Uganda Sugar prices to reduce as imports arrive

Tuesday, 20th September, 2011

Uganda Sugar prices are set to gradually fall starting this month as imported sugar floods the market, the trade ministry has said.

Ambassador Julius Onen, the ministry’s permanent secretary, said despite the depreciation of the shilling, the retail price of sugar will fall as supplies start to trickle into the country.

"In addition to the sugar imported by Kakira Sugar Works, we are expecting an additional 15,000 metric tonnes of sugar to arrive in the country in the second or third week of October," Onen said.

He explained that the retail price of a kilogramme of the imported sugar had remained high because of the associated costs of importation and the increase in international sugar prices.

Onen said a tonne of sugar costs over $1,000 (about sh2.8m) before taxes at the border points.

White sugar prices on the London Stock Exchange went up by about sh8,000 at the start of September.

A kilogramme of sugar is going for between sh5,500 to sh6,000 at most supermarkets in the city.

Earlier this week, traders in Jinja had threatened to block trucks importing sugar, saying it was illogical to buy a 50kg bag of imported sugar at sh223,000, while that of locally produced sugar goes for sh140,000.

"The shilling has depreciated so the cost has to go up," said Mayur Madhvani, the Kakira Sugar Works boss.

He said despite earlier hesitation, traders had started buying the sugar in large quantities.

Madhvani explained that one bag of imported sugar was sold for every bag of locally produced sugar to stabilise retail prices.

"A kilogramme of locally produced sugar costs sh2,800, while an imported one costs sh4,460. Traders should sell both at an average price of sh3,800," Madhvani noted.

Kampala City Traders Association spokesperson Issa sekitto said despite the 25% import duty being scrapped, traders still had to pay 18% of the value of sugar imported to Uganda Revenue Authority as valued added tax, pushing costs further up.

"Prices of sugar are definitely going to fall but it will not happen in one day," he said.

By Samuel Sanya : The New Vision Newspaper