How to lower sugar prices?

The government must now step in and address the cyclical sugar shortages which have, in the last the past four months, pushed up retail prices by more than 45 per cent.

It should also seek ways to remedy policy failures which are largely responsible for the shortage.

First, the government should sell its stake in the sugar industry to allow for injection of funds by private investors to revitalise the sugar mills where the state has a controlling majority.

This will enhance production capacity and encourage competition.

The government should also force the Kenya Sugar Board to come up with workable solutions to help farmers increase cane production.

The next step should be to stop pursuing protectionist policies which bar the import of sugar while the bottlenecks that lead to shortages and high prices are not addressed.

Under the Comesa treaty, Kenya is allowed to import sugar from any of the 23 member countries at a reduced tariff.

This, together with the fact that some of the countries produce sugar at half the local production costs, should help drive down retail prices.

That was supposed to happen in 2001, but the government lobbied the regional bloc for a moratorium, saying the local industry needs time to build capacity so it can compete with cheaper imports.

A decade later, nothing has happened. And all indications are that the government will be lobbying for a fourth extension when the current one expires on June 30 next year.

This must not be allowed to happen. If local millers cannot produce enough sugar to meet demand, then it should be imported from Comesa countries.

This, however, must be done in a structured way to ensure sugar barons do not take over the importation and conspire to keep the prices high.

source: dailynation