Controversy rages over the running retail price of locally produced sugar in Tanzania relative to the situation in the other East African Community partner states – Burundi, Kenya, Rwanda and Uganda.
Sugar industry sources stated in a survey by this paper that the item fetches the lowest price in Tanzania, adding that there is therefore no need for the government to continue calling for measures to further reduce it.
Rather, the sources recommended that the focus should now turn to hoarding, corruption and other factors usually conspiring to push prices of various goods up.
The survey showed that while the price of sugar in Tanzania currently stands at between USD 1.5 and USD1.6 (1800/- and 2,300/-) per kilogramme, it is USD1.7 in Rwanda, USD2 in Kenya and USD4 in Uganda. The corresponding figure for Burundi was not immediately established.
A Dar es Salaam-based sugar industry stakeholder said in a telephone interview with this paper yesterday that it was no longer necessary for the government keep demanding that producers reduce the price of sugar “as the current level is already as low as it could possibly be”.
“It is not true that the retail price of sugar in Tanzania is high, the fact is that we are have lowest prices in the EAC region,” he said, adding: “If the government still intends to reduce the price of sugar, it should instead consider scrapping or scaling down some of the taxes and other levies imposed on the business.”
He said operational costs obtaining in sugar production are so high that they contribute substantially to the rise in retail price for which consumers and the government have been blaming producers and dealers.
The stakeholder noted that a tonne of urea (fertiliser), which he said was a vital input in sugarcane growing, has recently doubled to USD 700, adding: “How can anyone hope to talk factories or wholesalers into lowering prices under such conditions?”
He said even producers operating from far-flung areas such as Kagera Region buy iron, diesel, pesticides and other “basic needs” from Dar es Salaam, “which contributes to high transportation costs and forces some factories to direct most of the sugar they produce to nearby regions even though the commercial capital (Dar es Salaam) is the most important market”.
Most people and institutions contacted during the survey were optimistic that the retail price of sugar would drop appreciably if measures were taken to reduce fuel prices and improve transport infrastructure and networks.
Sugar producers and dealers approached for comment indicated that they willing to hold talks with the government on modalities of putting the retail price of sugar within closer reach of more ordinary consumers but without short-changing any party in the process.
Reacting to comments by Members of Parliament in the National Assembly in Dodoma recently, Agriculture, Food Security and Cooperatives deputy minister Adam Malima said the government was ready to regulate the prices of all locally produced goods including sugar in order to enable more people to access them more cheaply.
He said it defied logic seeing sugar produced in Tanzania selling at a higher price than imported equivalents, suggesting that the major explanation for the situation was that the business was left in the hands of business people out to make windfall profits.
“It is unbelievable to see sugar from Mtibwa in Morogoro Region sold in the Dar es Salaam market at 2,000/- per kilogramme while that imported from Brazil fetches only 1,200/- per kilogramme. This is not fair to ordinary people,” he said.
The deputy minister said the government would meet representatives of local sugar producers, including small-scale factories, “with a view to seeing how to regulate these prices”.
He said in the event of the government seeing need to supplement supply of sugar in the country with imports, those licensed to bring in the item would have to deliver “as promptly as agreed and without inflating prices”.
Agriculture, Food Security and Cooperatives minister Christopher Chiza meanwhile stated that the government was determined to ensure that the country has enough sugar and would urge large small-time local producers to do more to reduce the deficit and therefore make importation unnecessary.
It was however reported that for a long time sugar producers have raised concern over importation of thousands of tonnes of sugar using foreign currency contrary to the amount specified by the government, saying the influx threatens local industries.
Local sugar producers have often stressed that there is hardly any need for Tanzania to “waste hard-earned foreign exchange” importing an item they produce enough of and to spare.
Reports show that traders once imported over 242,000 tonnes of sugar worth USD 157.3 million, claiming to hold permits issued by the government, while locally produced sugar was piling up in godowns for lack of buyers – partly because of the price factor.Sugar factories based in Tanzania include Kilombero and Mtibwa in Morogoro Region, Kagera Sugar Company in Kagera Region and TPC in Kilimanjaro Region.
Mtibwa Sugar operations manager Bernard Kiula is on record as having recently said they have in stock 3,000 tonnes of the item, attributing the pileup to a rise in imports selling cheaper than locally produced sugar.
“We resumed sugar production on June 4 this year and already have 3,000 tonnes in stock. We are experiencing more difficulties selling the product than obtained in the past,” he said, adding: “Our factory can produce between 3,000 and 4,000 tonnes of sugar in two weeks. But we have been informed of the presence of cheap imported sugar that will surely disrupt the local market.”
Local sugar factories normally shut down between February and May every year owing to torrential rains that adversely affect production and also for mandatory maintenance of machines and equipment, with business resuming in June.
Many sugar industry watchers see the influx of imported sugar seriously eroding local manufacturers’ capacity to do enough business to pay employees and the outgrowers feeding their factories.
Prime Minister Mizengo Pinda called a meeting of sugar stakeholders in March last year at which it was agreed that the retail price of sugar stand at no higher than 1,700/- per kilogramme across the country. However, the agreement didn’t work even for imported supplies that ought to have been cheaper.
In late March last year, then Agriculture minister Prof Jumanne Maghembe witnessed godown upon godown stocked with sugar awaiting buyers at Kagera Sugar Limited at the weekend.
Amid reports of intermittent shortages of sugar triggering hoarding and hikes in the price of the item in several parts of the country, he was told that the company had a lot more unsold sugar than it could hold in its warehouses.
KSL general manager Ashwin Rana had months earlier told a visiting National Social Security Fund delegation that they had enough sugar in stock which, combined with that lying in the godowns of its Mtibwa-based sister company, reinforced the perception that the much-discussed ‘shortages’ were artificial.