Release of seized duty-free sugar eases factory prices
Factory price of sugar dropped by 4.4 per cent in January helped by the release of duty-free commodity seized by the government but retail prices remained unchanged.
Data from the regulator shows the monthly average price of a 50 kilogramme bag stood at Sh4,082 compared with Sh4,271 in December.
The State agencies last month cleared the stocks that had been confiscated to ascertain fitness for human consumption following claims that most of the imports had been contaminated with mercury.
“Some cheap duty-free sugar imports earlier seized by the government for investigation of its fitness for human consumption was cleared and released to the market, thus helping to lower the price,” says the Sugar Directorate.
The directorate also attributes the decline in ex-factory sugar prices to increased competition from the cheap imported sweetener.
Wholesale price of imported sugar was Sh4,298 for a 50 kilo bag against Sh4,313 for the local commodity.
Sugar imports grew by 67 per cent for both table and refined commodity last month compared with corresponding period in 2018 as traders shipped in more of the commodity on account of declining production in the local market.
Data from the Sugar Directorate indicates the volumes shipped into the country in the month of January stood at 36,674 tonnes compared with 21,982 tonnes imported in the same period last year.
However, consumers are yet to reap the benefits of low prices with the regulator accusing the traders of making huge margins at the expense of consumers.
“Reduced ex-factory price does not necessarily reflect lower prices because traders are having higher margins than the manufacturers, making it difficult for retailers to pass the low factory price to consumers,” says head of the Directorate Solomon Odera.
Mr Odera said there are inefficiencies along the value chain that needs to be addressed by manufacturers.
“The factories need to bring more players on board in order to increase competition,” he said.