NAIROBI, KENYA – The price of sugar in Kenya is set to rise again following the new sugarcane price guidelines issued by the state to millers to increase farm prices.
The Kenya Sugar Millers Association (Kesma) says consumers may be compelled to shoulder the extra cost occasioned by the increase in cane prices.
“They (consumers) will have to bear the brunt of this increase as we struggle to meet the ever increasing production costs,” Kesma chairman Hebert Ojwang told the East African Business Week in an interview last week.
“We just have no choice but to pass the burden to them if we are to remain in business,” he explained.
Last week, the government raised the price of sugarcane per tonne delivered for milling at Ksh2,500 ($37), up from the previous price of Ksh2,000 ($29). This represents an increase of 13%. The millers say the move has pushed them to the wall and that the only option is to raise prices, added the official.
“We are meeting soon to review our selves in light of these new price adjustments by the state and the end result will see shelve prices up,” said the official.
The miller argued that while state continued increasing cane prices, it had had turned a blind eye on the ex-factory prices of the commodity.
The state has insisted that ex-factory prices be pegged at Ksh2,800 (US$41) for a 50kg bag of sugar, which translates to Ksh56 (US cents 82) per kilograme.
Wholesalers have been told to sell at Ksh3,000 ($44) for a 50kg bag or Ksh60 (US cents90) per kilogram, as for retailers the figures should be Ksh3,250 ($47) for a 50kg bag translating to Ksh65 (US cents 95) per kilogramme.
Millers argue that the thin Ksh6 margin left for them to finance operations is meagre, thus the need for upward revision.
