Thursday, July 9, 2009

Kenya: Sugar Prices On the Rise Again

Eunice Machuhi, The Nation, 9 July 2009

Nairobi — Sugar prices have gone up by more than 35 per cent in the last six months, the Nation has established.

From an average of Sh2,900 per 50 kilogramme bag, current prices indicate that the same is retailing at Sh4,500, an increment which has greatly affected consumers who will now be forced to part with an extra shilling.

Sources in the sugar industry revealed that prices are expected to rise once factories start closing down for annual maintenance.

The price hike has been attributed to the failure by Kenya to import its quota from the Common Markets for Eastern and Southern Africa (Comesa), although it has indicated plans to import sugar from an unspecified country.

"The failure to import sugar is because of a standoff between the Ministry of Agriculture, Attorney General and sugar importers," a source who could not be quoted because he is not authorised to comment said.

Last year, the AG, Amos Wako warned that the government's introduction of new import rules could provoke a major trade war in an export market that is Kenya's biggest.

Mr Wako, who is the government's chief legal advisor, says that the minister's plan to gazette new rules for the sugar market could invite restrictive measures against Kenya's exports in the Common Market for Eastern and Southern Africa (Comesa) with local producers as the main losers.

Due to the failure to agree on the interpretation, over 20,000 tonnes of sugar belonging to several Kenyan companies are still being held up at Mombasa Port.

It is also estimated that another 20,000 tonnes which were bought to bridge the annual Kenyan deficit are still in the Comesa countries awaiting shipment to the country.

These revelations come as Kenya Sugar Board issued a stern warning to importers that it had stepped up surveillance to ensure that illegal sugar does not enter the country.

Kenya Sugar Board (KSB) Coast regional manager James Sirro says that shrewd dealers import a consignment of say 50 containers which they declare as rice originating from Pakistan, but with up to 10 of them containing sugar.

"The consignments come through the port of Sharja in the United Arab Emirates and when they get to Mombasa they are declared as rice. Over the past one month about 500 metric tonnes of sugar has been imported in this manner," said Mr Sirro, who is also the chairman of the Mombasa sugar imports committee.

He said the committee, which comprises of officials from KSB, Kenya Ports Authority (KPA), Kenya Revenue Authority (KRA) and Kenya Bureau of Standards (KEBS) is already investigating two Container Freight Stations (CFSs) whose owners are alleged to be collaborating with the importers.