Sugar packaging in full swing as witnessed by Minister Katsonga-Phiri
* Production increased than normal for domestic supply up to over 600,000 tonnes as of Thursday and rising
* Unscrupulous traders accused of hoarding sugar in order to create commodity scarcity and increase prices
* Illovo never sanctioned any price increase as it still remains at K900 with some supermarkets selling at less at K850
* Survey by Illovo Sugar indicates that illegal exportation to neighbouring countries also contributed to scarcity
By Duncan Mlanjira
Illovo Sugar Malawi Plc maintains that it had enough stocks of sugar for domestic consumption to last up to May during the rainy season it stopped production but some unscrupulous traders were of late deliberately hoarding the commodity to create its scarcity in order to increase prices.
A survey that the company made when it came to their attention of the sugar scarcity on the market, also indicated that illegal exportation of the product to neighbouring countries such as Mozambique, Zambia and Tanzania — where Malawi’s Illovo sugar is cheaper — also contributed to the scarcity.
This was disclosed when Minister of Trade & Industry, Mark Katsonga-Phiri paid a visit to Illovo Sugar Malawi’s Nchalo Estate in response to the scarcity of the commodity and the high increase of the price that reached up to K1,500 per kg from the recommended price of K900.
The company’s Managing Director, Lekani Katandula maintained that they never sanctioned any price increase — thus they made the survey where they discovered that it was unscrupulous traders who were doing so at their own liberty while professional supermarkets were selling at recommended prices — with some even less at K850.
He highlighted that as soon as they realised that traders were hoarding the commodity while some of their suppliers were exporting to Mozambique, Zambia and Tanzania where the Malawi Illovo sugar was much cheaper there, they hastened their production season.
Annually, Illovo’s production both at Nchalo and Nkhotakota is halted during the rainy season to allow for the cane to get matured and that the ground should get dry for easy transportation from the estates to factory — both by Illovo itself and the smallholder farmers that sell their harvest to the company.
During that rain season — targeted between December up to March — they always have enough stocks as a strong cover to supply throughout the country that is targeted to last up to May.
But this year, Katandula said, the rainy season started very late in January that was accompanied by Cyclone Ana, whose floods and subsequent rainfall affected Nchalo Estate that resulted in crop damage of 250 hectares that resulted in loss of 40,106 tons cane.
There was also extensive damage on irrigation and drainage infrastructure; flooding of protection dykes and access roads to estates as well as damage to housing infrastructure; power outage for a month due to ESCOM infrastructure damage.
Katandula told the Minister and the media present that after the discovery that the sugar scarcity is man made by the traders themselves, Illovo Nchalo estate hastened to resume production but they were hindered by the still soft ground on their estates as well as from the supply from the smallholder cane farmers.
“Our supply trucks kept getting stuck in mud as you might appreciate that sugarcane growing is compact and thus the ground takes longer to dry and at the same time rains kept falling in the Lower Shire.
“All we wanted to do was to flood the market with new stock in order for those who were hoarding the sugar to be forced to release it and resume selling the sugar at recommended prices of K900.”
Figures that Katandula presented showed that as on Saturday, April 30, the company produced and released 256,000 tonnes of sugar into the market; 270,000 tonnes on Sunday, May 1; 241,000 on Monday, May 2; increased to 465,000 tonnes on Tuesday, May 3; 661,000 on Wednesday May 4 and had reached to 700,000 on Thursday.
Thus his anticipation that by end of this week, the country would be flooded with enough sugar because this supply is unprecedented just for domestic use, adding that none of this has been reserved for exports because their priority is the domestic market and they export the surplus.
The Minister and the entourage of journalists were accorded a visit to the factory that was in full swing 24/7 a day being supplied with lots of truck-trailers of cane on almost every other 10 minutes.
The entourage was also taken on a visit around the estate and stumbled on a loaded four-trailer truck that had gotten stuck in mud and was being pulled off to dry patch by a recovery tractor.
Last week, Illovo Sugar Malawi quickly assured the general public to dispel rumours as false that circulated through social media insinuating that there is a potential shortage of sugar.
The social media report, that was authored as if it was coming from inside Illovo itself, was warning people to stock pile sugar in their homes, saying the company is struggling to make sugar because the 2 Cyclones — Ana and Gombe — caused some sugarcane to gather mud and thus causing the factory to have frequent breakdowns.
This, the rumour said, could lead to supply being low shortly but the company assured its customers, consumers and the general public that both mills have commenced production.
On Saturday, Katandula said the cane from some parts of the estate indeed were mud-caked by its grinders only squeeze out the juice while the molasses are recycled back as fuel for their boilers.
He said the challenge was to separate the excess mud from the molasses since the soil cannot burn and obviously affect performance of their boilers.
“The company had also informed its customers, consumers and general public that it is common practice for cane haulage to be affected during the early part of the season due to wet fields but mitigating measures are in place to facilitate cane supply to the factory.
“Cane haulage usually resumes expeditiously as soon as excess water has drained off and it is safe for the haulage vehicles to access the fields.
“This is done as a safety measure to avoid vehicles being stuck in the fields. This however, does not automatically signify a looming sugar shortage as the factory continues to produce sugar from the sugar cane already available in its factory yard.
“This is a common occurrence and is planned for on an annual basis,” said the press statement from the company.
Recently, the company was also forced to clarity that it has not increased prices of its sugar products following some concerns raised by the general public through social media that indicated that prices of sugar have gone up in various outlets.
The company maintained that the recommendation retail price for 1kg packet of Brown Sugar remains at K900 and for 1kg of White Sugar packet is still K930, but some traders were selling at an inflated price.
When the company unveiled its financial report last month, it indicated due to some favourable economic factors the country faced some three years ago before CoVID-19 pandemic hit the country, it reduced prices of sugar to K800 per 1kg packet.
Since then it has risen slowly and back to K900 for 1kg packet of Brown Sugar and K930 for 1kg of White Sugar packet, which has been maintained for the past year.
In his comment then at shareholders AGM, MD Katandula had said their prices have been reasonably stable for the past three years considering the many economic factors the country is facing in which other products on the general market have been going up as of late.