Retailers Taking advantage of Sugar Shortage to Set High Consumer Prices

By Soko Directory Team / Published January 11, 2017 | 6:56 am





The average factory price for a 50-kilogram bag of sugar is currently retailing at 5,400 shillings, down from 5,600 shillings. Even with this decline on the prices, households are still buying the commodity at 135 shillings from the supermarkets for the local sugar.

Factories have lowered the price for sugar by almost 4 percent, and as usual, it is expected that retailers also need to follow suit and lower it for consumers. With the same prices, still on for retailers, they are taking in very high profits as they end up making a total of 6,750 for the same 50-kilogram bag which they get at 5,400 shillings, an additional 1,350 shillings for them.

The Agricultural Authority of Kenya has however issued a directive for retailers not to increase the prices anymore due to increased sugar imports in the country meant to cater for the lower production locally therefore leading to a shortage on the sweetener. The imports have been maintained at over 20,000 tonnes a month, up from 15,000 tonnes that should be imported when the sugar situation in the country normalizes.

With most of the public sugar millers crushing at barely half their capacities, local stocks of sugar have been declining in the last couple of months, forcing the Sugar Directorate to increase imports by 67 percent to cover the fall in domestic production.

From November last year, the country has been facing acute sugar shortage therefore leading at an importation of 25,000 tonnes  nd an additional 23,000 tonnes in December to supplement shrinking local stocks. Stocks held by millers in factories dropped to a low of 6,500 tonnes as of Tuesday, 2017, from 8,000 tonnes late last month as some processors struggle with production issues due to low-cane supply.

Kenya produces 630,000 tonnes of sugar a year, compared with an annual consumption of 900,000 tonnes. The deficit is met with imports from the Common Market for Eastern and Southern Africa (Comesa) and East African Community member states. The imports are currently being trucked from Uganda or shipped in from Madagascar, Malawi and Zambia.

Related: Increased Maize Prices Affecting Kenyan Households




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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