Sugar price rises by Sh30 on cane supply shortage

Consumers are paying a steep price after sugar prices shot up by Sh30 as low production in the factories and seasonal demand affect supply.

A two-kilogramme packet of the sweetener, which retailed at Sh200 in November, has hit Sh230, marking one of the steepest rises in recent months.

Head of Sugar Directorate Solomon Odera said the high demand in December has spiralled over in January, forcing upward trend.

“The reasons why the price of sugar has gone up is because of the high demand and a decline in local production,” said Mr Odera.

He said the high demand has been occasioned by several institutions that tend to buy huge stocks of sugar at the beginning of the year, piling pressure on the available stocks.

Rising cost of sugar is expected to have an impact on inflation, which has been rising in the last two months.

Inflation rate rose to a four-month high of 5.82 percent in December 2019, up from 5.56 percent recorded in November with the increase attributed to high cost of food stuff.

Food items are a major driver of cost of living contributing up to 36 percent of the total basket of inflation. According to the Kenya National Bureau of Statistics, the price of sugar went up by 4.2 percent.

The country has been grappling with a shortage of raw material that has seen quantities produced in factories decline.

According to the regulator, revenue from sugar cane dropped by Sh1 billion in 2019 when compared with the previous year as factories struggled with limited supply of raw material.

In a recent report, the directorate noted that the earnings from cane in 2019 was down to Sh19.6 billion from Sh20.6 billion the previous season.

Cane availability dropped from 5.5 million tonnes to 5.3 million tonnes in the review period, resulting in a decline in production.

Delivery to the factories dropped 12 percent in the year to October 2019 in comparison with corresponding period.

Data from the KNBS indicated that cane delivered to factories in the review period stood at 3.8 million tonnes against 4.3 million tonnes in a similar period last year.