Sugar prices rise after lull as production falls

Shelf prices of sugar have started going up following a decline in local production and relatively expensive imports.

Most brands that had recently declined to a low of Sh205 for a two-kilo packet in the last two months have now picked up, with the same quantity selling at Sh230 in different retail outlets.

In the April report, the Sugar Directorate had placed the price of branded sugar such as Khetia, Raha, Economy, Nutrameal, Tumaini, Shivling, Tuskys, 5 Star, Naivas, Choppies sugar at Sh106 per kilo.

The decrease in sugar production was attributed to reduced performance by Nzoia, Chemelil, South Nyanza and West Kenya sugar factories and continued closure of Mumias and Kwale sugar companies. The slowdown collectively resulted in reduced production by 12 percent.

The Sugar Directorate indicated in its April report that the prices increased by two percent margin during the review period, rising to a monthly average of Sh3,990 per 50 kilo bag following the decline of stocks in the market.

“The slight improvement witnessed in April 2019 is an indicator that the market is stabilising as the stocks of cheap sugar imports diminish,” said the directorate.

Total sugar closing stock held by all the factories at the end of April 2019 was 2,371 tonnes against 18,146 tonnes observed in March 2018. Sugar imports in April went up by 144 percent but the high price of the shipped in commodity did not help bring down the cost.

A kilo of imported loose sugar, according to the directorate, cost Sh107 against the local packs that retailed at Sh103.

According to the Sugar Directorate, imports of the sweetener between January and April stood at 150,302 tonnes compared with 61,516 realised in the corresponding period last year.

The rising cost of the commodity, which come at a time when other foodstuff such as maize flour and milk are likely to see a rise in inflation numbers.

Kenya’s inflation dropped to 5.49 from 6.58 percent in May with the Kenya Bureau of Statistics (KNBS) in its monthly updates attributing the decline to reduced prices of consumer goods.

The country depends on Common Market for Eastern and Southern Africa (Comesa) imports to seal a long-term deficit.