp rise in price.

Agriculture Cabinet secretary Peter Munya banned imports of sugar a month ago and revoked all the import permits that were current.

Mr Munya said the influx of imports had impacted negatively on sales of local sugar, leaving factories with huge stocks of unsold product.

The Ministry of Agriculture has come up with new regulations that would require importers to register afresh for new permits before they are allowed to ship in the commodity again.

Under the new regulations, traders will only be allowed to import what is required to avoid dumping of the sweetener in the country.

This and other measures put in place are some of the efforts that the government has effected to try and salvage the ailing sugar industry.

Kenya is allowed to import 350,000 metric tonnes of sugar from the Common Market for Eastern and Southern Africa bloc to bridge the annual deficit. With the poor performance by local millers, Kenya relies on imports to stabilise prices.