State won’t control prices - Mukwaya

Dec 20, 2006

THE Government will not set a price ceiling for sugar and other commodities whose prices have shot up in the past months, the trade minister has said.

By Harriette Onyalla

THE Government will not set a price ceiling for sugar and other commodities whose prices have shot up in the past months, the trade minister has said.

A price ceiling is a maximum price above which selling a commodity is illegal.

Speaking during a press briefing at the Media Centre in Kampala, Janat Mukwaya said the country operates under a liberalised economy where prices are set by the market forces of demand and supply.

“Market forces will continue deciding prices. We cannot intervene to push prices down. What is happening now shows that there is increased demand for Ugandan commodities both locally and in the Great Lakes region. But we expect sugar prices to go down in the near future,” she said yesterday.

Mukwaya said the rise in sugar prices from sh1,500 per kilogramme to sh3,000 in the last month, was part of a general trend in the increase of prices in the last six months.

She attributed the hikes to increased cost of power and prolonged drought. “In September, the producer prices of all manufactured goods were 12.3% higher than in September 2005, 12.2% higher in August 2006 than in August 2005 and 12.9% higher in July 2006 than in July 2005,” she noted.

Mukwaya, explained that the impact of the closure of Kinyara Sugar factory for servicing reducde the sugar production by 30%.
However, despite Kinyara’s reopening on November 30, sugar prices have continued increasing.

yesterday, a kilogramme of sugar was sold between sh2,800 and sh3,000 in city suburbs. In Arua and Gulu, the prices were between sh3,000 and sh3,500. In Soroti and Busia, prices were at sh2,500, while in Mbarara it remained at sh3,000.

But even when the three sugar factories are at full production, there is a 20% deficit in supply, as daily domestic consumption of sugar in the country is about 548 tonnes.

Trade ministry figures show that Kakira Sugar produces 300 tonnes of sugar daily, Kinyara 200, while 150 is produced by Lugazi Sugar company.

Mukwaya believes that external factors like high demand from South Sudan and the DR Congo, are partly responsible for the increasing prices. “The current trend is temporary. The price of sugar should be able to decrease following the resumption of production in Kinyara, increased imports and less speculation,” she assured.

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