13 November 2017

Kenya: Local Sugar Stocks Down as Prices Cut

Local sugar stocks held by factories have dropped 30 per cent as traders go domestic following reduced prices compared with regional imports.

The stocks declined from a high of 11,412 tonnes two weeks ago to 8,000 tonnes as of last Friday with traders taking a break from importing Common Market for Eastern and Southern Africa (Comesa) free-trade sugar.

However, shelf prices remain at an average of Sh230 for a two-kilo bag with millers blaming dealers for the constant cost.

The decline has been helped by low price of the domestic sweetener, now retailing at Sh3,800 ex-factory against Sh4,000 it cost to import from the Comesa states.

Millers have reduced prices from a high of Sh6,000 a tonne in May in response to low price of Comesa and Brazilian imports.

"It is all about business decision, traders have now found it convenient to buy the local commodity, which is cheaper as opposed to importing from the region," said Solomon Odera, head of Sugar Directorate.

Inventories at the factories had started rising in the last couple of weeks on account of the cheap sugar, leaving millers with high volumes of the unsold commodity.

The movement of local stock could also be attributed to decline in volumes of cheap Brazilian sugar after the High Court temporarily suspended importation from the country.

The court on October 22 stopped importation of duty-free sugar from outside the Comesa region after activist Okiya Omtata filed a petition.

The court temporarily suspended a gazette notice that had extended the importation to December. Mr Omtata sued Treasury secretary Henry Rotich for extending the window from September to December without public consultation.

He claimed the gazette notice published on October 4 was arbitrary as it was imposed without participation of stakeholders, including the affected local sugar industry.

"A conservatory order be and is hereby issued suspending the sued parties' gazette notice No.9801 dated September 29, allowing importation of duty free sugar," said Justice Enoch Chacha Mwita.

The government in May removed duty on imported sugar outside the Comesa region after a kilogramme of the commodity hit a record high of Sh200.

The imports have so far helped to lower the cost to Sh120 a kilo.

Traders and millers imported 300,000 tonnes of the commodity in August alone.


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