Let’s dismantle cartels inflating sugar prices

The admission by the regulator that cartels are inflating sugar prices is unfortunate. This indicts the Agriculture Fisheries and Foods Authority (AFFA) for failing to rein in individuals and firms making sugar production in Kenya the most uncompetitive in the region.

Kenyan consumers are paying a third more over the factory-gate prices. Now AFFA wants the Competition Authority of Kenya to come in and sort out the mess, by tracking the distribution chain to determine whether the value addition in transporting the commodity from the factory to the retail outlets is actually commensurate with the mark-up.

Currently, ex-factory prices of sugar range between Sh3,900 and Sh4,000 for a 50-kilo bag. On average, millers pay a maximum of Sh80 a kilo. However, buyers across the country, including retailers nearest to the factories, sell branded sugar at average prices of Sh120 a kilo, and Sh107 for the unbranded commodity, repackaged in polythene bags.

A parliamentary committee investigating the crisis in the sector blamed these mark-ups on inefficiencies along the supply chain that have allowed middlemen get away with damaging profit margins. The crisis brewing in the sugar sector requires intervention, rather than political rhetoric.

So what do we do in the meantime? First, the sugar cartels are not working in a vacuum; their identities are known. AFFA has acknowledged their existence, and this is their chance to name and shame them to rid the supply chain of the weak links. Second, the sugar barons should pay for messing up the livelihood of farmers. AFFA should act, now.