Sugar prices drop on local stockpile and huge imports

A customer picks sugar off the shelf at a supermarket in Nairobi. FILE PHOTO | NMG
A customer picks sugar off the shelf at a supermarket in Nairobi. FILE PHOTO | NMG 

The retail price of sugar has continued to fall as volumes held by millers rise due to stiff competition between imports and local produce.

A report by the Sugar Directorate shows the volume held by millers last week rose from 12,000 last month to hit 13,224.

Presence of cheaper imports in the market has pushed the price of a two-kilo packet to between Sh195 and Sh215 from a high of Sh230 in December and Sh220 in January. A two-kilo packet of Mara Sugar and NutraMeal is selling at Sh195, Nzoia Sh200 and Kabras Sh215.

“The stocks have gone up to 13,000 but we expect them to drop once high supply of imports in the market eases,” said Agriculture and Food Authority director-general Alfred Busolo.

Mr Busolo said the huge volumes of imports in the market are expected to be cleared around May or June.

Sugar imports increased by 196 per cent in 2017 compared with the previous year as traders rushed to ship in duty-free commodity to bridge the local deficit.

A market report by the directorate indicated the volumes shipped in nearly tripled from 334,109 tonnes in 2016 to 989,619 tonnes in the period under review.

The bulk of the sugar imports was of brown/mill white type (table sugar 829,871 tonnes), representing 84 per cent of the total consignment, while the balance was industrial sugar.

Millers have also cut ex-factory price of sugar with most of them selling 50 kilogramme bag at Sh3,600, a huge fall from about Sh5,500 average the commodity was trading at the same time last year. Imported sugar is selling at Sh3,750.

The Sugar Pricing Committee had recommended ex-factory price of Sh4,250 but millers have had to sell at lower price to make some sales.

The pricing committee also cut the price of a tonne of raw cane paid to farmers from Sh4,025 to Sh3,700 coming as a relief to millers who had been pushing for cost reduction in the last couple of months.

Kenya produces about 600,000 tonnes of sugar a year, compared with annual consumption of 870,000 tonnes.

The sugar deficit is usually covered by stringently controlled imports from COMESA trade bloc with country having a quota of 300,000 tonnes annually.