Sugar price tussle sours

Battle lines have been drawn between Illovo Sugar (Malawi) plc and Ministry of Trade and Industry over pricing, with the producer refusing to commit to reduce the price within seven days.

The local sugar manufacturer, which has a 95 percent market share,  said issues of pricing are decided upon internal evaluation of various factors.

The position follows a statement Minister of Trade and Industry Simplex Chithyola Banda issued earlier yesterday ordering the sugar manufacturer to reduce the price of industrial sugar within seven days.

The statement dated June 14 2023 comes after government led by Minister of Finance and Economic Affairs Sosten Gwengwe engaged Illovo Sugar (Malawi) plc on the matter on Sunday.

Chithyola Banda said the meeting resolved that the price of industrial sugar should be reduced and claimed  that Illovo Sugar committed to do so..

But in a written response last evening, Illovo Sugar (Malawi) plc communications and stakeholder relations manager Olive Kawerama expressed surprise that the ministry’s statement suggested that they have agreed to reduce the price of sugar.

She said: “Our understanding of the discussions was that the ministry requested Illovo to consider revisiting the price of industrial sugar as a condition for the ministry to consider cancelling the licences for the importation of sugar.

“Illovo undertook to revert to the ministry within a week and is yet to submit its response as the one week has yet to expire.”

Kawerama indicated that the Malawi Stock Exchange (MSE)-listed firm will internally evaluate the press release and respond accordingly, directly to the ministry.

However, Ministry of Trade and Industry spokesperson Mayeso Msokera yesterday justified the move to force Illovo to reduce price of  industrial sugar.

He said the ultimate goal of the move is to ensure that local products are competitive and the country achieves import substitution.

Msokera said: “This implies that after Illovo, we will also engage local manufacturers who use sugar as a raw material to ensure that such reductions do benefit the consumer.

“The goal is to see consumers ably affording some local products which are expensive on the local market so that they don’t buy the same outside the country.”

Meanwhile, the government has issued two sugar import licences to Mugisha Investments to bring in 20 000 metric tonnes (MT) of brown sugar, a development Illovo Sugar says will affect local manufacturers.

The ministry has since threatened to issue more import licences to other players in the sugar sector to help cushion the price of commodities that use sugar as raw material, if Illovo does not reduce the price.

Meanwhile, some industry sources backed the government’s decision, arguing that the cost of industrial sugar in Malawi is high.

Coca-Cola Beverages Africa, the parent company of Coca-Cola Beverages Limited, yesterday expressed hope that should the proposal be considered it will help bring down prices of some local commodities, specifically their beverages.

“We agree that this will be beneficial to both consumers and industry. We believe in partnering for solutions that benefit us all and this is a step in the right direction for future collaboration as we work together to grow the Malawi economy,” said the company’s managing director Seutloadi Thaanyane.

Locally, the price of sugar has been on the rise currently trading at K1500, a price last effected in October last year.

For industries they have been buying it at $1250 (about K1.283 million) per metric tonne.

Last week, Consumers Association of Malawi executive director John Kapito also accused the government for failing to protect consumers, saying they  are paying more to access sugar.

Meanwhile, Competition and Fair Trading Commission has said it is yet to make determinations on some cases it has been probing the giant sugar manufacturer Illovo Sugar Malawi plc for.

Illovo, which annually cultivates around 1.8 million tons of cane which together with approximately 350 000 tons produced by Malawian smallholder farmers has two estates in Dwangwa and Nchalo, is the country’s major sugar manufacturer.

The company, which is listed on the MSE, has a 97 percent market share and employs about 9 500 people.