Capital Ethiopia Newspaper

Sugar prices still sour

Sugar price hike and product shortage continue to be observed all over the country in spite of the government saying that the problem is resolved.
Sugar shortage that forced the price to rise significantly in Addis Ababa and regional towns seems to persist.  Dwellers in the capital city and regional towns said that they do not get the product as regularly as they used to and have to pay up to 25 birr per kilogram.
Capital’s survey found that the price of a kilo of sugar is about 18 birr in Addis Ababa and about 25 birr in regional towns.
“I buy a quintal of sugar for 2,300 birr from bulk suppliers from Addis Ababa,” a small shop owner from Hawassa town told Capital. “I sell it at 25 birr per kilogram here,” he said.
For the past few years the price of sugar and its inadequate supply has remained a hot issue on the market. Government officials and experts in the sector agree that the demand and supply gap in relation with unsettled market system is the major difficulty for the price instability. Recently, the government has changed its distribution scheme and started supplying it through governmental market systems, consumer associations and Kebeles. Previously it used to supply both imported and locally produced sugar through private traders via auction. But the administration was unable to keep the price steady due to traders’ speculation folly that led them into bidding higher and higher prices at the auctions knowing that they can fix their price by controlling the market creating scarcity through illegal hoarding.
A week back the government confirmed it has supplied sufficient amount of the product throughout the country. But consumers and retailers do not agree. “Comparatively speaking the Addis Ababa market has settled but the problem is not yet resolved in regional towns,” a trader from Merkato, the biggest market centre in the country, said. According to him, the product is still smuggled in regional towns from the capital city. “Illegal dealers are selling it up to 1,800 birr per quintal for traders who smuggle the product in regional markets,” the Merkato trader explained.
A kilogram of sugar supplied via the state owned Et Fruit Enterprise and Merchandise Wholesale and Import Trade Enterprise (MEWIT)or through the Kebeles costs 14 birr.
According to the government’s statement, sufficient sugar has been made available but illegal traders who hoard and smuggles the product to regional towns and border countries is the major reason for the artificial shortage resulting in price hike.  
The output of the three state owned sugar factories, Metehara, Finchaa and Wonji Shewa remains far from meeting the demand. To reduce the supply gap the government imports the product every year through international bidding. Currently, the three factories are undertaking several expansion projects to increase their capacity. Tendaho Sugar Factory, the biggest state owned factory is on its final stage of construction and will soon commence production.
Ethiopia has given high attention to expand the sugar sector not only to meet the local market but to also be one of the major sugar exporters in the world. Due to that the government has launched some nine sugar development projects in different parts of the country that are scheduled to end in the coming few years.
The government aims to become self-sufficient sugar producer by the end of 2013 and increase production eightfold to 2.3 million tons by mid 2015, creating a surplus of 1.25 million tons for export.