Market News

Factory sugar stocks rise on high imports

Bags of sugar are offloaded from a ship. file PHOTO | NMG
Bags of sugar are offloaded from a ship. file PHOTO | NMG 

Sugar stocks mainly in western Kenya factories have begun piling up again as imports take toll on local sales. A report by the Sugar Directorate shows stocks held have gone beyond 11,000 tonnes between December 12 and 14 with very little movement in terms sales. Last month the stocks were below 9,000 tonnes.

The opening stocks by all millers on December 13, for instance, was 11,208 while the closing stock was 11,923 implying the factories were unable to sell sugar on the dates.

“We are hardly making sales and this is affecting our revenue. We are stuck with huge stocks of sugar in the factories,” said an official of the Kenya Sugar Manufacturer Association.

Agriculture and Food Authority director-general Alfred Busolo said the movement has been affected by a number of factors including the availability of cheap imports and increased production in factories.

“Local stocks have been affected by duty-free sugar and an increase in production following a slight improvement in raw material,” said Mr Busolo.

The move has also affected the price of the commodity with a 50-kilogramme bag now selling at an average of Sh3,700 from Sh3,800 last month.

Traders have also been affected by the influx of sugar in the country, both from imports and local production, forcing them to halt shipping in the commodity from regional countries.

According to Mr Busolo, only two traders requested for licence last month, but they have not managed to import the commodity.   

As at last month, the country had imported about 900,000 tonnes of the commodity with most of the consignment coming in from Brazil.

Kenya has an annual quota of 300,000 tonnes of sugar from Comesa countries to make up for the local deficit.

The country requires 900,000 tonnes every year to meet the domestic needs, against local production of 600,000 tonnes.

Earlier sugar shortage was caused by drought in cane growing zones that affected crop in the field with the directorate estimating a shortage of 1.9 million tonnes at the end of last financial year.

Sugar growing zones and the tottering millers are likely to suffer for months from the huge imports this year.