| World sugar prices are set to rise sharply following
Brazil's decision to reduce its production by 12 million tonnes to be used
to produce power alcohol.
But Mumias Sugar Company chief executive Errol Johnson said this will
not affect Kenyan sugar unless the country imports the commodity.
Addressing the company's dinner for its customers in Mombasa at the
weekend, Mr Errol said: "Brazil will is producing 12 million tonnes
less of sugar this year, leading to a sharp rise in the global price of
the commodity," Mr Johnson said.
Industry sources said that as a major producer of crystallised sugar,
Brazil's decision was likely to destabilise the commodity's prices for
sometime.
He said the drop in local sugar production was caused by vagaries of
nature and some unscrupulous traders hoarding the commodity to create an
artificial shortage and then reap hefty profits.
Mr Johnson said: "The local sugar industry is going through a
temporary slump and within three weeks we shall witness some change."
He said Mumias was producing around 267,000 tonnes of sugar annually,
which was about 55 per cent of the domestic demand.
Mr Johnson said the drought and other problems afflicting the
sub-sector had interrupted the company's plans to increase production by
10,000 tonnes.
Meanwhile, Kenya Sugar Authority chief executive Francis Chahonyo
claims a Mombasa-based cartel was responsible for the current shortage.
He warned the traders that they will be in for a surprise when the
government acts to stabilise the prices.
"This cartel of powerful Mombasa-based traders has been
pressurising the government to allow them to import sugar. But the
authorities have been reluctant because this would deal a death blow on
the struggling local industry," Mr Chahonyo said.
Mr Chahonyo said the government might flood the market with cheap
imported sugar to upstage those hoarding the commodity.
Mombasa chairman of the Kenya National Chamber of Commerce and Industry
Najib Balala called for a collective approach to find a lasting solution
to the sugar shortage gripping the country. |