Stocks of sugar held by factories are up 42 per cent in a span of one week, highlighting the negative impact increased imports are having on millers.
Statistics from the Sugar Directorate indicate the volume held by factories rose from 8,009 tonnes on October 16 to 11,427 tonnes on October 23.
The trend implies that millers are grappling with slow-moving stocks as distributors opt for cheaper imported sugar.
The directorate anticipates stocks held by millers to continue rising.
“From the look of things the stocks will rise to about 15,000 tonnes in the coming days,” said Agriculture and Food Authority (AFA) director-general Alfred Busolo.
Sugar millers mainly rely on distributors to supply wholesalers and supermarkets countrywide.
The growing stocks have pushed the factory price down with a 50 kilo bag now trading at Sh3,700 from Sh4,000 a fortnight ago.
Last week millers unsuccessfully requested AFA to cut the price of cane from the current Sh4,025 per tonne to Sh3,000 following a decline in consumer cost.
The cane price is pegged on sugar prices and other variables as indicated in the formula by a pricing committee.
When the sugar price stabilises, the cane price remains constant. If the sugar price changes then the recommended price is calculated based on the new price.
A kilogramme of the commodity has dropped from a high of Sh200 in May to Sh120. Traders and millers imported 300,000 tonnes of the commodity in August ahead of the August 31 expiry of a waiver on cheap sugar from Brazil.
According to statistics from the directorate, sugar imports between January and July this year amounted to 245,168 tonnes.
Sugar production in the country dropped 49 per cent in the nine months to September as factories grappled with the shortage of raw material.
A monthly report by the Sugar Directorate indicates the quantities produced dropped to 252,415 tonnes in the first nine months of this year from 493,419 tonnes in a corresponding period last year.
The sugar shortage was caused by drought in major cane growing zones with the directorate estimating a shortfall of 1.9 million tonnes at the end of the last financial year.