Sugar price cap brews a storm in Tanzania

By Bob Karashani, DAR ES SALAAM Tanzania

Tanzanian sugar regulators are embroiled in a feud with producers as they seek to enforce price caps on the commodity, amid a nationwide shortage.

Retail sugar prices have gone up twofold from an average of Tsh2,300 ($0.91) in November to between Tsh4,000 ($1.58) and Tsh6,000 ($2.37) per kilogramme, with fingers being pointed at factory owners, importers and traders for the artificial shortage.

Across the EAC, sugar prices average about $1.30 per kilo in Kenya, despite a government waiver on import duty from January last year; $1.35 in Uganda, $0.44 in Rwanda, $0.83 in Burundi, $1.92 in DR Congo, $2.36 in South Sudan and $3.14 in Somalia.

In response to a public outcry over the rising prices, the Sugar Board of Tanzania last month announced shop price caps of between Tsh2,700 ($1.07) and Tsh3,200 ($1.27), depending on point of sale within the country, which were to become effective on January 23 and remain until June 30.

Industry players responded by saying the prices were too low and would render their businesses unprofitable. Tanzania’s seven main sugar factories have since halted or slowed down production, exacerbating the shortage in retail shops while prices have remained high.

This comes at a particularly bad time for the Islamic community as Ramadhan approaches, a period when demand for sugar is highest.

Agriculture Minister Hussein Bashe has warned sugar producers and traders to desist from trying to force a reversal of the price cap by lobbying government officials and ruling CCM party politicians “behind the scenes”. He asserted that such methods would be fruitless as “this is not a matter that can be resolved politically.”

“In this country, there are only four people who can summon and question me about the price caps: the President, the Vice-President, Prime Minister and Deputy Prime Minister,” Mr Bashe said. “There is no one else who can cancel that decision.”

Earlier, in a January 24 post on his X account, Mr Bashe invited industry stakeholders aggrieved with the sugar board’s move on price cap to his office for consultations and “stop looking for short-cuts.”

The seven major sugar factories in Tanzania currently produce an average of 1,000 tonnes per day against national requirements of 1,500 tonnes per day and 490,000 tonnes annually, with the gap covered by imports.

The government’s target for this year was 500,000 tonnes before the latest disruptions caused by rains.

Mr Bashe said on January 21 that the government would issue permits to local producers and traders to import 100,000 tonnes of sugar immediately but warned against abusing the permits by hoarding supplies to inflate prices.

“If the factory owners and wholesalers continue to hoard supplies in order to push prices up, the government will revoke its protection for them against sugar imports. We cannot protect factories at the expense of consumers,” he said.

According to Mr Bashe, sugar prices in the local market are expected to stabilise by mid-February and the total import allocation to have arrived in the country by the end of February.

“The ministry will also continue to assess the rain situation and damage caused to sugarcane farms since we don’t want to import amounts of sugar that could kill local production altogether,” he said.