Sugar smuggling hurting Kenya’s local prices-Kenya Sugar Board.

Sugar smuggling hurting Kenya’s local prices-Kenya Sugar Board.

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The Kenya Sugar Board wants government to stiffen controls at border points in the country to cushion against illegal importation of the sweetener, a crime it said was increasing, and affecting local cane farmers.

Hundreds of tonnes of illegal sugar have been impounded in the country especially in Mombasa, where it comes in through the port of Mombasa from origins including Brazil.

Rosemary Mkok, Kenya Sugar Board chief executive, said the country risked losing its cane farmers who have continued to be paid low amounts per tonne because of surplus sugar coming into the country illegally.

“In the period between January 2014 to date, the market (Kenyan) has experienced declining sugar prices to a low of 3,200 shillings for a 50kg bag, against an average industry break-even of 3,800 shillings, pushing down cane prices to lows of 3,000 shillings,” Mkok told delegates at the fourth African Sugar Conference which ended in Mombasa on Wednesday.

“Stocks have hit a record high of 40,000 metric tonnes against an optimal level of 9,000 metric tonnes,” she said.

She said high presence of illegal imports in the market had seen the industry continue to experience stock piles and declining ex-factory prices of sugar, with uncustomed imports being re-packaged into local bags to conceal identity and evade the surveillance network.

“Duty exempted industrial sugars have in some instances been similarly found re-packaged ending up on the market to compete with sugar that has been subjected to full duty.”

Africa’s sugar producers at the conference urged the continent’s governments to tighten border controls and deal with sugar smuggling within the continent, a problem they described as growing and key threat to local sugar prices.

Jose Orive, International Sugar Organisation (ISO) chief executive said African states had the potential to deal with smuggling whether within the continent or involving overseas countries.

“We have sensed that it is a serious problem. Every African sugar producer is very concerned. Part of the options that countries and governments have to contemplate when they negotiate continental trade agreements is measures at the borders to control the flows of sugar,” Orive told Baraka FM at the conference, which was attended by among others, representatives from major Sugar factories in Kenya.

“At the international level, if any country is selling below the market price, then you have the anti-dumping option at the world trade organization,” he added.

He said African countries facing smuggling challenges were free to ask ISO to help them tabulate statistics of the problem, to help the countries deal with it, but added none had made any such request.

Orive cautioned that the world was experiencing excess sugar production, and it was time Africa dealt with bottlenecks like smuggling, as it focused on adopting continental sugar trading to guard from the unstable global market.

“Right now we have a surplus worldwide. The European market will keep going down and we have seen that already. Africa should develop options to have intra-Africa trade, an arrangement where countries which consume the most, get sugar from countries that produce it,” he said.