Source: The Star
Author: Jacktone Lawi
Context and Background:
Kenya is experiencing a paradox in its sugar market, where retail prices have risen by at least KSh20 despite an increase in sugar imports and a reduction in factory prices. Jacktone Lawi, writing for The Star, highlights this puzzling trend that has left consumers and stakeholders questioning why retail prices are climbing while market conditions suggest they should be falling.
The increase in imports was intended to stabilize the market by supplementing the local sugar supply and curbing price hikes. Similarly, lower factory prices were expected to trickle down to consumers, making sugar more affordable. However, this has not been the case.
Market Dynamics:
The rise in retail prices, according to Lawi, can be attributed to several market inefficiencies and supply chain issues. While imports have risen, logistical challenges such as transportation costs, warehousing, and distribution bottlenecks have contributed to higher prices at the retail level. Additionally, traders may be taking advantage of the situation, marking up prices to maximize profits even as factory prices decrease.
Another factor contributing to the price increase is the ongoing instability in the global sugar market. Even with increased imports, global market fluctuations have driven up the cost of imports, adding pressure to local prices. These factors combined have led to a disconnect between the expected lower retail prices and the current reality.
Impact on Consumers and Farmers:
Consumers are feeling the pinch as the cost of sugar continues to rise, putting additional strain on household budgets. The price hike has also sparked concern among sugarcane farmers, who see little benefit from the higher retail prices, as factory prices continue to fall. Farmers have expressed frustration over the disparity between what they earn and what consumers are paying for sugar, raising questions about how profits are distributed across the supply chain.
Government and Stakeholder Response:
Lawi reports that industry stakeholders and government officials are being urged to intervene and address the inefficiencies that are driving up retail prices. Calls for better regulation and oversight of the sugar supply chain have grown louder, with consumers and farmers alike demanding transparency in how prices are set.
The government is under pressure to ensure that the benefits of lower factory prices and increased imports reach consumers, rather than being absorbed by middlemen and traders.
Opinion:
Can better regulation of Kenya’s sugar supply chain help reduce retail prices, or are global market forces too influential?
While global market forces undoubtedly play a role in Kenya’s rising sugar prices, better regulation of the domestic sugar supply chain could help mitigate the impact. By addressing inefficiencies in transportation, distribution, and pricing practices, the government can ensure that lower factory rates and increased imports benefit consumers. Greater oversight and transparency are key to ensuring that traders and middlemen do not unduly inflate prices, allowing both consumers and farmers to reap the rewards of a more stable sugar market.
While external factors may continue to influence prices, targeted reforms in the local supply chain could significantly reduce the burden on consumers.
Sourced by Rosemary Wambui of AFA - Sugar Directorate