The country’s sugar prices will not be affected by the recent sharp increase of international prices. To beat the emerging deficit on the local market, Kabuye Sugar Works is importing up to 1,200 bags of sugar from their “sister” company, Kakira Sugar Works in Uganda.
The imported sugar will supplement local production and keep prices stable.
“We are trying to bridge the gap and create market stability. So that we make more sugar available and speculation is removed,” Rao Mahakali, General Manager for Kabuye Sugar Works, told Business Times in an interview on Friday.
The price of sugar recently went up from Rwf2,000 to Rwf3,000 according to Mahakali.
“We would like to see the shortage is not exploited beyond limit. Sugar is sensitive when the price increases every body talks about it as opposed to other commodities,” he said.He also revealed that the increase was triggered by a mismatch between production and demand.
“While demand for sugar has been increasing, world production is less,” Mahakali said, pointing out that production is going down because the sugar raw material area has been reduced.
“The sugar cane area has reduced because part of the area is taken up for bio-fuel production,”However, Rwanda and Africa as a whole are shielded from the impact of this shortage as they produce brown sugar yet the rest of Europe and America consumes white sugar.
“This is not the case here in Africa, so the impact of the world prices is not so much in Africa,” he added.
World sugar production has been revised downwards in the recent past (2008/2009) to 149.3 million tonnes raw value from the February estimate of 156.3 million tonnes. This represents a 12 percent decrease on 2007/2008 production.
Meanwhile, global consumption is forecasted to grow at the rate of 2.19 percent to 165 million tonnes of raw value.
Kabuye Sugar Works owned by the Madhvani Group currently produces between 45-50 tonnes daily amounting to 65 percent of the country’s demand.
Rwanda’s current sugar demand stands at an annual 20,000 tonnes and the deficit is largely covered by imports from Zambia, Malawi and Kenya.
Recently the government removed the surcharge of 25 percent on imported sugar by different industries as a raw material.
Land is scarce in Rwanda and has been the biggest hurdle to increasing the factory’s output, Mahakali said, adding that much of its cane is grown in swampy areas that flood.
“We are engaging government to find us alternative land to grow enough sugarcane because the question of limited land continues to be the biggest challenge to our production capacity,” he said, pointing out that the company has the capacity to produce 100 percent requirement.
Mahakali said his firm was largely dependent on supplies from out growers cultivating farms on over 2,200 hectares.