Why sugar is becoming scarce on retail shelves

Business Daily Kenya: 

Nicholas Waitathu @PeopleDailyKE
Consumers will continue grappling with the biting sugar shortage and skyrocketing prices as producing countries within the Common Market for Eastern and Southern Africa (Comesa) bloc suffer the same fate with Kenya.
In the past one week, shelves have been drying up as supplies dip drastically with the Government blaming the situation on the impact of drought and hoarding of the commodity by traders.
Supermarket attendants interviewed by People Daily revealed that stocks are dwindling fast thus triggering price hikes, which are currently hovering around Sh400 for a 2kg packet.
A supermarket attendant within Nairobi’s Central Business District, who sought anonymity, said the situation was getting worse even as flour and milk prices shoot through the roof.
The three-month closure of Mumias Sugar Company — one of the main millers — for repairs has complicated the situation. Also offline is Chemelil Sugar whose operations were halted last week following a week-long strike by workers.
Against the backdrop of the biting shortage, the Agriculture and Food Authority (AFA) interim Director General Alfred Busolo is upbeat country will start recovering in the next two months. “We have enhanced imports, and in the next two to three weeks, we shall receive 40,000 tonnes from Comesa countries. A further consignment of 60,000 tonnes is expected in the next two months.
Further, we are urging distributors and wholesalers hoarding sugar to release the stocks into the market immediately,” said Busolo. So far the Sugar Directorate has increased number of importers to 162 so that they can import more.
Kenya produces slightly above 600,000 tonnes of sugar annually from 10 factories against a demand of 870,000 tonnes. To bridge the deficit, Kenya imports most of its sugar from the countries within the Comesa region under a protection window.
However, sugar shortage is also being experienced in the traditional sugarcane producing countries within the Comesa bloc due to drought. “The drought has contributed to 25 per cent production reduction in Swaziland, Malawi, Zambia, and Zimbabwe,” Solomon Odera, the interim head of Sugar Directorate told People Daily.
He said the country is currently relying on imports from Egypt, Mauritius and Sudan and that stocks are expected from Swaziland, Malawi, Zambia and Zimbabwe which are currently harvesting cane. “AFA is working with Government agencies to facilitate faster clearance of imported sugar at the ports and borders,” he added.
Sourcing the commodity from outside the Comesa bloc, for example Brazil which is major producer is quite expensive and takes long to deliver. Investigations by the People Daily revealed that lack of stocks in leading supermarkets follows disputes between wholesalers, distributors and owners of the retail outlets over credit terms.
Wholesalers and distributors are said to have reduced supplies with leading retailers due to the latter delay in remitting payments. The fallout thus explains why a good number of supermarkets have been packaging and branding their own sugar.
A dealer, who sought anonymity, said of late there hasn’t been any sugar supply and that they have been forced to operate without the commodity adding that the only available brand was Kabras sugar in quantities of one and two kilogramme packets”.
One kilogramme packet of most brands is retailing at more than Sh180 while two kilogramme packets were retailing at Sh400. In residential areas, the commodity is even more expensive where it is available.
While State-owned factories – Muhoroni, Sony and Nzoia Sugar — are still grappling with inefficiency challenges thus unable to produce enough to meet demand, the situation worsens following the closure of Mumias and Chemelil. Mumias has been recording dismal performance for the last three years prompting the government to extend a financial bailout.
According to the Mumias financial statements, government bailout of Sh2 billion last year did not yield any major turnaround results. Indeed, for the period to December 2016, the listed firm reported a half-year net loss of 2.92 billion.
The miller is hiring a new chief executive officer as Errol Johnston’s two-year renewable term ends in August. It is said Johnston, who was highly touted as a turnaround guru, has lost steam to revive the company and has opted not to seek a new term.
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