Sugar prices ease on improved supply after illegal trade purge

supermarket in Nairobi
A man picks sugar at a supermarket in Nairobi. FILE PHOTO | NMG 

The supply of sugar in retail shops has improved slightly easing the cost of the commodity after the price rally that was witnessed in the last two weeks.

The normalcy in supply comes after a government crackdown on illegal sugar was relaxed in the last few days following weeks of a clampdown by State agencies, which saw more than 1.2 million kilos of illegal commodity confiscated.

A spot check by the Business Daily revealed nearly all major retail shops had stocks with prices having dropped from Sh275 for a two-kilogramme packet to Sh260.

“We have seen an improvement in stocks in the last couple of days compared with the previous weeks,” said an attendant at Naivas Supermarket.

The price of sugar had hit a one-year high in what the sector regulator attributed to an artificial shortage in the market as millers had enough stocks that they had been releasing to the market.

However, the millers said they had sold out all the stocks they had been holding.

“We do not have stocks that we are keeping at the moment because of high demand and good price that has seen millers release their merchandise to the market as soon as they mill,” said Sony Sugar managing director Bernard Otieno.

He said the factory price of sugar had increased from Sh3,700 before the crackdown to Sh5,000 for a 50-kilogramme bag.

Kenya imported 981,000 tonnes of sugar between May and December last year following the opening of the duty-free window to bridge the local deficit.

The Treasury scrapped duty on the commodity last year following a sharp decline in production that saw the price rise to Sh400 per two-kilogramme packet.
Kenya produces about 600,000 tonnes of sugar a year against an annual consumption of 870,000 tonnes.

The sugar deficit is usually covered by stringently controlled imports from the Common Market for Eastern and Southern Africa Comesa trade bloc where Kenya has a quota of 300,000 tonnes annually.

The country also enjoys safeguards against an influx of sugar imports from more efficient sugar producing trade partners in the bloc, even as local millers still struggle to improve their efficiency to lower their cost of production.

The bloc’s council of ministers on Saturday passed a resolution accepting Kenya’s bid to extend the sugar safeguards for two more years up to February 2021 from the previous date of February 2019.