Sugar prices up as factory closes
May 29, 2010
Sugar prices have risen steadily during the last two weeks following closure of the biggest producer, Kakira Sugar Works, for maintenance.
By Agnes Kyotalengerire
Sugar prices have risen steadily during the last two weeks following closure of the biggest producer, Kakira Sugar Works, for maintenance.
Factory officials said they will remain closed till the last week of June.
By yesterday, the retail price in Kampala had risen to between sh2,700 and sh3,2 00, from sh2,400 last month.
The Uganda Sugar Cane Technologist Association yesterday attributed the price increase to speculation.
“When traders get to know that the sugar corporation is going to stop production for the annual maintenance, they increase prices as a result of speculating that the supply will be low,†said Wilberforce Mubiru, the association’s secretariat manager.
Mubiru added that the Sugar Corporation of Uganda Limited (SCOUL) had just resumed production when Kakira closed.
Mubiru, however, argued that the price rise is the fault of middle men and not the factories.
“Before the factory goes on off crop, it stocks enough to last through the period of non-production and therefore the factory selling prices remain the same,†he explains.
However, Mubiru predicts that after Kakira resumes operation in one month’s time, traders will drop the speculation and prices will come down.
He notes that this will be gradual because when the factory is resuming production from off crop, it does not fire off immediately but gradually, production normalises.
Kakira Sugar officials say they have maintained a factory price sh105,000 per 50kg bag, which translates into about sh2,100 per kilo.
However, sugar wholesalers insist there is limited supply and this is to blame for the price increase.
They argue that the costs of transportation, delay in delivery and rationing from other operating factories contribute to the high cost.
The wholesale prices have risen from sh10,6000 to sh130,000 per bag, which translated into sh2,600 per kilo.
About this time last year, when Kakira sugar factory closed for the annual maintenance, prices of sugar increased from sh1,900 to sh2,300 per kilo.
The prices remained stable, until October, 2009 when they again rose due to closure of Kinyara Sugar Works for annual maintenance. Kinyara will close again this October.
Sugar prices have risen steadily during the last two weeks following closure of the biggest producer, Kakira Sugar Works, for maintenance.
Factory officials said they will remain closed till the last week of June.
By yesterday, the retail price in Kampala had risen to between sh2,700 and sh3,2 00, from sh2,400 last month.
The Uganda Sugar Cane Technologist Association yesterday attributed the price increase to speculation.
“When traders get to know that the sugar corporation is going to stop production for the annual maintenance, they increase prices as a result of speculating that the supply will be low,†said Wilberforce Mubiru, the association’s secretariat manager.
Mubiru added that the Sugar Corporation of Uganda Limited (SCOUL) had just resumed production when Kakira closed.
Mubiru, however, argued that the price rise is the fault of middle men and not the factories.
“Before the factory goes on off crop, it stocks enough to last through the period of non-production and therefore the factory selling prices remain the same,†he explains.
However, Mubiru predicts that after Kakira resumes operation in one month’s time, traders will drop the speculation and prices will come down.
He notes that this will be gradual because when the factory is resuming production from off crop, it does not fire off immediately but gradually, production normalises.
Kakira Sugar officials say they have maintained a factory price sh105,000 per 50kg bag, which translates into about sh2,100 per kilo.
However, sugar wholesalers insist there is limited supply and this is to blame for the price increase.
They argue that the costs of transportation, delay in delivery and rationing from other operating factories contribute to the high cost.
The wholesale prices have risen from sh10,6000 to sh130,000 per bag, which translated into sh2,600 per kilo.
About this time last year, when Kakira sugar factory closed for the annual maintenance, prices of sugar increased from sh1,900 to sh2,300 per kilo.
The prices remained stable, until October, 2009 when they again rose due to closure of Kinyara Sugar Works for annual maintenance. Kinyara will close again this October.