This is why sugar prices may remain high in Tanzania

Dar es Salaam. The recent spiking in sugar retail prices will unlikely ease in the short term as promised, even with imports streaming in, The Citizen can report.

A market survey in the commercial capital, Dar es Salaam, yesterday showed that many wholesalers were buying the commodity from one major stockist at Sh130,000 for every bag of 50 kilogrammes of sugar.

With a marginal profit margin expected by the wholesalers, they told The Citizen that they were selling the same 50 kilogrammes of sugar for Sh135,000 to the end retailers.

For a couple of days now, most retailers across many parts of the country are offering a kilogramme of sugar for Sh4,500, up from between Sh2500 and Sh2800.     

The Tanzania Sugar Board and the Fair Competition Commission have blamed alleged hoarding of sugar by wholesalers and other malpractices for the price jump and warned that dire action will be taken against culprits.

Yesterday, the sugar board director general, Prof Kenneth Bengesi, said the problem will ease as more imports of the commodity arrive in the country over the coming weeks.

However, according to the field inquiries by The Citizen, the wholesalers are the unlikely culprits. Yesterday, those found lining up to buy sugar from the Dar es Salaam stockist confirmed they were all being sold the 50kgs bag for Sh130,000.

“It is therefore impossible to say we can buy the sugar for that much and sell it for less the amount. For us to make some profit, I will buy the 50kgs bag for Sh130,000 and sell it for Sh135,000. If you work out the calculations, it will show you why retailers too have to sell the commodity for Sh4000 and above,” explained one wholesaler who wished not to be identified due to the sensitivity of the sugar business.

According to the city centre wholesaler, he had applied to be given 600 bags of the 50kgs of sugar from the same stockist but was only able to get 400 bags. “The queue is too long and you can see that only this stockist has the product for sale in Dar es Salaam,” he noted.

Efforts to get an explanation from the stockist about the rationale for pricing the sugar at Sh130,000 per 50kgs bag were futile as the owner of the business was unavailable to speak to the media.

This particular stockist, according to the sources who spoke to The Citizen, was selling stocks received last week from over 6000 tonnes of sugar imported by Kagera Sugar. It was also not immediately established for how much the dealer bought the product from Kagera Sugar. Call to the company and the other manufacturers who enjoy the import facility were unsuccessful. A spokeperson for the association of sugar producers declined to speak when reached for comment.

According to the wholesalers, for the retail prices of sugar to fall from Sh4500 to the normal range of Sh2500 to Sh2800 a kilo, the main stockist has to sell the a 50kg bag of sugar for less than Sh95,000 to the wholesalers. Some of the traders challenged the sugar board to state for how much the importers were paying up to the point of clearing a tonne of sugar at the port. “If you factor in all the costs of importing and clearing the sugar, including paying the requisite taxes, the cost of a 50kgs bag comes to around Sh87,000,” pointed out another trader  who has been in the business for many year.   

But when asked about the market inquiries and what The Citizen had discovered, Prof Bengesi said the board was not aware of the trend, saying it could not comment basing on media inquiries.

“What SBT knows is only landed costs, but for the cost of a-50 kilogram it could be better if you ask importers themselves,” said Prof Bengesi.

 “Though I cannot tell how much exactly, importers should sell above 84,000, unless there is computation problem.”

 He said price varied among importers as the cost of imports varied too.“We are working on the indicative price. They will be public later on,”

Earlier speaking to The Citizen, Prof Bengesi said the price may start falling next week as about 24,620 tonnes of imported sugar is released into the market. Prof Bengesi said some 5,643 tonnes have already been distributed to various regions.

He added that the rest, including 720 tonnes which arrived on Monday was expected to be cleared yesterday (Tuesday) and would all enter the market from tomorrow. “Unless the prices start falling next week, we will launch a crackdown to identify and punish unscrupulous traders who are creating artificial prices,” noted Prof Bengesi. 

“Dishonest traders risk having their operating licenses revoked, but this should be our last resort as there are other penalties,” noted Prof Bengesi.   “Our aim is not to hurt traders, but make them responsible.”

The country’s four factories of Kagera Sugar Ltd, Kilombero Sugar, Mtibwa Sugar Estates Ltd and TPC Ltd produce an estimated 360,000 tonnes of sugar annually against the domestic demand of about 670,000 tonnes. The deficit is filled by imports, with SBT issuing import permits to the four manufacturers.