, NAIROBI, Kenya, Dec 15 – The Parliamentary committee on agriculture now wants the maximum price of sugar capped at Sh130 per kilo saying unscrupulous retail traders have been manipulating the costs to unduly gain from the current shortage.
The committee, led by Naivasha MP John Mututho, noted that the costing formula used by millers under the prevailing conditions set the price at Sh115 per kg but retailers increased the prices to highs of Sh200 per kg.
The committee argued that even though the high production costs incurred by factories could have led to the general increase, the current prices could not be justified.
Mututho maintained that retailers be held responsible for the escalating sugar prices and be reprimanded for exploiting consumers noting that millers had indicated that the maximum retail price per kg should not have exceeded Sh150.
“The recommended retail price per kilo should be placed at a maximum of Sh130. This is because millers estimated this price was indicative both locally and in the COMESA region,” he said.
The committee further called for the immediate importation of 275,000 tonnes of duty-free sugar by all sugar millers, in proportion to their production capacities, to offset the current shortage.
Supermarkets have been restricting the quantity of sugar shoppers can buy at a go due to the shortage.
Mututho said that it was important to provide licenses to all sugar millers for the importation of the said duty-free products.
The committee also wants the duty free waiver for the importation of sugar by factories extended by four months to cover December 2011 and April 2012 in order to ensure that no shortage would be witnessed in the event that millers shut down their operations to allow cane to mature.
“This is the period during which most factories close operations to allow cane to reach harvesting age so the extension will cover any eminent shortages,” explained Mututho adding that the four months was required for the maturation of cane.
He also urged the government to fast track the process of privatising state-owned sugar factories to promote their expansion and increase their efficiencies.
“The committee recommended that the share capital by farmers during privatization be pegged at 51 percent so that it acts as an incentive for farmers to boost production,” argued Mututho.
The committee further accused the provincial administration of impunity for encroaching on a 30-acre estate belonging to Chemelil Sugar Company used for cane development.
The country’s current sugar production rate stands at 376,112 tonnes against a rising consumption rate of 772,731 tonnes forcing Kenya to import the commodity to bridge the deficit.
The 11-member committee also discovered that there had been a steady decline in sugar production since the beginning of the year.
Mututho noted that while in January total national production levels by the nine sugar factories stood at 55,974 tonnes, the levels decreased to 22,276 in September.
“Statistics further indicate that total sugar production in the country has registered a mere 0.6 percent increase between 2010 and 2011,” he observed.
It also emerged that the effects of the post election violence had destabilized cane development in sugar growing areas.
Other factors that were also cited for the shortage were poor rainfall patterns, inability by sugar millers to produce their cane, poor operational performance of parastatal sugar mills as well as delays in clearing sugar imports.