Smuggling hurting African sugar producers

Africa’s sugar producers want governments to tighten border controls across the continent and tackle sugar smuggling, a problem they said was helping drive down local sugar prices, Reuters has reported.

Rosemary Mkok, chief executive of the Kenya Sugar Board, told a conference of sugar producers on Wednesday that smuggling was a big problem in east Africa’s biggest economy.

Large amounts of illegal imports had led to stockpiles and was pushing down sugar prices in Africa, with illegal imports being re-packaged into local bags to conceal their identity and evade the surveillance network.

“In the period between January 2014 to date, the market (in Kenya) has experienced a decline in sugar prices to a low of $36 for a 50 kilogram bag, against an average industry break-even of $43,” Mkok told the conference of African Sugar Producers in Kenya’s port city of Mombasa.

She said stocks in Kenya had hit a record high of 40,000 metric tonnes against an optimum level of 9,000 metric tonnes. Sugar prices are already under pressure due to excess global production.

Prices on the global market, especially in the European Union – Africa’s biggest external market – have fallen sharply over the last few years due to oversupply, and African producers are seeking new markets to cushion themselves.

African sugar producers at the conference have been discussing ways to increase trade of the commodity within Africa to survive falling world prices and the end of duty-free access to the European Union.