Why your breakfast will cost more
Households will spend more money on breakfast as the price of sugar is expected to increase on falling stocks, adding to already costly milk.
The stocks held by sugar millers have dropped nearly 50 per cent over the past two weeks from 22,000 tonnes to 12,000 tonnes as of April 26.
Millers have increased factory gate price for the 50 kilogramme (kg) bag from Sh3,600 early last month to Sh4,000 in response the falling stocks and retailers are expected to pass on the cost to consumers in coming weeks.
Milk prices have increased by up to Sh10 for a 500 millilitre packet since January, and the commodity, together with sugar and bread, account for a significant share of the breakfast budget of most homes.
Agriculture Food and Fisheries Authority (AFFA) director-general Alfred Busolo said the falling stocks are likely to lead to an increase in price of sugar.
“We are looking at a situation where demand is going to outweigh the supply and obviously this will see the price of the commodity go up,” said Mr Busolo.
Some of the supermarkets and small retail shops have already increased the price of a two kg packet from Sh240 to Sh250.
An increase in food prices due to dry weather helped lift inflation to an eight-month high of 7.08 per cent last month, up from 6.31 per cent in March.
The decline in sugar stocks has been attributed to the temporary closure of Sony and Soin sugar millers for maintenance. The leading miller Mumias sugar factory is expected to shut down its plant this month to repair leaking pipes, further worsening the short supply of the sweetener.
Mr Busolo, however said it was also likely that traders are hoarding some quantities in anticipation of high prices in future.
A report from the sugar directorate indicates that Nzoia is the leading firm in terms of stocks, holding 7,976 tonnes as at April 26, followed by Butali which has 1,236 tonnes with Mumias having 945 tonnes.
Kenya remains a net sugar importer and is struggling to boost output as its consumption continues to outpace production. Consumption stands at 800,000 tonnes per year against local production of 550,000 tonnes.
The country has 12 millers, but the industry is dominated by loss-making State-owned sugar firms such as Mumias, Nzoia, Sony, Muhoroni and Chemilil which collectively owe the government Sh58.1 billion.