Sugar prices go up, CFTC to open probe
Consumers are now paying 15 percent more for a one kilogramme (kg) packet of sugar following decisions by Illovo Sugar (Malawi) plc and Salima Sugar Company to increase prices yesterday.
While the sugar manufactures say the price review is arising from soaring production costs, but the Competition and Fair Trading Commission (CFTC) says it will investigate the reasons behind the price increase.
A memo Business News has seen dated April 20 2024 shows that effective yesterday, one kg of brown sugar is selling at K2 300, up from K2 000, a development which comes barely five months after the company effected a 33 percent hike in sugar prices following the November 2023 devaluation.
Following the increment, consumers are now paying K43 241 for a bale of brown sugar and K48 674 for refined sugar.
The price hikes come amid sugar scarcity on the market, which saw some traders selling the commodity at as high as K4 000 per kg.
In an interview yesterday, Illovo Sugar (Malawi) plc managing director Lekani Katandula said the company expects sugar to be readily available throughout the country within the next two weeks.
He said: “We have resumed production in Nchalo and will be resuming production in Dwangwa within this week.
“We, unfortunately, can’t provide such information as that would breach Malawi Stock Exchange [MSE] regulations in respect of market sensitive information.”
Speaking seperately, Salima Sugar Company board chairperson Wester Kosamu confirmed that rising production costs have pushed thir sugar prices from K1 900 to K2 200 per kg
However, Consumers Association of Malawi executive director John Kapito described the hike as unjustifiable and punitive.
He said: “ The monopolies starved the market of sugar for months and suddenly when they want to start their new production, they introduce unjustifiable and punitive prices using their arguments against the parallel market prices that were caused by the sugar scarcity they had created.”
On his part, Centre for Democracy and Economic Development Initiatives executive director Sylvester Namiwa said there is need to revive the Sugar Bill of 2021, observing that the strategic commodity that is sugar cannot be regulated by the Control of Goods Act alone that also seems to protect and serve the interests of a monopolies.
“This is why we are pushing for proper regulations in the sugar industry,” he said.
Malawi has seen a rise in commodity prices due to, among others, the weakening kwacha and the Russia-Ukraine war.
The developments have in turn exerted pressure on domestic prices, which have risen sharply since last year.
In an interview yesterday, economist Gilbert Kachamba observed that a significant price hike in a staple commodity like sugar could contribute to overall inflationary pressures.
Speaking separately, CFTC spokesperson Innocent Helema said the commission will engage the sugar manufactures on the reasons behind the recent increase.
He said: “This may culminate in a full-fledged investigation against the company depending on the explanation we get.
“Salima sugar will be engaged to appraise CFTC as regards to the basis of such an increment especially consiering that, just few days ago, they had alunched the new season sales at another recomended price.”
