Consumers will have to dig deeper into their pockets to buy sugar following a 15 percent price hike by Illovo Sugar (Malawi) Limited.
This is a second hike in four months following a 12 percent jump in November 2012 necessitated by rising cost of fossil fuels and electricity.
But the sugar manufacturer’s public relations officer Ireen Phalula explained to Business News the cause of the rise this time around.
“This is a normal annual price increase implemented at the beginning of each sugar milling season,” she said.
The company’s milling season normally starts in April and ends in September.
Phalula said the sugar price adjustment, like the one that happened in November 2012 were in response to “abnormal economic conditions in the country” such as the depreciation of the kwacha, the continued rise in inflation, fuel and electricity price increases effected in the month.
Sugar price hikes have not amused the Consumers Association of Malawi (Cama).
Cama executive director John Kapito said the commodity is currently unaffordable to many and the increase will make life even harder for Malawians.
“To begin with, Illovo is a monopoly protected by government from imports. There are many institutions in Malawi that are failing to make similar profits like Illovo because government has refused to support and protect them, and they are on the brink of closing,” he said.
Kapito wondered why Illovo is given the free hand to operate as if the market were not regulated.
In the year ended September 30 2012, the company projected sales to be in excess of 300 000 tonnes, a four percent jump from the year before, buoyed by increased cane production.
Out of the sales, domestic market will account for about 55 percent of total sales, and that year-end stock will be carefully managed to ensure that the domestic market is fully supplied during the off-crop period.
The company, in the financial year, saw its revenue climbing by 71 percent to K30.6 billion (about $78.4m) from K18.1 billion (about $46.4m) same period the year before.
Illovo’s profit also went up to K9 billion (about $23m), a 143 percent increase from K3.7 billion (about $9.5m) the year before.
The Malawi Stock Exchange (MSE)-listed company has 713 million shares on issue.